Are 340B Covered Entities Sacrificing Affordable Care for Executive Compensation?

By: Brandon M. Macsata, CEO, ADAP Advocacy, Guy Anthony, Chair, ADAP Advocacy 340B Patient Advisory Committee, and Marcus J. Hopkins, Health Policy Lead Consultant, ADAP Advocacy

The 340B Drug Pricing Program was founded on a straightforward accountability agreement: in return for significant discounts on outpatient medications, safety-net providers would “stretch scarce federal resources” to make healthcare more accessible and affordable for those most in need. However, as eligibility for the 340B Program has broadened and revenues have soared, a pressing concern has emerged: are some covered entities diverting a patient-focused initiative to fund executive compensation (CEO compensation at hospitals increased by an average of 197.2%, while compensation for CEOs at organizations that provide care for patients living with HIV/AIDS increased by 219.9%) rather than reducing costs, expanding services, and supporting vulnerable communities?

The long and short of it is YES.

Since 2023, ADAP Advocacy, in collaboration with the Appalachian Learning Initiative (APPLI) and the Community Access National Network, has audited Form 990 federal filings with the Internal Revenue Service, which have uncovered troubling trends. It involved a multi-year audit of 170 organizations eligible to participate in the 340B Program as “covered entities”—non-profit healthcare providers of various types who qualify to purchase certain outpatient prescription drugs at significantly lower prices, sell them to lower-income and poor patients, and receive rebates from pharmaceutical companies for the difference between the list price of those drugs and the purchase price (Figure 1). 

The program’s financial gains are increasingly benefiting executive leadership rather than bedside care. We believe that a program designed to stretch scarce resources shouldn’t be stretching paychecks faster than it stretches care.

What we’ve discovered has been astonishing.

Across 170 covered entities audited (all averages exclude outliers):

• Annual revenues after the first year of eligibility increased from the year prior to receiving eligibility by an average of 12.2%, while annual CEO compensation increased by an average of 28.9%.
• From the year prior to eligibility to the most recent 990s on file, annual revenues increased by an average of 609.5%, while annual CEO compensation increased by an average of 221.3%.
• CEO compensation at hospitals increased by an average of 197.2%, while compensation for CEOs at organizations that provide care for patients living with HIV/AIDS increased by 219.9%. Similarly, at other types of organizations, including (but not limited to) Federally Qualified Health Centers, Consolidated Health Centers, and STD clinics, CEO compensation increased by an average of 230.4%.

All data from ADAP Advocacy’s findings are available online at https://340bmap.org.

Figure 1 – The Complex Ecosystem of 340B Drug Pricing

Photo Source: Martin, 2025

What differentiates HIV care providers who run AIDS Drug Assistance Programs (ADAPs) under the Ryan White HIV/AIDS Program is that ADAP providers are required to report detailed records about the amounts of 340B revenue they receive and how those revenues are used. Many of these ADAPs also operate under a rebate model rather than the upfront payments used by nearly all other covered entities participating in the program. They’ve successfully used these rebates to expand access to care and treatment, while remaining accountable. 

Essentially, they’re required to show their work.

Hospitals, however, are not required to provide any public-facing information about their 340B drug sales, revenues, or how those revenues are used, which has repeatedly led to those revenues—statutorily required to be used to improve the access and affordability of healthcare services for poor patients—being misappropriated for other purposes, including the opening or acquisition of new facilities (known as “child sites”) in affluent neighborhoods where profits will be higher, unnecessary, decorative construction inside hospitals, to increase CEO and other executives’ salaries, and other purposes.

In fact, 10 of the 104 hospitals we audited saw CEO compensation increase by 500% or more from the year prior to their eligibility for the 340B program to their most recent filings, with one hospital increasing its CEO compensation by 2,803.8% in just 16 years.

It is symbolic of a larger trend within the hospital ecosystem, as eloquently noted by Dutch Rojas in a recent Substack post in The Rojas Report: The Charity That Pays Like Wall Street. Supplemental Executive Retirement Plans, or SERPs, are "how nonprofit hospitals pay their executives more than Wall Street pays its bankers" (Rojas, 2025).

Meanwhile, the United States faces a critical national nursing shortage that will leave American citizens at significant risk. This shortage will increase as a result of recent moves by the Trump Administration to declassify nursing as a “professional” degree, thus making it more difficult for aspiring nurses to receive student loans. And all of this while CEOs—who virtually never engage with actual patients or provide any sort of healthcare service—are able to demand salaries so high that most Americans cannot conceive of the number, and nobody blinks an eye.

We argue that 340B dollars, regardless of the covered entity eligible to receive them, should be directly tied to improving patient access and affordability. One way to improve services, for example, would be to use those funds to hire more nurses. Or increase the pay of the existing nurses. Alternatively, keep rural hospitals open rather than closing and consolidating them.

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.

References:

[1] Martin, K. (2025, August 06). The 340B Drug Pricing Program: How It Works and Why It’s Controversial. Commonwealth Fund. https://doi.org/10.26099/210h-wv98

[2] Rojas, Dutch. (2025, January 29). The Charity That Pays Like Wall Street. The Rojas Report. https://dutchrojas.substack.com/p/the-charity-that-pays-like-wall-street?utm_campaign=email-post&r=3z1yhv&utm_source=substack&utm_medium=email