BUSI 304 Week 5 Group Blog 2 Example

Where Do the 340B Savings Go? A Group Blog on Drug Discount Transparency and an Email to a Representative

Blog Entry: A Discount Program That Has Outgrown Its Purpose

Congress created the 340B Drug Pricing Program in 1992 so that hospitals and clinics serving low-income patients could stretch scarce resources. Drug manufacturers must sell outpatient drugs to these covered entities at deep discounts. The covered entity can pass the discount to patients, or it can bill insurers at full price and keep the difference to support its services. The second option is legal, and for many safety-net providers it is a lifeline. The question our group asks is whether the program still serves the patients Congress had in mind, more than three decades and many billions of dollars later.

The program has grown enormously. Nikpay and McGlave (2026) report that 340B purchases reached $66 billion in 2023, and that between 2010 and 2021 the average share of pharmacies in a county dispensing 340B drugs under contract with a covered entity rose from 1.5% to 43.7%. That growth followed insured patients: contract pharmacies were more common where Medicare and Medicaid coverage was high and less common where more people were uninsured, the reverse of what a safety-net program might be expected to do. Pharmacies serving well-insured patients generate the largest spread between the discounted purchase price and the insurer's payment, so the incentive to locate there is built into the program's design.

The pattern differs by type of provider. Nikpay et al. (2022) found that the spread of hospital contract pharmacies was unrelated to poverty, uninsurance or medical underservice, while the spread of contract pharmacies tied to safety-net clinics was associated with higher poverty rates. In other words, clinics appear to use the program much as Congress intended, while many hospitals use it to earn margins on insured patients.

Hospitals respond that 340B savings pay for charity care and services that would otherwise close. That may be true for some, but no one can know, because covered entities are not required to report how they use the money. McLaughlin and McLaughlin (2015) note that sound policy analysis depends on data about who benefits, and here the data are missing.

Scripture teaches that those entrusted with resources must be found faithful (English Standard Version Bible, 2001/2016, 1 Corinthians 4:2). A program funded by discounts meant for the poor should be able to show where its savings go. A safety-net program should be able to show that its savings reach the people the net was built to catch. Our group supports legislation requiring covered entities to report their 340B savings and how they are spent, while protecting community health centers from new restrictions.

Email Template to the Legislator

Dear Representative [Name],

We are constituents from [town] and healthcare administration students at Liberty University, writing about the 340B Drug Pricing Program, which falls under the Energy and Commerce Committee where you serve. Several of us work in hospitals and clinics that participate in the program, so we have seen both its value and its gaps.

Research published in peer-reviewed journals shows that 340B purchases reached $66 billion in 2023 and that contract pharmacies tied to hospitals have spread without regard to local poverty or uninsurance, while those tied to community health centers have grown in poorer areas. Because covered entities do not report how they use their savings, neither Congress nor the public can tell whether the program is helping the patients it was created to serve.

We respectfully ask you to support legislation that requires every covered entity to report its annual 340B savings and how they were used, and to ensure that any reform preserves the program for community health centers and rural clinics that depend on it.

Thank you for considering our request and for your work for our district. We would be glad to send you the studies we have cited and to meet with your staff.

Respectfully,

[Names], [Town], [Email]

References

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

McLaughlin, C. P., & McLaughlin, C. D. (2015). Health policy analysis: An interdisciplinary approach (2nd ed.). Jones & Bartlett Learning.

Nikpay, S., Gracia, G., Geressu, H., & Conti, R. (2022). Association of 340B contract pharmacy growth with county-level characteristics. American Journal of Managed Care, 28(3), 133-136. https://doi.org/10.37765/ajmc.2022.88840

Nikpay, S., & McGlave, C. (2026). Association between 340B contract pharmacy growth and payer-specific drug coverage. American Journal of Managed Care, 32(2), 108-112. https://doi.org/10.37765/ajmc.2026.89882