{"id":12874,"date":"2026-04-24T23:51:16","date_gmt":"2026-04-24T23:51:16","guid":{"rendered":"https:\/\/medical-article.com\/?p=12874"},"modified":"2026-04-24T23:51:16","modified_gmt":"2026-04-24T23:51:16","slug":"340b-is-a-hidden-tax-expenditure","status":"publish","type":"post","link":"https:\/\/medical-article.com\/?p=12874","title":{"rendered":"340B is a Hidden Tax Expenditure"},"content":{"rendered":"

That is the argument made by Ike Brannon and Anthony Lo Sasso in a recent <\/a>Health Affairs Forefront<\/a><\/em> article<\/a>. 340B allows hospitals serving low income communities to purchase pharmaceuticals at discounted rates, but then receive full price reimbursement from payers (e.g., commercial insurers, Medicare). It is not clear that the 340B program even benefits low-income patients. The authors write:<\/p>\n

Crucially, the program does not require hospitals or clinics to pass 340B discounts on to patients. Instead, participating providers can purchase drugs at deeply discounted prices while continuing to bill insurers\u2014including Medicare and private payers\u2014at standard reimbursement rates. The resulting spread increases hospital revenue without any obligation to lower patient costs or expand access. <\/p>\n

The authors claim that 340B acts as a tax expenditure. What is a tax expenditure? <\/p>\n

Tax expenditures\u2026provide financial benefits through exclusions, deductions, or exemptions that reduce tax liabilities <\/p>\n

One example of a tax expenditure is employer-provided health insurance. These benefits employees receive are tax exempt\u2013whereas income earned at that same job is of course not tax exempt. Another example is the mortgage interest tax deduction. So why would 340B be a tax expenditure?<\/p>\n

As the volume of discounted sales increases, manufacturers\u2019 profits decline, lowering their federal tax liabilities. These losses are not offset by increased access to care; instead, they largely accrue to nonprofit, tax-exempt hospitals in the form of higher [hospital[ margins\u2026
Former CBO Director Crippen has\u00a0estimated<\/a>\u00a0that reduced pharmaceutical profits associated with 340B could lower federal tax revenue by as much as $200 billion over the next decade, which puts it not in the top tier of currently recognized tax expenditures, but comparable in magnitude to the tax preference for traditional individual retirement account contributions.\u00a0 <\/p>\n

In effect, 340B functions as a mandated transfer from taxable firms [pharmaceutical manufacturers] to tax-exempt entities [hospitals]\u2026 <\/p>\n

Who cares? Why does classifying the 340B as a tax expenditure matter? The authors state that
tax expenditure are routinely scrutinized by policymakers and government bodies around tax reform and budget deficits; specifically, reclassifying 340B as a tax expenditure would require an annual estimate of the program\u2019s revenue cost. <\/p>\n

You can read the full article here<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

That is the argument made by Ike Brannon and Anthony Lo Sasso in a recent Health Affairs Forefront article. 340B allows hospitals serving low income communities to purchase pharmaceuticals at discounted rates, but then receive full price reimbursement from payers (e.g., commercial insurers, Medicare). It is not clear that the 340B program even benefits low-income…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-12874","post","type-post","status-publish","format-standard","hentry","category-articles"],"_links":{"self":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/12874"}],"collection":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12874"}],"version-history":[{"count":0,"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/12874\/revisions"}],"wp:attachment":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12874"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12874"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12874"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}