The 340B program was established by Congress in 1992 to provide steep discounts to hospitals that serve a large proportion of low-income patients, while allowing hospitals and Federally Qualified Health Centers — known as FQHCs — to be reimbursed for the full rate for outpatient prescription drugs. Hospitals are meant to reinvest the difference back into care for the most needy.
However, in recent years, pharmaceutical makers have cried foul, claiming exponential growth in hospitals’ use of the program amounts to a multibillion-dollar profit center to the 57% of hospitals nationwide that participate.
They say hospitals are making money off 340B without any accountability or transparency about their charity care levels and that pharmacies that are largely owned by the big pharmacy benefit manager companies are gaming the system.
Drugmakers have begun to reject 340B discounts for certain providers and are pushing legislation to require more detailed reporting of charitable care tied to drug discounts in both Congress and state legislatures. Meanwhile, proponents of the 340B program in Illinois are promoting their own legislation to shore up the discount program and forbid manufacturers from denying providers their discounts.
"The 340B hospital markup program has strayed from its original purpose and increasingly benefits hospitals and for-profit pharmacies instead of patients," Stami Turk, spokeswoman for the drug manufacturer trade group PhRMA, said in a statement. "PhRMA supports greater transparency to evaluate whether the program is actually helping vulnerable communities in Illinois access the medicines they need and to understand the costs of the program to Illinois employers, taxpayers and patients."
Ford, whose district is on the West Side and near west suburbs, said in an interview with Crain’s he has heard from small providers like Loretto Hospital and financially struggling West Suburban in Oak Park, as well as local FQHCs, that they fear the program is in jeopardy.
"For FQHCs and safety nets, this is a source of income that’s keeping them open; they need the funds generated because, with high Medicaid populations, they suffer from low reimbursements," he said.
"But big systems, they’re using it as a profit center," Ford said.
In his opinion piece he called out UChicago Medicine and Rush University System for Health for what he believes is evidence that 340B funding is enabling the Chicago systems to reach out to affluent suburban patients.
Ford said UChicago Medicine is a "classic example" of investments going to the suburbs.
"I believe that rather than reinvesting 340B dollars into services for South Side residents, UChicago Medicine began opening clinics in affluent suburbs such as Hinsdale and Northbrook, where the median household income is nearly triple that of neighborhoods around its parent hospital," Ford wrote.
Ford said UChicago Medicine’s revenue has gone from $2.55 billion in 2020 to $4.63 billion in 2024, but its "charity care spending has plummeted below the national nonprofit hospital average."
Ford also pointed to Rush, saying the system, anchored in the Illinois Medical District on the West Side, is placing outpatient clinics in Oak Park, Aurora and Yorkville. And the system touted 340B revenues, Ford wrote, when telling Moody’s Investors Services that Rush expects to see its profits continue to rise from 340B drug discounts as its cancer business expands.
Rush did not respond to a request for comment.
UChicago Medicine, in an emailed statement, pushed back at Ford’s assumptions, saying the system is "exactly the type of hospital and patient population the 340B program is intended to serve."
"As the largest provider of Medicaid-insured care in Illinois, the University of Chicago Medical Center relies on 340B to provide critical care to our South Side community, which faces high rates of chronic disease and health disparities," the statement said.
"Thanks to 340B, we have built vital facilities in and for the South Side community, including an expanded adult emergency department, an adult trauma center and the state-of-the-art Center for Care & Discovery," the statement said. UChicago is also opening a freestanding cancer hospital in Hyde Park in 2027.
"Our commitment to expanding access to academic medicine extends across Chicagoland, including in Harvey, where UChicago Medicine Ingalls Memorial Hospital, a critical safety-net provider for the south suburbs, provides care for a predominantly Medicaid-insured population," the statement said. "In fiscal year 2024 alone, we invested $715 million in community benefits and services, including a nationally recognized violence recovery program, a vital part of the South Side’s only comprehensive trauma services for adults and children. Our Meds-2-Beds and outpatient pharmacies provide free or discounted medications to patients in need."
"Without 340B, many essential programs — such as our Level 1 trauma centers, neonatal intensive care unit, the South Side’s only burn unit and hospital-based emergency helicopter services — would be at risk," UChicago said. "At a time when federal Medicaid cuts threaten the health care ecosystem on the South Side, 340B remains more important than ever to ensure access to high-quality care for our community."
Ford is calling for lawmakers in Washington and Springfield to make sure the discount revenue is spent on the underserved.
He told Crain’s a bill in the General Assembly that proposes to expand the current status of 340B should not progress if transparency is not addressed.
House Bill 2371, called The Patient Access to Pharmacy Protection Act, could be debated in the General Assembly’s fall veto session this week, but both opponents like Ford and proponents like sponsor, state Rep. Anna Moeller, D-Elgin, say it is unlikely to be brought up.
The measure would prohibit pharmaceutical manufacturers from restricting the acquisition of a 340B drug by provider or contract pharmacy that are covered under the program.
"(The bill) simply preserves the status quo; yet even as Congress enacts deep Medicaid cuts that threaten health care for nearly 500,000 Illinoisans and compromise hospital stability, Big Pharma continues to limit hospital access to discounts that fund affordable prescriptions and essential new service lines for patients," Paris Ervin, spokeswoman for the Illinois Health & Hospital Association, said in a statement. "Similar laws are already in place in 20 other states and have been upheld by multiple courts. And contrary to Big Pharma’s claims, the bill strengthens accountability by expanding transparency requirements so both the public and lawmakers can see exactly how hospitals use 340B savings to benefit patients."
Pharmaceutical manufacturers, Ervin said, are behind much of the transparency and anti-340B rhetoric.
They are "running a multimillion-dollar disinformation campaign intended to misrepresent and distort the truth about the 340B program so they can continue overcharging the hospitals who care for our state’s most vulnerable residents and protect their billions of dollars in profits," she said. "Illinois hospitals remain committed to transparency, accountability and compassionate care. The proposed legislation simply protects patients and communities — at no additional cost to the state — and ensures that 340B savings continue to support the people who rely on them most."
"I’m listening to all sides," Ford said about his opinion piece. "Businesses have to do what’s best for business. But we can protect them and still protect 340B for the people who need it the most."
