Given its name, you’d expect the federal 340B Drug Discount Program¹ to save money for the American health system. When it comes to cancer, though, it’s actually a major driver increasing costs, according to a report from the Community Oncology Alliance².

The program was created in 1992 to financially support so-called safety net hospitals that provide charity care to poor and underserved patients. It was designed to deliver that support not through already scarce federal resources but through mandatory manufacturer discounts on outpatient drugs. The intent of the program was to help these providers increase the charity care they provide with the money they saved from the program.

But “creative uses” of 340B have contributed to increasing the cost of cancer care, boosted revenues for hospitals (which charge more for cancer care than community oncology practices), and expanded the use of hospital outpatient cancer services. Because this program has been so profitable for so many hospital systems, outpatient hospital-based cancer services have grown dramatically. Pharmaceutical companies have naturally tried to offset giving so many discounts to hospital systems by increasing the prices of their drugs.

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