The 340B Program Needs to Be Fixed to Help Black Americans 

COMMENTARY

Across the country, Black individuals face persistent disparities in health care and health outcomes. Black Americans have higher uninsured rates, are disproportionately likely to have medical debt, and are more likely to skip care due to cost. 

Several conditions also impact our communities more strongly than other racial groups. For example, Black adults are more likely to be diagnosed with heart and kidney disease and suffer from obesity and type 2 diabetes.

The reasons for these disparities are complex and often intertwined. 

Created in 1992, the 340B Drug Pricing Program aimed to help close health disparity gaps by supporting hospitals and health care facilities that serve low-income and uninsured patients, including Black Americans. Today, a growing number of Black patients are receiving care at 340B eligible hospitals. Unfortunately, while Black Americans rely on 340B hospitals more than ever, growing evidence suggests the program is being abused at our expense. 

Hospitals, community health centers, clinics and other “covered entities” participating in the 340B program can purchase prescription drugs at significantly reduced prices. 340B prices are, on average, 57% below the list price, but can be as low as one penny. 

Theoretically, this enables hospitals to pass those savings on to patients in the form of cheaper drugs or use the profits they generate from selling discounted medicines at the full price to fund other vital services for underserved patients. 

However, the lack of government oversight and transparency into how hospitals use their 340B-derived funds has me questioning whether the savings are truly benefiting Black patients.

Over the last few decades, large-scale hospital systems have rapidly expanded the number of health facilities that are eligible for the 340B program. In 2000, there were 8,100 hospitals and retail pharmacies enrolled in the program, but by 2020, that number was above 50,000. As the number of 340B-eligible health care facilities has increased, so too has the program’s spending. 

A report from the Congressional Budget Office found that purchases in the 340B Program grew 19% annually, rising to $43.9 billion from 2010 to 2021. Eighty-eight percent of the growth in spending can be attributed to spending on drugs prescribed by hospitals and dispensed by their affiliated network of contract pharmacy chains — a majority of which have financial ties to insurer-owned pharmacy benefit managers. 

If spending on the program is increasing, then we should expect to see more patients in need benefiting from the program. Unfortunately, this has not been the case.

Hospitals and their affiliated pharmacy networks have instead treated the program as a major profit-making center to fund services across their health care systems. As both The New York Times and The Wall Street Journal have reported, 340B funds are used to provide services in wealthier, and often predominantly White, neighborhoods rather than in the communities that need it most. 

340B contract pharmacy networks are also driving quality care away from Black communities. 

While it is reasonable to expect patients to use a pharmacy in their community, more and more Black patients cared for by 340B hospitals are finding that the options they have to fill their prescriptions are limited.  

Studies have found that the growth in 340B contract pharmacies has been concentrated in affluent and predominantly White communities. Meanwhile, lower-income Black communities are disproportionately left behind in “pharmacy deserts.” Between 2006 and 2019, 3.2% of 340B pharmacies in predominantly Black regions closed, while there was a 4% increase in predominantly White communities. 

In its current state, it’s more appropriate to think of the 340B Program as a hospital mark-up program than a drug discount program.

Fixing the issue requires congressional action.  

Viable 340B reforms could include measures to enhance oversight, including monetary penalties instituted as punishment for violations. Implementing stricter monitoring practices and mandatory reporting practices to catch violations would ensure 340B savings are being distributed back into the communities they were meant for.

Reforms seeking to clarify the rule governing contract pharmacy use are also necessary. 

By implementing these reforms, we can empower safety-net providers serving Black communities and expand access to lifesaving medications. Failure to do so will only perpetuate the existing disparities and deny Black communities the vital support they need and deserve.

Kenya Hutton is the co-chair of the Human Rights Conference for World Pride 2025 and plays a pivotal role in organizing D.C. Black Pride 2025. His leadership extends to initiatives like the Black Queer Film Festival, fostering visibility for Black queer filmmakers, and spearheading efforts to improve health care access for marginalized communities through the PhRMA CAREs Grant. He can be reached here.