Updates to 340B and What Pharmacists Need to Know

The 340B Drug Pricing Program is a federally mandated drug pricing program created by Congress in 1992 that allows certain health care organizations (called covered entities) to purchase specific outpatient drugs at significantly discounted prices. The core intent is to help these providers “stretch scarce resources” so they can serve low-income and underserved patients, reach more patients, and provide more comprehensive services in their communities.

However, despite its original intent, the program faces various challenges in the shape of manufacturer restrictions, legal and regulatory uncertainty, administrative burens, and compliance risks. As restrictions, litigation, and reimbursement cuts stack up, 340B savings shrink.

Obstacles That Undermine the 340B Program

Manufacturer restrictions play a significant role in limiting the reach of the 340B program. They accomplish this by limiting the number of contract pharmacies a covered entity can use, restricting which pharmacies/locations can receive 340B drugs, and requiring submission of detailed claims or medical data as a condition for 340B pricing.

In short, this reduces access to medications and the cost savings needed for covered entities to “stretch resources” and fund services, including support for community health initiatives and reducing patient out-of-pocket costs. This leaves patients without access to crucial care.

The 340B program is surrounded by legal and regulatory uncertainty as ongoing litigations address contract pharmacy restrictions, rebate model structures, and Health Resources and Services Administration (HRSA) authority. Outcomes in the courts across the country are mixed. Some decisions favor manufacturers’ flexibility, while others suggest there are limits when conditions become too burdensome or conflict with statute. This leaves covered entities in an unstable policy environment—complicating operational planning because rules may change with court decisions or new guidance.

“When we look at this decade is where we start to see legal battles occur… drug manufacturers began limiting 340B discounts and enacted certain requirements and restrictions for covered entities,” said Marco Martino, PharmD, BCOP, BCPS, JD, MBA, a health care consultant with Advis, during a presentation at the 2026 Hematology/Oncology Pharmacy Association Annual Conference. “Additionally, today, in this decade, we're starting to see more legislation come through in both on the federal side and the state side.”

The administrative burden and compliance risk presents another obstacle for pharmacists as they attempt to maintain access to 340B pricing under new models, especially where rebates or data submissions are involved. Covered entities struggle to capture and integrate complex data, meet tight submission timelines, and reconcile rebates and manage disputes. These administrative tasks require IT investment, specialized staff time, and ongoing compliance and audit presentation—presenting numerous financial, staffing, and time challenges.

State Legislative Responses

Various efforts are being made to address the obstacles on both the state- and federal-level. State-level legislative responses to 340B are dedicated to 2 things: Protecting 340B access at contract pharmacies and increasing transparency and reporting requirements. Many states have introduced or passed laws aimed at blocking or limiting manufacturer restrictions on 340B pricing, especially for contract pharmacies (Table).

Not all state efforts are purely protective. Some state legislative efforts are intended to address transparency and reporting requirements, requiring covered entities to submit additional data—such as utilization and savings use—as a way to increase accountability around how 340B savings are spent. These efforts are often framed as a response to concerns about "bad actors" within the program.

Several states have pending or proposed bills along these lines. Texas has introduced legislation that prohibits discrimination against covered entities and pharmacies in the 340B context. North Dakota has focused on increased reporting, requiring covered entities to submit additional data. Oregon and Illinois are among other states with relevant legislation in progress.

A common theme across many of these efforts is a mix of 2 competing priorities: protecting contract pharmacy access to 340B pricing on one hand, and introducing trade-offs in the form of greater reporting and transparency requirements on the other.

Federal Legislative Responses

At the federal level, the legislative landscape around 340B is best described as a patchwork of proposed bills, with no comprehensive reform yet enacted. Many proposals remain stalled in Congress.

Manufacturer-Leaning and Transparency-Focused Bills

Several federal proposals have been driven largely by manufacturer interests, centering on increased reporting and transparency obligations for covered entities.

The SUSTAIN Act represents the most expansive of these efforts. It would require covered entities to report significantly more information about how 340B savings are used, the types of patients they serve, and a range of other operational and financial metrics. While transparency is a broadly appealing concept in principle, advocates for covered entities have raised serious concerns: the volume and granularity of data the SUSTAIN Act would require could be administratively burdensome to the point that many entities simply would not be able to collect all of it, making compliance a daunting prospect.

The PROTECT Act functions as a somewhat scaled-back version of the SUSTAIN Act. It retains the focus on transparency and reporting but attempts to be less sweeping in scope, though it would still impose meaningful administrative load on covered entities. Similarly, the 340B Reporting and Accountability Act represents another variant in this category, aimed at codifying reporting requirements and strengthening oversight tools. Taken together, these bills share a common thread: greater scrutiny of covered entities and how they operate under 340B, rather than of manufacturers.

It is worth noting the forces driving this narrative. Media coverage and third-party investigations have raised questions about whether some covered entities use 340B primarily to generate margin rather than to deliver direct patient and community benefit. These legislative proposals respond to that narrative by tightening requirements on covered entities.

Covered-Entity-Leaning Bills

On the other side of the debate, some federal proposals are more supportive of covered entities and aimed at protecting access to the program while limiting manufacturer restrictions.

