When Jamie O'Neill opened his pharmacy bill and didn't see a charge for his diabetes medication, he thought it had to be a mistake.
For years, the $350 drug charge had shown up every few months. O'Neill, a retired community college English professor living in Sacramento, had even stopped taking the medication for a time because of the high cost.
"It's outrageously expensive," O'Neill, 82, complained.
Then one day, the charge for his Jardiance tablets simply disappeared.
The savings came through UC Davis Health's outpatient pharmacy, which enrolled him in a program that covered the entire cost. O'Neill is one of thousands of UC Davis Health patients — and millions across the country — who are benefiting from a little-known federal program called 340B. It allows hospitals and health centers to purchase medications at discounted rates. Hospitals then use the savings to cover medication costs for patients, such as O'Neill, who struggle to pay for expensive drugs.
O'Neill said he is grateful that UC Davis Health registered him for the discount program, and then he quipped, "because it reduces my sense of irritation, which I have for an old guy."
The 340B program is not just a financial mechanism - it is a lifeline for our patients and a cornerstone of our mission." -Mike Condrin, interim chief executive officer, UC Davis Health
How 340B supports UC Davis patients and the community
The 340B program was created by Congress in 1992. It requires pharmaceutical companies to sell outpatient drugs at a discount to safety-net hospitals, such as UC Davis Medical Center, which serve a lot of uninsured and government-insured patients. The hospitals qualify for the program because they typically lose money when providing high levels of care to individuals with low incomes.
Hospitals use the savings not only to offer free and low-cost medications. The savings also fund many programs and services for uninsured or underinsured people. These include:
- Community health screenings
- Subsidized chemotherapy and immunotherapy services
- Personalized pharmacy appointments for patients with serious and chronic medical conditions
- Critical care ambulance rides for children who need transportation to UC Davis Medical Center from hospitals throughout Northern California
- No-cost nicotine therapy for people trying to quit smoking
- Free preventive care procedures such as colonoscopies and mammograms
- Support for a street medicine program that cares for unhoused people
"The 340B program is not just a financial mechanism — it is a lifeline for our patients and a cornerstone of our mission," said Mike Condrin, interim chief executive officer for UC Davis Health.
"This program is pivotal in our efforts to provide comprehensive care for a diverse array of challenging conditions," Condrin added. "It reinforces our commitment to being a safety-net provider, ensuring that every patient receives the necessary care, irrespective of their financial situation."
In fiscal year 2024, the 340B program saved UC Davis Health $289 million — an amount that directly helped patients and the community.
Saving on medications supports healthier living
The beneficiaries include people like Patricia Davis, a longtime Sacramento resident who receives free medications for chronic conditions and lives on disability income.
"Because I'm on a fixed income, it's pretty helpful that I don't have a co-pay to pay for my medication," said Davis, who was born at UC Davis Medical Center 61 years ago. "People on a fixed income like SSI, we don't get a lot of money to even pay for a $10 copay for our medication because that's money we can use for groceries — and it's important for us to eat healthy, exercise and not have to worry about where we are going to get the next meal from."
Saving on copays, she added, allows her to buy groceries that are recommended for her high blood pressure, diabetes and heart condition. "Organic vegetables," she noted, "are more expensive than a bag of potato chips."
UC Davis Health leaders say the experiences of Davis and O'Neill are exactly what the 340B program was designed to support.
This program is helpful not only for me, but for other patients who qualify, and I think they should keep it that way. I thank God for having such a beautiful care team that cares about me and my medication." -Patricia Davis, UC Davis Health patient
Hospitals defend 340B amid industry criticism
"Our involvement in the 340B program is a testament to UC Davis Health's dedication to advancing health for all," Condrin said.
Lately, the pharmaceutical industry has pushed back against the 340B drug pricing program, lobbying policymakers and regulators to modify the way it is implemented. They allege 340B is boosting the bottom lines of hospitals and for-profit pharmacies. But the American Hospital Association (AHA) counters that drugmakers spread misinformation about the program. AHA officials maintain that 340B is doing what it should: helping nonprofit safety-net hospitals stretch limited resources to expand care for vulnerable patients.
"Drastic changes to the program could jeopardize our ability to offer comprehensive services to those who rely on us," Condrin said. "We are committed to maintaining the integrity of the 340B program to continue supporting the health and well-being of our communities."
Davis, who is trying to manage her heart condition while waiting for Medi-Cal to approve a stent procedure, wants 340B to stay intact.
"This program is helpful not only for me, but for other patients who qualify, and I think they should keep it that way," she said. "I thank God for having such a beautiful care team that cares about me and my medication."
