Study: New York Hospitals Using Federal Drug Discount Profits for Investments, Not Patient Care
- Mar 19
- 2 min read
MILWAUKEE (March 19, 2026) -- New York hospitals participating in the federal 340B Drug Discount Program are generating substantially higher revenues and directing large sums into Wall Street investments rather than expanding care for vulnerable patients, according to a new analysis by Dr. Lisa Grabert, a health policy researcher at Marquette University and former senior House Ways and Means Committee aide.
The study finds that New York's 340B hospitals invested 42% more revenue into stocks and bonds than non-340B hospitals, with average investments of $191 million compared to $95.4 million at non-340B facilities.
"The 340B program isn't working the way it was intended for New York families," said Grabert. "Too many hospitals are using the program to boost revenues and build investment portfolios instead of expanding access to care for low-income and uninsured patients"
The 340B Drug Pricing Program allows safety-net hospitals to buy deeply discounted medicines and bill insurers and other payers at higher prices, with the expectation that resulting profits will be reinvested in care for underserved communities.
Grabert's analysis suggests that many New York hospitals are instead using the program as a profit center. The research draws on publicly available data on hospital revenue growth, financial investments, charity care, and workforce spending.
Among the study's key findings:
Hospitals use 340B as a profit engine.
New York's 340B hospitals reported average revenue of $932 million, more than double the $423 million reported by non-340B hospitals.
One 340B hospital charged patients about $55,000 for a cancer drug -- 12.5 times the average Medicare price.
340B profits flow into Wall Street investments.
New York's 340B hospitals invested an average of $191 million in stocks and bonds, compared with $95.4 million at non-340B hospitals.
Charity care does not increase proportionally.
Despite significantly higher revenues, NY 340B hospitals dedicated a percentage of charity care that is no different than that provided by non-340B hospitals
Frontline caregivers do not share in the savings delivered by 340B.
On average, 340B hospitals paid contract workers nearly double what they paid their full-time employees.
One hospital paid its CEO more than $15 million -- 163 times what the average nurse earns.
"Policymakers ought to take a long, hard look at how hospitals are using 340B funds today," Grabert said. "If the goal is to help vulnerable patients afford care and medicine, the program is not delivering."
"It's troubling to see many New York hospitals directing their enormous funds into Wall Street investments instead of helping vulnerable patients as intended by the 340B program," said Dr. Mike Kapsa, a member of the board of directors of Community Action for Responsible Hospitals, the nonprofit coalition that sponsored the research. "New Yorkers deserve transparency and accountability to ensure these resources actually improve access to care."
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