Season 1, Episode 8 · Released October 20, 2026 · About 29 minutes
At the 2026 State of the Patient Summit on Capitol Hill, Terry Wilcox put one question to a panel that rarely shares a stage: of the money the 340B drug discount program moves each year, how much actually reaches the patient, and how would anyone know?
Thomas Johnson, Dr. Anthony DiGiorgio and Ryan Long take that question from Congress to the hospital floor: the four reform proposals now in front of lawmakers, the fights over contract pharmacies and rebates, what patients should pay, and whether the help should go to hospitals at all or straight to patients.
Patients Rising is a member of the Alliance to Save America’s 340B Program, the coalition Thomas Johnson leads.
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This transcript has been lightly edited for readability.
Terry Wilcox: In January of last year, the New York Times told the story of Virginia King, a woman in Santa Fe, New Mexico, who had just been diagnosed with metastatic breast cancer. At an outpatient clinic, a nurse gave her an injection to slow the damage the cancer was doing to her spine. The drug had a list price of about $2,700. The hospital that owned the clinic billed her insurance company $22,700 for it. Her insurer paid $10,000, and the hospital still sent her a bill of her own for more than $2,500. The clinic was part of a federal program that lets hospitals buy drugs like hers at a steep discount. Last month at the State of the Patient Summit in the Kennedy Caucus Room on Capitol Hill, I sat down with three people who see it from very different places, and I asked them the one question I think the whole debate keeps stepping around. I'm Terry Wilcox, and this is State of the Patient.
Terry Wilcox (at the Summit): Our first panel, we're going to be talking about 340B, which I know for many of you who have never heard of it may sound like a tax form. It does. I say that all the time. So this panel asks one question: of the roughly $100 billion 340B moves each year, how much actually reaches the patient? And how would anyone know? The CBO says nothing in the law requires hospitals to report it.
Terry Wilcox: Here is the short version of how it works. Drug manufacturers are required to sell outpatient medicines at a steep discount to hospitals and clinics that qualify, mostly because they serve a large share of patients on Medicaid or with no insurance at all. In most cases, the hospital is then paid the usual rate by whoever covers the patient, and then it keeps the difference. Congress wrote the program in 1992 to help those facilities stretch scarce resources further for the patients who need it most. What it never wrote was a requirement to show that it does. Three people joined me on stage to talk about the gap. Thomas Johnson is the executive director of the Alliance to Save America's 340B program, a coalition working to reform it. Patients Rising is a member of that coalition. Dr. Anthony DiGiorgio is a neurosurgeon at the University of California, San Francisco, who operates at San Francisco General, a hospital in the program. He made a point of saying that he speaks for himself and not for his hospital, and that is how his comment should be heard. Ryan Long is Director of Congressional Relations at the Paragon Health Institute. Thomas kicked us off with where things stand in Congress.
Thomas Johnson: When I first started in 2023, there were no comprehensive proposals that had been introduced into the Congress. Now there are four. Three of them actually were introduced this summer. So we've gone from having essentially no comprehensive proposals to four, two in the House and two in the Senate. The Senate HELP Committee, I think, will be crucial in determining whether or not action will take place this year through the midterms. Our coalition, which Patients Rising is a member of, we really appreciate the fact that all of these proposals are comprehensive and not piecemeal.
Terry Wilcox: Four comprehensive proposals, two in each chamber, and three of them released just this summer. The ACCESS Act in the House, Senator Bill Cassidy's 340B for Patients Act discussion draft. The SUSTAIN Act from a bipartisan group of six senators, and the SECURE Act in the House. They overlap on transparency and on the satellite clinics that hospitals call child sites, and they part ways on contract pharmacies and rebates. We'll come back to both. But first, I wanted to hear from the one person on that stage who works inside a 340B hospital. I asked Anthony where the program helps his patients and where it misses them.
Dr. Anthony DiGiorgio: One of the ironies with 340B is that it doesn't actually help the true safety net hospitals as much as it helps other large not for profit health systems. So for example, and this is all publicly available data, so no trade secrets here, our hospital, San Francisco General Hospital, has about a one point four billion dollar a year budget. And the 340B revenue for our hospital is about twenty million a year. So less than two percent of total operating budget. If you look at the Minnesota 340B report, there are hospital systems that make 10 to 15% of their operating budget via 340B revenue. And that's because once you meet that DSH threshold as a hospital to qualify for 340B, you actually don't generate much spread for treating more Medicaid and uninsured patients. You make the spread off of treating wealthy insured patients who have good commercial plans. For our hospital, our commercial payer mix is less than 5%. We're about two-thirds Medicaid. You're actually incentivized to treat fewer safety net patients and treat more privately insured commercial patients.
