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340B Legislative Updates and Key Trends Impacting Covered Entities

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340B Legislative Updates and Key Trends Impacting Covered Entities

CPS 340B Solutions hosted a roundtable webinar exploring current events impacting the drug pricing program.


On April 12, 2022, the CPS 340B Solutions team presented a roundtable discussion with the goal of examining recent legislative updates and key trends impacting hospitals, Federally Qualified Health Centers (FQHCs), and other designated entities.



  • Ted Slafsky, publisher and CEO of 340B Report and founder of Wexford Solutions, a consulting firm that provides public policy intelligence, business development guidance, and communication services
  • Jason Reddish, partner, Feldsman Tucker Leifer Fidell LLP (FTLF) that has represented the interests of FQHCs, Ryan White HIV/AIDS program clinics, and other federal grantees
  • Todd Hudnall, Vice President of 340B Solutions for CPS
  • Kelly Kolker, Executive Vice President of 340B Solutions for CPS and moderator for the roundtable



  • Contract pharmacy and its history in the 340B program
  • Current manufacturer restrictions and requirements related to contract pharmacy
  • Current litigation as related to drug manufacturer restrictions as related to contract pharmacies and how that litigation is expected to be resolved
  • Federal and state legislative solutions and their expected impact on 340B covered entities (CEs)


Todd Hudnall opened the roundtable with an overview of CPS 340B Solutions. He noted that CPS partners with more than 2,500 professionals while serving more than 800 partner facilities to provide the following:

  • 340B Assist to scrutinize 340B programs to reveal opportunities
  • 340B Audit to help CEs stay prepared for the inevitable audit
  • 340B Continuous Readiness Program that maintains preparedness and peace of mind
  • 340B Optimization and Referral Capture that identifies eligible prescriptions from external clinic visits

A Brief History of Contract Pharmacy

Jason Reddish followed with a brief history of contract pharmacy, noting that from 1996 through 2020, every drug manufacturer participating in the 340B program participated in shipping covered outpatient drugs to contract pharmacies. In 2020, some manufacturers began to impose restrictions and requirements on 340B drugs sent to contract pharmacies.

He went on to say:

“As stated in the 1992 340B statute, CEs are entitled to purchase outpatient drugs at or below the 340B ceiling price and cannot sell or transfer those drugs to anyone other than their patients. Many of the original CEs that were established when the 340B program began, such as Ryan White clinic sites, did not have an in-house pharmacy.”



  • In 1996, HRSA recognized the right of CEs to hire one contract pharmacy as a vendor to dispense their 340B drugs only if they lacked an in-house pharmacy
  • In 2010, HRSA expressly recognized the right to hire as many pharmacies as needed, leading to the entry of chain pharmacies and others in providing access to 340B drugs
  • In addition, the Affordable Care Act, which expanded the Medicaid Drug Rebate Program to MCO-covered drugs, increased access to insurance and admitted rural hospitals into the 340B program

Reddish then noted that since June of 2020, a number of drug manufacturers began imposing restrictions and requirements related to contract pharmacies and 340B drug pricing. To date, 15 pharmaceutical manufacturers have restrictions in place for 340B pricing for contract pharmacies. Because the 340B statute does not speak to restrictions imposed by drug manufacturers, the CE view is that all purchases must be honored. The manufacturer view is that restrictions can be imposed, citing concerns over potential duplicate discounts.

Current Litigation

Reddish identified litigation around the issue of manufacturer restrictions and requirements related to 340B, including:

  • NACHC and Ryan White Clinics sued HRSA in late 2020 to force HRSA to implement the Administrative Dispute Resolution Process, which allows CEs to bring overcharge claims against manufacturers directly
  • Genesis Health Care sued HRSA over its application of the patient definition; this suit is currently in federal appeals court
  • Eli Lilly, AstraZeneca, Sanofi, Novartis, Novo Nordisk, United Therapeutics, and Boehringer Ingelheim all sued HRSA to invalidate a December 30, 2020, HHS advisory opinion that concluded that withholding drug sales is illegal and May 2021 letters threatening enforcement action

Federal and State Legislative Solutions

Ted Slafsky pivoted to an overview of federal and state legislative solutions in the works, including the Protect 340B Act, a bipartisan bill submitted to the House of Representatives intended to address the issue of discriminatory reimbursement to 340B pharmacies and providers.

Slafsky noted that HRSA has begun contacting hospitals forced out of 340B during the COVID-19 pandemic regarding possible reinstatement, and explained that a recent bill creates eligibility exceptions to support these CEs.

He also stated that HRSA has asked Congress for regulatory authority, which would allow them to publish regulations in the areas of contract pharmacy, patient definitions, and other places where HRSA does not currently have authority.

Regarding state legislation, Slafsky shared that 18 states have been active in passing legislation that reforms PBM practices and laws that protect 340B CEs. These include anti-pickpocketing laws that prevent PBMs from paying 340B CEs less than non-340B entities. Some bills address additional issues such as payer requirement to tag 340B drugs at the point of sale.


The Protect 340B Act, a bipartisan bill submitted to the House of Representatives intended to address the issue of discriminatory reimbursement to 340B pharmacies and providers.


Interested in more information on how CPS 340B Solutions can partner with your organization to DRIVE EXCELLENCE FOR YOUR 340B PROGRAM?


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