Why would the Senate Choose Wealthy Hospitals over everyday New Yorkers?
The federal 340B drug pricing program was created with a clear purpose: help low income patients access medicines and support care in underserved communities. Hospitals are allowed to purchase drugs at significant discounts, with the expectation that the savings will benefit vulnerable patients.
Over time, however, the program has grown into a major revenue stream for large hospital systems, with limited to no transparency and few requirements to show how the money is used.
A recent transparency report from Minnesota offers a revealing case study. Hospitals accounted for more than 80 percent of the state’s net 340B revenue. Clinics in underserved communities represented just 2 percent. More than half of all 340B net revenue flowed to the four largest hospitals in the state. In total, Minnesota hospitals generated at least $1.34 billion in net 340B revenue.
There is no clear public accounting of how those dollars are spent.
New York should take note. Lawmakers in Albany are considering legislation, S.1913, that would expand the 340B program in the state. The proposal does not include meaningful transparency or reporting requirements.
At the same time, a new IQVIA analysis highlights the broader fiscal impact. The report estimates that 340B hospital markups cost New York public health plans $118.4 million annually. Money from New Yorkers going to wealthy hospitals. One word: outrageous!
These costs are ultimately borne by taxpayers and public employees.
Existing data also raise questions about how closely 340B revenue aligns with charity care. Many hospitals in the program provide charity care at or below national averages, while generating substantial revenue from discounted drug purchases. Without consistent reporting, policymakers and the public cannot determine how much 340B revenue directly supports low income patients or community health initiatives.
It would be negligence to expand the program and increase the scale of 340B in New York.
Albany should ensure that the program is accountable to the communities it was designed to serve.
Rev. Kirsten John Foy is president and CEO of The Arc of Justice, spokesman for Consumers for Fair Legal Funding, and the convener of Faith Leaders Against Predatory Lending.
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