Ryan Long: You maximize 340B revenue if you meet the DSH threshold, so you qualify for the program, and then you don't offer a lot of charity care, you don't take care of a lot of Medicaid patients, and you have a high commercial payer mix. But then you have other 340B hospitals within the Northern California area that may have commercial that's well above 40 percent. They're making exponentially more from the program. And so I think one of the biggest myths of the 340B program in Washington, D.C., is that the structure of the program is designed to funnel money or focus money towards indigent safety net hospitals, whether they be urban indigent safety net hospitals or rural hospitals. It's actually the opposite. The way the program works is more money is going to wealthier hospitals because it's all based off the commercial payer mix.
Terry Wilcox: Hold on to that because it runs underneath everything else in this episode. The spread a hospital earns comes from patients with good commercial insurance. A hospital like San Francisco General, where most patients are on Medicaid, earns comparatively little from the program, while a hospital with a wealthier patient mix can earn far more. Ryan then laid out how he thinks lawmakers should judge any reform, and he went further than others on that. He argued that 340B is not free to taxpayers because of what it does to Medicare spending and to premiums. Now that point is contested by some. The discounts themselves are in fact paid by manufacturers rather than the government, and defenders of the program make that case often. Ryan's argument is about the incentives the discount creates further down the line.
Ryan Long: How should you evaluate 340B legislation? I would say first and foremost, does it change the way that assistance is directed towards the covered entities? Does more assistance go to actual poor hospitals versus wealthier hospitals? So I'd say that's number one. Number two, there is a myth that the 340B program does not cost the federal government any money. That is not true. I think CBO has come around to that conclusion. It increases federal spending in the Medicare program and increases Medicare beneficiaries' Part B premiums, increases commercial sector premiums. There is an incentive to use higher price drugs. There's an incentive to use more drugs. There is a disincentive to use biosimilars. I saw a study yesterday or data yesterday that after interchangeable biosimilars were approved by FDA, the amount of money that hospitals were generating actually increased dramatically, where you think it would actually go down. You have 340B hospitals that are buying up independent physician practices, they don't get access to 340B pricing. But as soon as they're bought, they do. There is actually more money that goes to for-profit companies from the 340B program, particularly even Fortune 50 companies, than go to all of the critical access hospitals and sole community hospitals combined in the country. And so we need to stop the leakage of 340B revenue that goes to for-profit companies, if in fact this program is designed to help indigent hospitals.
Terry Wilcox: After Ryan finished, I brought up a white paper Patients Rising published this summer, in which we went through more than 900 medical bankruptcy filings that listed a 340B hospital as a creditor. I want you to hear what I said. And then what I said a few minutes later, because the second part matters just as much.
Terry Wilcox (at the Summit): Patients Rising did a study. We studied over 900 medical bankruptcy files from patients who had a 340B hospital listed as a creditor on their bankruptcy filing. And it was amazing to me. And one of the reasons why we put it out and why we were so fascinated by it was because there were people who had an eighteen hundred dollar a month margin or sometimes a negative margin in their income. And they had a $200,000 bill they were getting sent to collections for. Now think about that a minute. The hospital was never going to get that money from those people. Not ever. In any universe would they get that money. And yet they took all that time to send them to collections, ostensibly ruined their financial life for seven years because they had to file bankruptcy. That was just a microcosm of: why are people not being screened properly? Because that shouldn't happen. And one of the things I just want to point out about what I just said a minute ago about the bankruptcy filings, there's no way that I can prove that any one of those patients on those bankruptcy filings had a 340B drug that they were ever charged for and that really wasn't the point of the story. The point of the story was actually that they needed charity care or some kind of screening that they didn't get. And so I just want to make that as a clarification that I wasn't implying something different.
Terry Wilcox: That clarification stays in this episode on purpose. The filings show people who owed a 340B hospital far more than they could ever pay and were sent to collections anyway. They do not show that any of those bills involved a 340B drug. What they raise is a much simpler question, which is why nobody screened these patients for help before it came to that. I put the word broken to Thomas because he and plenty of others have used it about this program, and I asked him exactly what he means by it.
