The Program:

The program, known as 340B, requires most drug companies to provide hefty discounts — typically 20 to 50 percent — to hospitals and clinics that treat low-income and uninsured patients…

The Loophole:

The program allows hospitals to use the discounted drugs to treat not only poor patients but also those covered by Medicare or private insurance. In those cases, the hospital pockets the difference between the reduced price it pays for the drug and the amount it is reimbursed…

The Payoff:

When a private oncology practice in Memphis formed a partnership with a nearby hospital in late 2011…


The nation’s new health care law will make more hospitals eligible for the discounts by increasing the number of Medicaid patients they treat, even as the need for the discounts should arguably diminish because fewer people will be uninsured.


Some oncologists say the 340B program is one reason that more than 400 oncology practices have become part of hospitals in the last several years.

Full story on the 340B program in The New York Times.