Republish this Story

(Creative Commons License BY-NC-ND 4.0)
Creative Commons License

Why a little-known drug discount program is so controversial

Ryan Levi

Return to Story

General Guidelines and Requirements

First time republishing a Side Effects story? Read our Frequently Asked Questions first for important information.

Side Effects Public Media welcomes the republication of any of our original reporting. However, we require that you do the following:


  1. Credit the reporter as follows: By [reporter name] – Side Effects Public Media.
  2. Credit and link back to us in the footer at the end of the piece as follows: "This story was produced by Side Effects Public Media, a news collaborative covering public health."
  3. If you republish our photographs or graphics, use the same credits that appear with our images. You are responsible for obtaining any rights for all other pictures and materials not created or owned by Side Effects (such as stock or AP photos).


  1. Side Effects uses AP style. Edit only to reflect relative changes in time or location (for example, changing "yesterday" to "last week" and "Columbia, Missouri" to "Columbia" or "here") or to conform to your newsroom style. You may not pull soundbites to use out of the larger context of the journalistic work.
  2. All original links in the story must be included in any republication.
  3. Additional edits may be considered on a case-by-case basis. Please contact us at if you would like to make changes beyond those described in this section.

For Public Radio and TV Stations

All Side Effects original reporting can be pulled in with the NPR Story API, a feature available on Core Publisher and many other public media web systems. If you're unsure how to do this, contact your station webmaster for more information.

ID Information for NPR API Use
Side Effects Public Media's Station/Organization ID 4780019
This Story's ID (Use "Get NPR Content" Menu) 1110317184

For Other Publications


  1. To republish this story, copy and paste the HTML below into the "source" view of your content management system (ex: Wordpress, Drupal, etc). Our tracking tag, embedded at the end of the story, must be included in all republications. The tag tells us who is sharing and viewing our stories.
  2. If you choose to rebuild the story in your CMS, be sure to include the tag for the specific story; the HTML is provided in a separate box at the bottom of the page.
  3. If you cannot use our tracking tag for some reason, e-mail our editor at

For Radio/Streaming Audio

For outlets with an existing subscription to PRX, Side Effects prefers that you use it to download stories because of the back end analytics it gives us. For others, we recommend, but do not require, the use of PRX. If you want to use radio stories but do not have access to the platform, get in touch with us at


You have two options for republishing in print: highlight and copy the page or request an editable (typically MS Word) file from our editor by contacting us at

Source Code for Republication

Full Story

To republish this story, copy and paste the HTML below into the "source" view of your CMS (ex: Wordpress, Drupal, etc):

