20-05-2025
Tax breaks, drug discounts — and no receipts: The 340B abuse you're paying for
OHSU Hospital is located on Marquam Hill in southwest Portland. (Lynne Terry/Oregon Capital Chronicle)
Beyond providing quality health care, tax-exempt hospitals have substantial responsibilities to the public. These hospitals not only avoid nearly all taxes — they also reap billions of dollars in financial benefits from a federal prescription drug program known as 340B.
The 340B drug discount program was created in the 1990s to help low-income Americans access affordable medications and to support healthcare providers in underserved areas. But today, those drug discounts are being captured by corporate hospital systems and big box pharmacies, with no guarantee patients benefit at all.
So, while Oregon hospitals are supposed to use 340B savings to improve access to affordable care for patients in need, there are significant questions as to whether they are meeting their obligations. We do know they are devoting less of their resources to charity care than the national average.
And Oregon's big health systems are not exactly putting a damper on the doubts as they continue to fight to keep their finances and policies hidden from public view. Oregon Health & Science University (OHSU) and another U.S. hospital recently sued the federal government to block an audit on how the hospitals are handling their 340B dollars.
This isn't an isolated case. It's part of a disturbing pattern across Oregon's tax-exempt 340B hospitals. Just look at Providence Health:
Providence had to refund over $20 million in medical bills to low-income residents and cancel another $137 million in medical debt because of its over-aggressive debt collection practices, which were so egregious they warranted a feature in the New York Times describing how patients' lives were ruined.
The hospital system was then accused with stonewalling an investigation by the Oregon Department of Justice into similar debt collection practices.
And then, Providence – which, again, is supposed to be using its tax benefits and 340B resources to improve care to local communities – is attempting to sell its home health and hospice operations to an out-of-state private equity firm which could diminish care for thousands of Oregon residents.
Hospitals are vital pillars of our communities. They are so important that it makes it all the more distressing when hospitals focus more on their financial bottom line than on keeping Oregonians healthy. A recent investigation by the U.S. Senate revealed that hospitals are collecting revenue through the 340B drug program, but fail to share those savings with their patients.
The program is in dire need of reform but big hospitals and PBMs don't want to see alterations anytime soon. That's why they are lobbying state legislatures around the country to increase their access to 340B discounts. In Oregon, they're pushing House Bill 2385, expanding their access to 340B profits while doing nothing to ensure transparency or community benefit. This misguided bill doesn't protect patients. It protects powerful corporate institutions and undermines public trust.
When hospitals benefit from taxpayer support, they have a duty to show how those dollars are used. Oregonians deserve answers. It's time for hospitals to open their books and prove they are truly serving the public — not exploiting the system for financial gain.
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