Funding the U.S. healthcare safety net: implications and opportunities of the 340B drug pricing program
Embargo Date
2027-01-16
OA Version
Citation
Abstract
This dissertation examines the role of the 340B Drug Pricing Program in the US health care safety-net and its implications for access, affordability, and health equity. The 340B Program allows certain hospitals and public health clinics that serve a disproportionate share of low-income patients to purchase outpatient drugs from manufacturers at steep (estimated 25–75%) discounts; however, the 340B statute does not specify whether discounts are to be passed along to patients nor how profits generated from full price drug sales of discount-acquired drugs (i.e., “spread pricing”) is to be spent. This has led to calls for reform. At the same time, the 340B Program is well-situated to play an important role in the delivery of care for syndemic conditions (i.e., HIV, substance use disorder (SUD), mental health disorders), which disproportionately affect marginalized patient populations.Revenues generated from the 340B program present a key opportunity for hospitals to invest in low-profit services that may especially benefit socially and economically marginalized patient populations, such as HIV and SUD services (i.e., “mission motivated” behavior). However, providers face competing financial incentives to reinvest 340B revenue into high-profit services or services with high-cost drugs to maximize spread pricing (i.e., “margin motivated” behavior). The impact of the 340B program on low-profit or syndemic service provision is unclear.
The overarching goal of this dissertation is to assess the relevance of the 340B Program to hospital finances, safety-net spending, and provision of low-profit services. This dissertation has three aims. First, I synthesize what is known about the 340B Program in the peer-reviewed, empirical literature via a systematic scoping review, categorizing outcomes indicating margin- versus mission-motivated behavior by 340B providers. Second, I assess the financial wellbeing and service provision decisions of nonprofit hospitals in the years following enrollment into the 340B Program using a staggered difference-in-differences design, based on 20 years (2000–2019) of Medicare Cost Reports and American Hospital Association survey data. Third, I estimate the impact of a 340B Medicare reimbursement cut on nonprofit hospital finances and safety-net spending outcomes, using a triple differences approach, based on cost reports and hospital tax filings.
Description
2025
License
Attribution-NonCommercial 4.0 International