<p>Billions of dollars a year flow to U.S. hospitals through the federal prescription drug discount program known as <u><a href="" class="Link" target="_blank">340B</a></u>.</p><p>A Supreme Court case this summer briefly thrust the little known but highly controversial program into the spotlight. In 2018, the federal government cut payments to hospitals in the program, and a group of hospitals and trade associations sued.</p><p>The court <u><a href="" class="Link" target="_blank">sided with the hospitals</a></u> and rejected the payment cuts, but the unanimous opinion did little to address the controversy that has dogged the 340B program for decades: Who should benefit — providers or patients?</p><p>We asked 340B expert and Tradeoffs Research Editor <u><a href="" class="Link" target="_blank">Sayeh Nikpay</a></u> to help explain how a program designed to help the neediest patients became so controversial.</p><p><b>Where did 340B come from?</b></p><p>By all accounts, 340B started with good intentions.</p><p>Congress created the program in 1992 to help hospitals and clinics that cared for large numbers of low-income and uninsured patients, including large <u><a href="" class="Link" target="_blank">public hospitals, AIDS clinics and community health centers</a></u>. They did so by requiring pharmaceutical companies to give these safety-net providers big discounts on prescription drugs. The exact discount amounts are confidential, but government reports indicate they can range from <u><a href="" class="Link" target="_blank">20 percent</a></u> to <u><a href="" class="Link" target="_blank">more than 50 percent</a></u>.</p><p><b>How does 340B work?</b></p><p>To understand 340B, it helps to follow the money.</p><p>Imagine someone needs a cancer drug that a drugmaker normally sells for $100,000. The company would have to sell that drug at a discount to a 340B hospital or clinic, so they might only pay $50,000.</p><p>But if a patient with insurance needs that same drug, the hospital or clinic can charge the insurance company or Medicare the full $100,000 and pocket the $50,000 difference. This is known as the "spread," and 340B providers can use that money to help cover free medication for the uninsured or to pay for other operational costs.</p><p><div class="Enhancement" data-align-center> <div class="OEmbed"> <iframe src="" width="100%" height="180px" scrolling="no" frameborder="0" style="border:none;overflow:hidden;"></iframe>  </div></div></p><p><b>Why is 340B so controversial?</b></p><p><u><a href="" class="Link" target="_blank">Drugmakers</a></u> and some <u><a href="" class="Link" target="_blank">policymakers</a></u> argue 340B should more directly help low-income people afford prescription drugs instead of being routed through the hospitals and clinics. Others say giving discounts to providers inevitably trickles down to needy patients.</p><p>Recent growth in the program has made this argument even more contentious.</p><p>Hospitals have to apply to the federal government to enroll in 340B. When the program started in 1992, fewer than 3 percent of hospitals participated, and they tended to have many low-income and uninsured patients.</p><p>But the eligibility rules for 340B are broad, and by 2009, 13 percent of hospitals were in the program, with many of the newer hospitals serving far fewer needy patients. The following year, <u><a href="" class="Link" target="_blank">the Affordable Care Act</a></u> allowed rural hospitals, cancer hospitals and others to join, regardless of how many uninsured patients they served.</p><p>By 2020, about 40 percent of American hospitals were getting discounts, and the program now <u><a href="" class="Link" target="_blank">accounts for $38 billion</a></u>, or 7 percent of total U.S. drug spending.</p><p>The more insured patients a hospital has, the more money it can bring in through 340B. And even though hospitals with more insured patients are legally eligible to join the program (and can spend the money they bring in however they want), their proliferation in 340B has pushed drugmakers and some policymakers to accuse them of exploiting a loosely worded law to pad their profits without doing much to help low-income patients.</p><p><u><a href="" class="Link" target="_blank">Hospitals</a></u> <u><a href="" class="Link" target="_blank">counter</a></u> that 340B discounts allow them to provide free care, open specialty clinics and offer additional services to complex patients.</p><p><div class="Enhancement" data-align-center> <iframe src="" height="425" frameborder="0" id="embed61862" style="width: 100%" scrolling="yes"></iframe></div></p><p><b>What does the evidence say?</b></p><p>There are no reporting requirements to track how hospitals spend the money they bring in through the 340B, which makes it difficult to know whether they're using the money in line with the law's goals of supporting low-income patients.</p><p>But the studies we do have (using far-from-perfect data) suggest hospitals that have joined the program more recently are finding ways to bring in more money through 340B while their spending on low-income and uninsured patients remains flat.</p><p>For example, there are studies showing newer 340B <u><a href="" class="Link" target="_blank">hospitals</a></u> and the <u><a href="" class="Link" target="_blank">clinics they run</a></u> are more likely to be located in counties with higher income levels and fewer uninsured patients, and that hospitals' <u><a href="" class="Link" target="_blank">drug spending</a></u> <u><a href="" class="Link" target="_blank">increases</a></u> after they join 340B, which could lead to bigger "spread" payments.</p><p>But <u><a href="" class="Link" target="_blank">several</a></u> <u><a href="" class="Link" target="_blank">studies</a></u> <u><a href="" class="Link" target="_blank">and</a></u> <u><a href="" class="Link" target="_blank">government reports</a></u> show little change in how much hospitals spend on low-income patients when they join 340B.</p><p><b>Any solutions in sight?</b></p><p>Congress held a <u><a href="" class="Link" target="_blank">handful</a></u> of <u><a href="" class="Link" target="_blank">hearings</a></u> on 340B in <u><a href="" class="Link" target="_blank">2018</a></u>, but nothing has come from them.</p><p>Suggested reforms have generally centered on <u><a href="" class="Link" target="_blank">increased oversight</a></u>, <u><a href="" class="Link" target="_blank">greater transparency</a></u> of how hospitals use 340B savings and providing <u><a href="" class="Link" target="_blank">more direct funding</a></u> to safety-net providers to limit their reliance on 340B.</p><p>But the program’s complexity and low profile make it difficult to reform. On top of that, there is a lot of money at stake for hospitals and clinics, and it can be difficult to convince lawmakers to take funding away from institutions that are often pillars of their communities and huge employers.</p><p>The more 340B grows and becomes seen as a way for hospitals to increase profits, the more drug companies are likely to push back.</p><p>At least <u><a href="" class="Link" target="_blank">16 drugmakers</a></u> are currently refusing to <u><a href="" class="Link" target="_blank">offer 340B discounts to some pharmacies</a></u>, drawing <u><a href="" class="Link" target="_blank">outrage from providers</a></u> and <u><a href="" class="Link" target="_blank">lawsuits from the federal government</a></u>. Federally funded clinics in particular say they <u><a href="" class="Link" target="_blank">rely on these savings</a></u> and losing them could threaten the low-income patients they serve.</p><p><i>This story comes from the health policy podcast<a href="" class="Link" target="_blank"> </a><u><a href="" class="Link" target="_blank">Tradeoffs</a></u>, a partner of<a href="" class="Link" target="_blank"> </a><u><a href="" class="Link" target="_blank">Side Effects Public Media</a></u>. Dan Gorenstein is Tradeoffs’ executive editor, Sayeh Nikpay is research editor and</i><b> </b><i>Ryan Levi is a reporter/producer for the show, which ran a version of this story on July 7.</i></p><p><i>Tradeoffs' coverage of health care costs is supported, in part, by Arnold Ventures and West Health.</i>  <div class="fullattribution"><img src=""/></div></p>

Tracking Code

Or, if you have already re-created the story in your own CMS, just add this tracking code to the bottom:

<iframe src="" height="425" frameborder="0" id="embed61862" style="width: 100%" scrolling="yes"></iframe>