Who Benefits From the 340B Drug Discount?

The 340B program was created to help patients who can’t afford care. A new study of nearly 4,000 hospitals finds participating hospitals provide less charity care than those outside the program.

The federal 340B program gives some non-profit hospitals discounts on medicines so they can do more for patients who can’t afford care. A new study from Pioneer Institute and CancerCare finds that hospitals in the program spend a smaller share of their budgets on charity care than hospitals that do not participate.

The study uses federal cost-report data that the hospitals filed themselves.

Key findings

• Charity care: 340B hospitals spent 2.16 percent of operating expenses on charity care. Non-participating hospitals spent 2.82 percent.
• Care for uninsured patients: The gap was wider for charity care provided to uninsured patients. 340B hospitals spent 1.60 percent of operating expenses on this care, compared with 2.26 percent at non-participating hospitals. The pattern held across other measures, including uncompensated care and unreimbursed care.
• Medicaid patients: 340B hospitals treated a larger share of Medicaid patients, reflecting their role in low-income communities. Results varied by hospital type. Disproportionate Share Hospitals drew nearly 30 percent of patient days from Medicaid. Critical Access Hospitals drew about 8 percent and also trailed on charity care.
• Limited reporting: Medicines flowing through 340B were worth about $179.5 billion at list prices in 2025. No federal rule requires a 340B hospital to report how much it receives through the program or how it spends those resources.

What the study shows

The authors describe the findings as a snapshot. The study does not claim that joining 340B causes hospitals to provide less charity care. It shows that the discount does not reliably translate into more help for patients, and that current reporting rules give the public no way to see how 340B savings are used.

“A discount this big shouldn’t be a mystery,” said William Smith, PhD, Senior Fellow and Director of Pioneer’s Life Sciences Initiative. “If it’s reaching the patients in need, that’s the easiest thing for the institutions to prove, but none of those hospitals do, because no one has ever had to.”

Contract pharmacies

The report also looks at contract pharmacies, which receive part of 340B revenue for dispensing drugs. A 2025 Senate investigation found specialty-pharmacy agreements in which CVS kept 13 percent of reimbursement and Walgreens collected administrative fees of 8 or 20 percent. Because these payments rise with a drug’s price even when the service is the same, the study recommends a flat fee based on the service provided.

Recommendations

The report recommends three standards the program currently lacks:

• A floor requiring participating hospitals to pass savings on to low-income patients
• Clear, comparable rules for what counts as charity care
• Public reporting of what hospitals receive through 340B and how they spend it

“Hospitals receiving 340B discounts should be able to show how those savings help patients in need,” said Kim Czubaruk, JD, Vice President of Policy at CancerCare. “This report underscores the need for clear standards and public reporting to ensure the program delivers meaningful financial assistance to the people it was intended to serve.”

Why it matters now

Congress is considering the first major overhaul of 340B in 15 years. A Senate reform draft closed its comment period in late August, and a competing bipartisan House bill was introduced in July.

Read the full report below.