Thomas Johnson: Well, broken is when we don't have any data on eighty-seven percent of the purchases in the program because hospitals aren't required to report on that. Broken is when hospitals close some of their facilities at the central site, open up child sites in wealthy suburban areas, and then extend the 340B benefit to those areas. Broken is when you do not account for some type of sliding fee schedule to account for those who, as your example pointed out, might get billed, even though this is supposed to be a program to help the underserved. You know, a program that's existed for thirty-four years, at some point you need to look at what's happening in the program, you need to look at the abuses in the program, and you need to address them and fix them.
Ryan Long: What is astounding to me, you mentioned Senator Cassidy, was the report that they put out last year where you had covered entities that basically blatantly say we have no obligation to provide discounts to uninsured patients. And so there really is, you know, we talk about the program being 34 years old, but you can bifurcate it into two different periods. And it is before 2010 and it is after 2010. And before 2010, the program was really about manufacturers helping hospitals defray the cost of providing uninsured patients, either, you know, low cost care or free care. Since 2010, it's really evolved into a hospital subsidy program, to subsidize the holistic operational cost of a hospital. It has gone way beyond what the intent of the program was in 1992. And we can't necessarily fix it by trying to stay within the four corners of the existing program.
Terry Wilcox: Then we turn to the bills. The first sticking point is contract pharmacies, the outside pharmacies that dispense 340B drugs on a hospital's behalf. Senator Cassidy's draft would cap a hospital at five of them, and the SUSTAIN Act would set no cap at all. I asked the panel what either approach means for a rural patient. And Anthony answered by asking whether the cap is aimed at the right target.
Dr. Anthony DiGiorgio: I think if we're talking about limiting the number of contract pharmacies, we're really tinkering at the margins of a program that needs a lot more structural reconsideration. The contract pharmacy revenue is actually pretty minimal in the program. A lot more of the revenue is made via physician administered drugs. And then, for example, purchasing an oncology practice that can then give those cancer infusions, right? Those are the high price drugs where the margins are really large. And so, you know, going down from unlimited contract pharmacies to five contract pharmacies, I think is really just sort of tinkering around the margins. And we need more wholesale reform. I think it's a good step, but it's not enough.
Terry Wilcox: The second sticking point is rebates. Starting January 1st, for a limited set of drugs, manufacturers can give the 340B discount as a rebate after the sale instead of up front. I asked whether that is good or bad for patients. Thomas went first, and I appreciated the honesty of his answer.
Thomas Johnson: I am going to defer to my colleagues because our coalition actually has not taken a position on the rebate program. So I'll defer.
Dr. Anthony DiGiorgio: Our hospital, we've looked at the financials. And again, I don't speak for our hospital. These are purely my own personal opinions, but our hospitals look at the margins and it's gonna hurt a little bit. But again, if you know, the 340B revenue for a hospital system like ours is so small. I mean, the neurosurgery department makes multiples of what the 340B program makes for our small community hospital, small San Francisco General Hospital. And so I think yes, it will hurt a little bit to go to a rebate model, but you know, once you start getting that new cycle of receiving the rebates, because I think it's about a 10-day limit on the rebate, I don't think it's gonna hurt that much overall.
Terry Wilcox: Senator Cassidy's draft would also cap what patients pay out of pocket for 340B drugs on a sliding scale tied to income. I asked whether that is the right fix.
Thomas Johnson: I think it's part of it for certain populations that go to 340B hospitals and other types of covered entities. A lot of the clinics that are part of the program do have a sliding fee schedule for those who are at 200 percent of poverty. And so I think, you know, as a coalition, that's where we borrowed that provision from. And my sense is that probably Senator Cassidy did the same as well. So I think it's part of a solution.
Ryan Long: Yeah, as Thomas said, the grantees have requirements to offer a sliding scale to uninsured patients. I do think that makes sense. I think it is what many members of Congress believe the program already requires. But to Anthony's point, things like transparency, things like the requirement of the discount does require additional compliance cost for entities. And those compliance costs are outsized for particularly poor hospitals that don't generate a lot of revenue. So their percentage cost to compliance is a lot higher for those entities than it is for the richer entities that generate hundreds of millions of dollars from the program.
Terry Wilcox: The last point from Ryan is worth sitting with. In his experience, many members of Congress believe the program already requires hospitals to pass the discount along to uninsured patients.
