For people living with chronic illnesses—like HIV, hypertension, or arthritis—consistent access to medication is essential. But for many working-class families, affording prescriptions can feel like choosing between staying healthy and putting food on the table.
A federal safety-net program known as 340B was created to ease that burden. It allows qualifying clinics and hospitals to purchase prescription medications at discounted prices and use the savings to improve care or reduce drug costs for patients. In its original form, 340B was a lifeline for low-income and medically underserved communities.
But the program has gone off course. Over time, 340B has been hijacked—not by patients or the providers who serve them—but by large national pharmacy chains that have found ways to turn the program into a profit engine.
These chains partner with healthcare centers as “contract pharmacies” to dispense 340B drugs. While the drugs are purchased at steep discounts, the pharmacies get reimbursed at full price—and keep the difference. A recent analysis found that contract pharmacies make more than three times the profit on 340B drugs than they do on standard prescriptions. That’s money that was meant to help patients—not line corporate pockets.
Since 2010, the number of 340B contract pharmacy arrangements has grown by more than 2,400%. But this massive growth hasn’t improved access to care in the places that need it most. Only 23% of these pharmacies are located in federally designated medically underserved areas. Many are concentrated in more affluent, predominantly white neighborhoods—and increasingly, they aren’t even in the same state as the clinics they’re supposed to serve.
In California alone, 340B entities have signed more than 3,500 pharmacy contracts, and 40% are with out-of-state pharmacies. That’s not just a regulatory loophole—it’s a missed opportunity to expand access to care in communities like ours.
Some Angelenos live in areas with inadequate access to healthcare. When patients have to travel long distances to fill prescriptions, they face additional costs, logistical barriers, and higher risks of missing doses.
Recent efforts to expand 340B—such as California’s AB 1460—miss the mark. While the bill’s intent may be to improve access, it fails to address the core shortcomings of the current 340B system. It does nothing to require contract pharmacies to pass along savings to patients, or to prioritize reinvestment in underserved communities.
Analysis shows that only 1.4% of patients at contract pharmacies receive a discount on 340B brand-name medications. Meanwhile, charity care by major 340B entities in California continues to decline—even as revenues rise.
If we’re going to strengthen the 340B program, patients—not pharmacy chains—should benefit from the program’s discounts. And, underserved communities in Southern California, not just high-income ZIP codes, must be the focus of any expansion.
Unfortunately, Assembly Bill 1460 would allow the most egregious abuses of the 340B program to persist without oversight. It fails to require contract pharmacies to pass along savings to patients, or to prioritize reinvestment in underserved communities. These shortcomings have united a broad, bipartisan coalition of concerned stakeholders. Notably, the Service Employees International Union (SEIU) has recently expressed concern about the lack of transparency regarding how 340B savings are being used.
The fight for patients with chronic conditions has always been about more than just medication—it’s about dignity, equity, and access. Assembly Bill 1460 is not the solution patients need. Legislators must reject this bill, especially those in underserved communities will continue to fall through the cracks.
Jax Kelly is Founder, President & CEO of the Aging and HIV Institute (A&H), a California-based think tank focused on bridging aging and HIV service systems through policy advocacy and community collaboration.
