Research published in Health Affairs Scholar offers a clear picture.
The 340B Drug Pricing Program is a safety net program that requires manufacturers to offer steep discounts on outpatient drugs to certain providers known as covered entities (CEs). The U.S. Congress established the 340B Program in 1992, with the limited purpose of restoring discounts that have traditionally been granted to safety net providers by manufacturers before the enactment of the Medicaid Drug Rebate Program. The 340B Program has grown exponentially in recent years, becoming the second largest federal prescription drug program after Medicare. Hospital CEs may expand care through 340B child sites which include clinics, infusion centers, and various other outpatient treatment centers.
The number of 340B hospital child sites exceeded 34,000 in 2023, compared to just over 7,000 in 2013. The new study reveals that both 340B hospitals and their child sites have consistently been located in areas with higher annual incomes every year since 2014. Since 2022, hospitals have placed child sites in neighborhoods that are healthier, wealthier, better insured, and with more white residents compared to the parent site or alternative locations 340B hospitals could have chosen within a 10 mile radius.
The study suggests that 340B hospitals generally do not locate child sites closer to vulnerable residents in lower-income, higher-need neighborhoods, which would expand patient care. Instead, 340B expansion creates hospital profits by targeting wealthier areas with better reimbursement prospects. Whether 340B hospitals reinvest additional income gained from child sites in alignment with the Program’s intended goals remains uncertain, given the absence of transparency and accountability for the use of 340B financial gains. The authors concluded that the observed trend of 340B child site expansion risks exacerbating health disparities between communities and may work directly against the Program’s mission of improving access for patients most in need.
This research was funded by Johnson & Johnson and conducted in collaboration with Dr. Neal Masia (Columbia University/ Entity Risk) and Darren Filson (Claremont McKenna College). For full details on the study design, methods and limitations, see: Masia N, et al. Income, health, and racial gaps between 340B hospitals, child sites, and nearby neighborhoods. Health Affairs Scholar. 2025;qxaf121. doi:10.1093/haschl/qxaf121