Health Economics

Consequences of the 340B Drug Pricing Program

Sunita Desai

BACKGROUND

The 340B Drug Pricing Program entitles qualifying hospitals to discounts on out-patient drugs, increasing the profitability of drug administration. By tying the program eligibility of hospitals to their Disproportionate Share Hospital (DSH) adjustment percentage, which reflects the proportion of hospitalized patients who are low-income, the program is intended to expand resources for underserved populations but provides no direct incentives for hospitals to use financial gains to enhance care for low-income patients.