OpEd: The Unintended Consequences of Expanding the 340B Program in Illinois (Chicago, IL) — The Greater Chicagoland Black Chamber of Commerce is deeply committed to the economic and civic well-being of our communities. A key part of this mission is ensuring that healthcare policies serve those who need them most. Unfortunately, recent legislative efforts in Illinois to expand the federal 340B drug program threaten to exacerbate existing inequities rather than solve them. While the 340B program was designed to support healthcare providers serving low-income and underserved populations, its unchecked expansion into wealthier communities and lack of transparency raise serious concerns about both healthcare equity and financial accountability.
Today the 340B drug program is the second largest federal drug program behind only Medicare Part D. What began as a program for clinics that primarily treated low-income populations has ballooned far beyond its original intent. Today, the opportunity to generate significant revenue through the program has resulted in large, tax-exempt hospital systems buying up smaller clinics to benefit from their 340B status. The unintended consequences of perverse incentives within the program and lax oversight by the federal government has led to rampant consolidation by large hospitals and little transparency when it comes to how hospitals are utilizing the revenue 340B brings in.
A major flaw of the program is the lack of oversight regarding how 340B revenue is used. Hospitals and healthcare systems participating in the program are not required to demonstrate that funds are used to directly benefit underserved populations. This means that some hospitals have taken advantage of the program to significantly markup medications, leading to increased profits without meaningful reinvestment in community health services. An investigation by the New York Times found a 340B hospital system in Virginia was taking the profits its generated from the 340B program an investing them into hospitals and clinics in more affluent areas. Research by the North Carolina Treasurer and more recently by Health Capital Group has found that 340B hospitals charge more for medicines and procedures than non-340B hospitals.
Furthermore, the expansion of 340B places an excessive financial burden on employers and the state. Specifically, according to a recent IQVIA report, the legislation introduced in Illinois would increase the cost to employers & workers from $224 million to $313 million. The more the program grows, the greater the potential for lost revenue, particularly as more hospitals seek to qualify for the program without necessarily serving low-income patients. This loss affects Medicaid and other state-funded healthcare programs, diverting critical resources away from truly vulnerable populations.
Without legislative safeguards, at the federal level, ensuring that 340B discounts are used to lower patient costs or improve healthcare services in underserved areas, expansion efforts in Illinois will only exacerbate current abuses.
Abuses within the 340B program have a disproportionate impact on predominantly Black communities and small businesses in the healthcare sector. Independent pharmacies and small healthcare providers, many of which serve predominantly Black and Brown communities, often struggle to compete with large hospital systems that can take advantage of 340B discounts while engaging in practices that drive out local competition. This trend stifles economic opportunity within our communities and limits access to trusted, community-based healthcare providers.
The Greater Chicagoland Black Chamber of Commerce urges state legislators to prioritize policies that foster true healthcare equity. Expanding 340B without addressing its fundamental problems will only deepen existing disparities and impose unnecessary costs on the state and employers alike. The 340B program does need reforms, but they should occur at the federal level.
The Unintended Consequences of Expanding the 340B Program in Illinois