The PATIENTS Act is the primary example. It would explicitly codify expanded use of contract pharmacies in statute, supporting what is sometimes called the "unlimited contract pharmacy" model. The bill would prohibit manufacturers from imposing many of the restrictions they have increasingly placed on contract pharmacy arrangements and would establish significant monetary penalties for manufacturers that violate these protections.

Litigation Overlay

It is crucial to acknowledge that every state that has passed strong 340B-protective legislation has faced a legal challenge from drug manufacturers. The central argument manufacturers raise is federal preemption—the claim that because 340B is a federal program, states do not have the authority to dictate manufacturer behavior within it.

So far, courts have largely sided with the states, particularly under the framework established by the Arkansas case and affirmed by the Eighth Circuit. However, meaningful challenges remain. Enforcement is still politically and practically difficult, and some Attorneys General have been hesitant to aggressively pursue penalties against manufacturers while litigation and appeals continue to work their way through the courts.

“One of the most important things is telling our story of why 340 B is important and how we use it to benefit patients and the communities,” said Anthony Trovato, PharmD, BCPS, MS, 340B ACE, a 340B program pharmacist at the University of Utah Health. “So that's how you're going to be successful in passing these bills.”

The 340B Rebate Model

It is important to distinguish the HRSA-driven 340B rebate pilot from the manufacturer-initiated rebate actions that companies like Eli Lilly and Johnson & Johnson have pursued independently. The model discussed here is the one proposed by HRSA itself, and it represents a more fundamental structural shift in how 340B pricing would work.

Under the current system, covered entities receive an upfront discounted price at the point of purchase. The proposed HRSA model would change that entirely. Instead of receiving the 340B discount at the time of sale, covered entities would purchase drugs at Wholesale Acquisition Cost (WAC), essentially the list price—and then submit detailed data to demonstrate that a given claim is 340B-eligible. Only after that verification process would they receive a rebate equal to the difference between what they paid and the actual 340B price. In other words, covered entities would be required to front the full cost of the drug and wait to be made whole.

In its initial form, the model would apply to a subset of drugs—specifically mirroring the ten Part D drugs subject to Medicare Drug Price Negotiation under the Inflation Reduction Act (IRA) in 2026. Rebate processing would run through the Beacon platform, the same vendor that operates the 340B ESP system already familiar to many covered entities.

HRSA has articulated 2 primary goals for the model. The first is to give manufacturers a clearer mechanism for identifying which claims are 340B-eligible versus which are not. The second is to prevent duplicate discount—specifically, the concern that the same drug transaction could trigger both a 340B discount and a rebate under the IRA's Maximum Fair Price program, effectively giving covered entities a double benefit that the statute does not intend.

Challenges Associated With the Rebate Model

The most immediate concern for covered entities under the rebate model is financial. Because entities must purchase drugs at WAC upfront and wait for reimbursement, they face significant working capital strain. Although the model was designed with a roughly 10-day rebate turnaround in mind, early experience with IRA Maximum Fair Price rebates suggests payments can take 28 days or more—and longer still when claims are disputed. For smaller, rural, or financially fragile hospitals, floating those costs may simply not be feasible.

The administrative burden is equally significant. Covered entities must submit detailed claim-level data across multiple platforms each with its own file formats, submission rules, and reconciliation processes. Medical claims are particularly difficult, as the data often live across disconnected billing and clinical systems. One large academic medical center reported spending more than 50 staff hours per week managing just the 10 IRA-negotiated drugs. Compounding this is a strict 45-day submission window: if a claim is not fully processed and submitted in time, the rebate is lost permanently even if the patient and drug were otherwise eligible.

Taken together, these challenges raise a deeper concern about whether the model is consistent with the program's core purpose. The rebate structure shifts financial risk and administrative workload onto the very entities 340B is designed to support, and the costs of compliance can erode the savings the program is meant to generate for low-income and underserved patients.

The Pharmacist's Role in Protecting 340B

Pharmacists are uniquely positioned to support their institution's 340B program, both operationally and strategically. Pharmacy systems are often the most reliable source of clean, timely claims data—and as rebate models and manufacturer restrictions increase, the importance of rapid, accurate submissions, pharmacists and pharmacy informaticists play a central role in building the automated feeds and reconciliation workflows crucial for keeping the program functioning. Pharmacists also serve as a frontline resource for identifying eligible patients, ensuring proper drug classification, and maintaining audit readiness across an increasingly complex landscape of platforms and requirements.

Beyond operations, pharmacists are well-suited to make the case for 340B internally and externally. They see firsthand how 340B savings fund clinical pharmacy staff, prior authorization support, patient assistance programs, and access to medications that would otherwise be out of reach for vulnerable populations. That ground-level knowledge is exactly what is needed when engaging legislators, health system leadership, or community stakeholders. Pharmacists can help quantify the program's impact and contribute to the kind of community benefit reporting that counters the narrative that 340B is simply a revenue tool.

Ultimately, 340B's future will be shaped by the people who understand it best and are willing to advocate for it. Pharmacists, as both stewards of the program's integrity and witnesses to its patient impact, have both the credibility and the responsibility to be active voices in that effort — whether at the state capitol, in response to a federal RFI, or at the bedside.

REFERENCES

Martino M, Beechy J, Trovato A. Updates to the 340B drug pricing program. Presented at: 2026 HOPA Annual Meeting. March 26-28, 2026. New Orleans, LA.