The 340B drug discount program was envisioned as a way to lower drug costs and increase revenues for safety-net healthcare providers by allowing them to purchase outpatient  prescription drugs at discounted prices while getting reimbursed at full cost. With revenues from the discounted drugs, these hospitals and federally supported clinics would then be able to expand services and improve care for underserved and low-income populations. The 340B program has expanded rapidly since it was passed in 1992 to include significantly more hospitals and other providers (“covered entities”), as well as by allowing covered entities to dispense discounted drugs at contracted retail pharmacies. The program’s growth has generated controversy in the media, lawsuits from pharmaceutical companies, and calls for reform from some policymakers stemming from evidence that many hospitals—which account for over 86% of discounted 340B purchases—are not using the program to meaningfully enhance safety-net care for vulnerable populations.

But while hospitals’ participation in 340B has been analyzed, another type of covered entity has not been examined as thoroughly. Federally Qualified Health Centers (FQHCs) are community-based health care providers that receive federal funding to deliver comprehensive primary care services, especially to underserved and vulnerable populations. Because they are required to provide free or reduced-price care to low-income patients, FQHCs typically have significantly more patients who are either uninsured or on Medicaid.

In recent years, FQHCs have intensified their participation in 340B through increasing the number of 340B locations where discounted drugs can be dispensed. A new study from the University of Minnesota School of Public Health (SPH) investigates whether that growth is linked to increased safety-net care among FQHC patients. By examining data from 1,468 FQHCs from 2004 to 2022, the study, published in JAMA Health Forum, found:

• A positive association between the number of 340B locations and an increase in patient volume, particularly among uninsured, low-income, non-English-speaking, and unhoused populations.
• Unlike many hospitals, FQHCs seem to use 340B revenues to enhance care for underserved populations. Each additional 340B registered location is correlated with a modest but statistically significant increase in patient care and preventive services.
• Increases in 340B registered locations led to more preventive health services, such as HIV tests, tobacco cessation counseling, and flu vaccinations — services that are generally considered high-value but low-profit.

“As policy makers consider reforms to the 340B program, this study helps provide evidence that, unlike the experience at many private hospitals, 340B may be working as originally intended in federally supported clinics.” says Elizabeth Watts, SPH doctoral student and lead study author. “The results suggest that FQHCs may be using 340B revenues to enhance safety-net care to vulnerable populations, and that any reforms to the program should consider the different ways private hospitals and FQHCs are participating in the program.”