340B Hospitals Give Less Charity Care Despite Discounts, Study Finds

NEW YORK, NY – May 26, 2026 – Hospitals participating in the federal 340B Drug Pricing Program provide less charity and uncompensated care on average than their non-participating counterparts, according to a new study that challenges the effectiveness of the multi-billion-dollar program. The findings, released today by patient advocacy group CancerCare® and the policy research-focused Pioneer Institute, are intensifying calls for federal reforms to ensure the program's deep drug discounts ultimately benefit the low-income and uninsured patients it was designed to serve.

The report, titled "Financial Outcomes and Community Benefit in the 340B Program: Comparing 340B and Non-340B Hospitals," analyzed 2023 financial data from nearly 4,000 hospitals nationwide. Its central conclusion suggests a stark disconnect between the program's intent and its real-world outcomes, prompting questions about accountability and transparency for the participating hospitals that receive an estimated 25-50% discount on outpatient drugs.

A Widening Gulf Between Savings and Service

The study's authors argue that the data reveals a troubling pattern. Despite the significant financial advantages conferred by both the 340B discounts and, for many, a tax-exempt status, participating hospitals are not uniformly translating these savings into greater direct financial assistance for vulnerable patients.

"340B was designed to expand access for low-income and uninsured patients, but our research with CancerCare suggests the program is not consistently meeting that goal," said Robert Popovian, PharmD, MS, a Senior Visiting Fellow at the Pioneer Institute. "We found that 340B hospitals provided lower average charity care and uncompensated care than non-340B hospitals, underscoring the need for greater transparency and accountability."

Adding another layer of complexity, the study notes this disparity in charity care exists even though 340B hospitals report slightly higher levels of engagement with Medicaid patients. This suggests that while these institutions serve a significant number of low-income individuals, the financial benefits of the program may not be directly subsidizing care for the uninsured or underinsured at the expected rates.

William Smith, PhD, a Senior Fellow at the Pioneer Institute, described the program's evolution as problematic. "The deep discounts once given to and used by 340B hospitals in economically disadvantaged neighborhoods to help underserved patients are now arbitraged by some hospitals into billions of dollars in 340B revenue," he stated. Smith pointed out the paradox where "simultaneously these are hospitals providing lower and insufficient levels of charity care to underserved patients."

A Program's Purpose Under Scrutiny

Established by Congress in 1992, the 340B program was intended to help safety-net providers—including public hospitals, community health centers, and other eligible entities—"stretch scarce federal resources" to better serve their communities. The premise was simple: by purchasing outpatient drugs at a steep discount, these facilities could reallocate the savings to expand patient services, reduce drug costs for patients, and offer more comprehensive care.

However, the program has ballooned in size and scope over the past three decades, growing far beyond its original footprint. This expansion has been accompanied by persistent controversy. Government Accountability Office (GAO) reports have repeatedly flagged weaknesses in federal oversight, while pharmaceutical manufacturers have accused some large hospital systems of leveraging the program for profit rather than charity.

In contrast, hospital associations like the American Hospital Association (AHA) maintain that 340B savings are a critical lifeline that funds a wide range of essential community benefits, from trauma care and mental health services to free vaccines and transportation for patients. They argue that focusing solely on a narrow definition of "charity care" misses the broader picture of how these funds support the health of underserved populations.

The Human Cost of Misaligned Incentives

For patient advocates, the debate is less about accounting and more about access. The financial pressures on patients, especially those facing catastrophic illnesses like cancer, are immense. Organizations on the front lines see the direct impact when financial assistance falls short.

"CancerCare speaks with patients every day who struggle to overcome financial and other access barriers standing between them and the care they need to treat their cancer," said Kim Czubaruk, JD, Vice President of Policy at CancerCare. "The purpose of the 340B program is for participating hospitals to use the savings from the drug discounts to provide comprehensive services to a greater number of vulnerable patients."

The study's findings raise critical questions about what constitutes a "community benefit." While hospitals report their contributions on IRS Form 990, the definition of "charity care" is specific, referring to free or discounted care provided with no expectation of payment. It is distinct from "bad debt"—uncollected bills—or shortfalls from Medicare and Medicaid reimbursements. Critics of the current system argue that some hospitals may be inflating their community benefit figures with activities that do not represent direct relief for patients' out-of-pocket costs.

Washington Turns its Attention to Reform

The findings from CancerCare and the Pioneer Institute land in a Washington D.C. environment already primed for a debate over the 340B program's future. There is growing bipartisan consensus in Congress that the program requires significant reform to enhance transparency and ensure its benefits reach patients.

Several legislative proposals are already in circulation. A bipartisan discussion draft, the SUSTAIN 340B Act, aims to bring clarity to the program by establishing clear requirements for hospital child sites, permitting the use of contract pharmacies while prohibiting manufacturers from imposing extra conditions, and mandating greater transparency in how savings are used. Other bills, such as the 340B PATIENTS Act, focus on enforcing manufacturers' obligations to provide discounts regardless of where drugs are dispensed.

As access to affordable healthcare becomes an ever-more pressing issue, the new data provides fresh impetus for lawmakers to act. Czubaruk emphasized the urgency of the situation, stating, "As access to cancer care gets further out of reach for more people, it is imperative that meaningful reforms to 340B be implemented at the federal level to ensure the program fulfills its intended purpose and serves both a societal and human need."