Ryan Long: And right now the reality is the 340B program is not about patients. The 340B program is about subsidizing hospitals and other grantees. I do think it makes sense to say that if a hospital is going to be getting a discounted product to take care of some uninsured patients, that they have an obligation to provide a discount. And they shouldn't be marking it up off of what they purchase it for. But writ large, again, I think if the program really is a hospital subsidy program and it's designed to provide assistance to indigent hospitals, whether they're urban hospitals, whether they're rural hospitals, that we have to fundamentally transform the program so the assistance actually goes to those entities and not towards richer entities.
Dr. Anthony DiGiorgio: Yeah, it has evolved into a hospital subsidy program. And again, I agree there should be some sort of safety net. These are very expensive patients. They have really high healthcare needs. And I think we are obligated to provide a safety net. That's why I work at the hospital where I work. But the 340B program is not functioning as a safety net subsidy. I think one of the other ironic things with 340B is that it uses an inpatient metric to qualify for an outpatient drug program, right? So the DSH percentage that hospitals use to qualify is an inpatient metric based on the number of Medicaid and dual eligible stays inpatient, but it qualifies for outpatient drug program.
Thomas Johnson: Yeah, and I would just add, when you see patterns like 340B hospitals, there was a study done by Magnolia Market Access showed that 340B hospitals net assets have grown by close to 50 percent outside of those that aren't 340B hospitals from 340B revenue. When you hear those stories about a program where you acquire a drug at a discount and then you bill Medicare and Medicaid five to ten times the cost of the drug, we've gotten away from the nature of the program. And so our principles that we've adopted as a coalition, we think they're very reasonable. We actually think a number of the bills that have been introduced talk about a number of these areas in some fashion. And we are hoping that sooner rather than later, the Congress will adopt something that will benefit patients.
Terry Wilcox: Every time I have this conversation, I hear the same answer from the hospital side. It's too hard, and the administrative burden would be too great. Here is what I said back.
Terry Wilcox (at the Summit): As somebody who runs a nonprofit, many people in this room run nonprofits. When you get to the end of the year, you have to justify the money you've been given. You have to show what you've done, the impact you've had, where the money's gone. You have to show all of these things. Why don't 340B nonprofit hospitals have to do that? Why don't they? Why don't they have a seal? Anybody in this room who has a nonprofit, you want your Candid seal and your this seal and your that seal. You want all your seals so that everybody knows you're doing the right things with the resources that you have. Hospitals don't have to do that.
Dr. Anthony DiGiorgio: Money's fungible, so maybe they could. I actually kind of share this worry for more administrative burden because as a practicing physician, I can tell you most of the administrative burden falls on us. So if hospitals have a new checkbox that they're gonna have to fill out, it's gonna be the doctors and the nurses that are gonna end up filling out that checkbox.
Terry Wilcox: That is a fair worry, and I said so. I also told the panel I think technology has made this kind of tracking far easier than it used to be. But Anthony was not convinced.
Dr. Anthony DiGiorgio: I work in an industry that still uses pagers, fax machines, and CD ROMs. So I am not that hopeful that technology will solve this. The hospital industry is so slow to update technology, like government.
Terry Wilcox (at the Summit): Yes, exactly. A hundred percent agree.
Dr. Anthony DiGiorgio: So I do not share your optimism that technology is gonna fix this, unfortunately.
Thomas Johnson: It just seems to me that if HRSA grantees have to report this type of information based on their status as grantees, there should be some way for hospitals to be able to report similar information that isn't, you know, overwhelmingly burdensome. There was an interesting report that came out from the state of Minnesota who actually collect revenue data on 340B hospitals. One of the things that the report showed is that over a two-year period, 340B revenue from clinics increased about 6.2%. Revenue from hospitals over that two-year period increased from a range of 114% to 154%. Now, we would not have that data but for that statute. But that type of data opens your eyes as to what's happening in the system with regards to 340B.
Terry Wilcox: Then Anthony went back to first principles and he made the boldest proposal of the afternoon.
Dr. Anthony DiGiorgio: And I don't want you to think that I'm anti-transparency just because I think it's going to fall on the doctors. I do love the Minnesota report and I think it's great. I really would go to first principles. What is the most administratively simple way to do a subsidy? And that's to give them the money directly and let the patients decide where they want to spend their funds. So if you take a subsidy and say, here, like a food stamp, you get to decide where you're going to spend the funds that are directed towards you, the patient. That is what to me makes the most sense. There's no administrative burden to that at all.
