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WASHINGTON, D.C.— Refusals by a group of pharmaceutical companies to offer federally mandated drug discounts are reducing safety-net hospitals’ ability to serve their patients with low incomes and those living in rural areas. New research released today demonstrates that hospitals participating in the 340B drug pricing program use their program savings to benefit patients, including those diagnosed with COVID-19, those in need of comprehensive diabetes or cancer care, and those living in remote areas. These patient benefits are at substantial risk from several major drug companies that have stopped providing the prescription drug discounts that the 340B law requires.

An annual survey of nearly 500 hospitals participating in 340B shows they all are using their savings to benefit patients, including by increasing access to needed services, supporting the provision of uncompensated and unreimbursed care, and providing free or discounted drugs to patients living with low incomes. These actions have helped improve health outcomes for patients. About 86% of surveyed disproportionate share (DSH) hospitals said they had used 340B savings to improve medication adherence among patients, 80% said they had reduced hospital readmissions, and 73% reported improving care transitions for patients.

For many of the nation’s smallest rural hospitals, 340B savings provide them with the resources they need to stay in operation. Three-quarters of critical access hospitals (CAHs), which have 25 beds or fewer and are at least 35 miles away from the next nearest hospital, reported that they rely on 340B savings to keep their doors open.

Pharmaceutical manufacturers that have cut off 340B discounts to hospitals for drugs dispensed at community-based pharmacies are significantly impeding hospitals’ ability to avoid harmful reductions in care. Nearly all surveyed hospitals said these actions are having a negative financial impact, with nearly two-thirds reporting that they expect to lose more than 15% of their 340B savings just from the actions of the six companies. The overwhelming majority of hospitals said they would have to cut programs and services if the drug company attacks on 340B became more widespread.

“The evidence is clear. By cutting off access during a pandemic to 340B discounts on drugs dispensed at community pharmacies, drug companies are harming the ability of safety-net providers to continue their effective COVID-19 responses and tackle some of the health system’s most prevalent chronic diseases,” said 340B Health President and CEO Maureen Testoni. “The Biden administration must act now to ensure this damage is not permanent.”

Cuts to hospitals’ 340B savings would threaten the gains they have made in expanding care and improving health outcomes. Hospitals identified oncology and diabetes services as most at risk from cuts to 340B. Nearly 40% of DSH hospitals said their COVID-19 response efforts would suffer from 340B cuts, and among CAHs that figure was more than 50%.

Read the report to see the full extent of data on 340B hospitals’ use of program savings and see more details on the effect of drug company restrictions on 340B community pharmacies.

Contact: Richard Sorian at richard.sorian@340bhealth.org or 202-536-2285.