Albany gave safety-net hospitals a sweetheart deal decades ago. A lot of those hospitals turned around and used it to buy competitors, fatten balance sheets, and leave low-income patients to sort out their own drug costs.
That’s what’s driving a bitter fight over New York’s handling of the federal 340B Drug Discount Program. The program was built to let safety-net hospitals buy prescription drugs at deep discounts and pass those savings along to poor patients. The State Senate’s current budget proposal, critics say, doesn’t come close to fixing what’s broken.
Start with the numbers, because they don’t lie. Just 29% of 340B funds in New York are landing in ZIP codes below the state median income. Read that again slowly. A program designed from the ground up to serve low-income patients is routing nearly three-quarters of its money into areas that aren’t even poor by the state’s own definition.
It gets uglier from there.
Between 2014 and 2022, hospitals in the 340B program saw their total assets jump by 38%. Charity care, the very thing hospitals point to when justifying their place in the program, dropped by 29% over that same window. Today, 85% of these hospitals deliver charity care at rates below the national average. The hospitals got richer. The patients they’re supposed to serve got less.
“The financial incentives associated with 340B directly impact what a cancer patient pays for their care, the higher the cost of the drug used, the greater the amount cancer patients pay in cost sharing,” said a researcher cited in an American Cancer Society study on the subject. That’s not a footnote. That’s the program’s logic working against the people it’s supposed to protect. Cancer patients are being steered toward expensive treatments because that’s where the hospital’s financial interest sits.
The consolidation angle is just as bad. From 2016 to 2022, 75% of organizations acquired by large hospital systems were 340B facilities. These networks haven’t been buying up sites to reach more low-income communities. They’ve been acquiring them to lock in the program’s financial incentives, squeezing independent pharmacies and neighborhood clinics out of the picture in the process. Government health plans in New York are losing roughly $89 million a year as a result of how the program is being exploited.
None of this is hidden. amNewYork has been tracking the debate over the Senate’s budget language for months. What’s missing isn’t information. It’s political will.
The State Senate’s budget proposal doesn’t close the loopholes that let large hospital systems drain the program dry. It doesn’t add transparency requirements. It doesn’t create any mechanism to verify that discounts are reaching patients at the pharmacy counter rather than vanishing into a hospital system’s operating budget. Right now, a hospital can save millions through 340B and face zero obligation to tell anyone where that money went. Not regulators. Not patients. Nobody.
That’s a serious problem when you consider what’s coming. Federal Medicaid dollars are tightening. The cost of living in this city isn’t dropping. The patients who were supposed to benefit from 340B, the ones without coverage options and without political connections, are the last ones anyone in Albany seems worried about protecting.
From 2014 to 2022, the program’s beneficiaries got 29% less charity care while the institutions running the program got 38% wealthier. That’s not a rounding error. That’s a policy failure that’s been sitting in plain sight for years, and the Senate’s current budget language does nothing meaningful to correct it.
What happens next depends on whether Albany decides to treat this as a real problem or a talking point. The budget process won’t wait forever. And the patients who can’t afford to wait won’t get a second shot if this budget cycle closes without reform.