Terry Wilcox (at the Summit): I agree with you. We do think that patients should have more agency over their healthcare. And I believe that about everything. But given the complexity of this program, I mean that isn't an administrative burden, but how would you get hospitals to buy into that? Because that would be them giving their subsidy away, right?
Dr. Anthony DiGiorgio: No, I'm saying let them earn the subsidy by catering to patients instead of it just being a handout to them for meeting this drug arbitrage program. Because it's hard. Again, it's hard to serve a Medicaid population, right? These are patients that have high no-show rates for clinics. So you need to make sure you have to hire extra staff to call them and remind them that their appointment's coming up. You sometimes have to get transportation. Our hospital has a contract with Uber to make sure patients can get to their appointments. So if you give a subsidy to patients directly, they then choose where they can spend those dollars. If it's a clinic that does that sort of reach out to that patient population, that clinic will get rewarded by reclaiming that subsidy by providing good care for those patients. And if you look at the Minnesota report, I think it was eight dollars for every hundred dollars in revenue actually went to third party administrators. So not just for-profit pharmacies, but other companies that just run the program.
Terry Wilcox: We were running out of time, so I asked each of them for one final thought.
Thomas Johnson: You should find out if the hospital that you are getting services from or that you attend is a 340B hospital. Because I guarantee you most people probably don't know if their hospital is or if it isn't. One of our coalition members came up with a proposal that maybe there should be a notice requirement for 340B entities, just like you have notice of privacy practices, which we're all used to now, so that at least patients know if that facility is a 340B covered entity. I just think awareness specifically about the facility, awareness about the fact that reforms are needed. And, you know, now that you've got four proposals in front of Congress, contact your representative and your senator and say, you know, let's take care of this and fix it.
Dr. Anthony DiGiorgio: I agree, but I would like to see — those are all great bills — I want to see more wholesale reform, more targeting at the patient itself. There's a bunch of different ways you could do it. But if we're gonna say that this is a hospital subsidy, again, which I think is fine, but admit it's a subsidy. Let's take out the middleman and let's get that subsidy as close to the patient as possible.
Ryan Long: Just to sort of conceptualize how the 340B program works, you know, in the individual market, we have premium tax credits. The higher you go up the income scale, the less your credit is worth. The 340B program, if you want to sort of make an analogy, it would be like if someone made 390% of poverty, they'd get a $15,000 credit a year. But if they made 130 percent of poverty, they'd get a thousand dollar credit. Now, if we actually came forward with that proposal, you'd be laughed out of a room. But that's essentially what we have with the 340B program now in terms of how it provides assistance to hospitals. A system that keeps drug arbitrage as the mechanism for generating revenue will always lead to that outcome. It will always lead to wealthier hospitals getting more money from the program than poor hospitals. And I think reform needs to change that.
Terry Wilcox (at the Summit): And my final thought is this. I've always wanted to do a campaign because at Patients Rising we often get asked, do you have any 340B stories? And I'm like, no, we do not have any 340B stories because patients do not know what 340B is. But the patients that we have told, in fact, we've had a couple of patients, they've gotten high hospital bills, and we said, they're a 340B hospital, why don't you ask them about their 340B charity care program? And one of them did, and their bill went away. And so I've always thought, well, why don't we do an Ask About 340B program and just randomly tell everybody to start going into their hospitals and asking about 340B? Then the public would start to know that there should be some kind of protocol for patients who need assistance.
Terry Wilcox: Find out whether your hospital is in the program. Take out the middleman. Stop paying the hospitals with the wealthiest patients the most. And ask. Here is what stays with me from that hour. Nobody on that stage argued that the hospitals caring for underserved patients should get less help, and two of them said plainly that those hospitals need more. What they argued about is whether a program built on the spread between a discounted price and a full one can ever get that help to the right place, and whether anyone would be able to tell if it did. Right now the law doesn't ask. That is the gap Congress left, and it is one Congress can close. So the next time a hospital bill doesn't make sense to you, ask whether the hospital is a 340B hospital and ask about its charity care program. Most Americans have never heard of 340B, which is exactly why the question is worth asking. No one applies for this job. The system hands it to you, so take it — be the CEO of your own health care and your family's, because there's no plan, there's no government program, there's no helpline coming to save you.
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