340B Program Expansion Threatens Rural Healthcare

Pharmacies are essential to the communities they serve. Yet throughout America, rural independent drugstores are struggling.

This month, the Rural Policy Research Institute reported this troubling fact: The number of independently owned retail pharmacies declined by 16 percent in the United States between 2003 and 2021. According to NPR radio, that has contributed to the appearance of what are called “pharmacy deserts” across rural America—areas where residents must drive more than 15 minutes to a drugstore. A 2021 report issued by Good Rx called “Mapping Credit Deserts” provides a graphic representation of the counties having insufficient access to a drugstore.

Disparities in access to care and health outcomes for rural, underserved, and minority populations have long been significant issues. Any policy that could further restrict the availability of medicines to these populations—or force them to travel farther to obtain them—needs to take the issue of health equity into consideration.

Unfortunately, there has been a massive expansion in recent years of a program that exacerbates the pharmacy desert phenomenon.

The program, known as 340B after a section of the 1992 federal law containing it, has grown by leaps and bounds in just the past few years.

Here’s how the program works: Hospitals and pharmacies are allowed to buy prescription drugs at a big discount, as mandated by the law, and they are reimbursed by insurance companies—and by Medicare and Medicaid—at the full price of the drugs.

The law was meant to help low-income people afford their medicines. Unfortunately, “The financial benefits of the 340B discounts are accruing almost entirely to hospitals, clinics, and physicians; and patients’ out-of-pocket costs and total cost of care are being increased,” according to a 2013 JAMA article. Indeed, the profit has become a major revenue source for for-profit healthcare providers.

340B has bestowed more and more economic power to the already-monstrous, national chain pharmacies that have driven so many local, mom-and-pop pharmacies out of business over the past several years. It creates an economic environment in which incentives encourage consolidation of healthcare systems, put healthcare farther out of reach of rural Americans, and imperil the ability of underserved Americans to receive the medications they need. All this, while also lining the pockets of big healthcare systems and giant chain pharmacies. Meanwhile, it does little or nothing to reduce healthcare costs, which is what everyone really wants. Indeed, it probably increases costs while resulting in poorer health outcomes.

That’s why the Domestic Policy Caucus is urging Members of Congress and state officials to oppose 340B expansion and refocus the policy on its original intent of lowering the price of medicines for underserved Americans and achieving health equity.