HR5256-119

What This Bill Does

This bill reforms the 340B Drug Pricing Program, which allows certain hospitals and clinics serving low-income patients to purchase prescription drugs from manufacturers at significantly reduced prices. The reforms aim to increase transparency, tighten eligibility requirements, prevent duplicate discounts, and ensure that drug pricing savings actually benefit patients rather than being retained by hospitals and pharmacies.

Who Benefits and How

Low-income and uninsured patients are the primary intended beneficiaries. The bill requires hospitals to establish sliding fee scales ensuring eligible patients pay no more than a maximum out-of-pocket amount for 340B drugs, directly passing savings to patients who need them most.

Drug manufacturers benefit from greater transparency and oversight of the program. The bill creates a claims data clearinghouse to prevent duplicate discounts (where both 340B pricing and Medicaid rebates are claimed on the same drug), reducing manufacturer losses from program abuse.

Pharmacy benefit managers, health insurers, and group health plans receive legal protection from being required to give preferential treatment to 340B covered entities, while also being prohibited from discriminating against them.

Who Bears the Burden and How

Hospitals participating in the 340B program face significantly increased compliance burdens. They must submit detailed annual reports on drug purchases, revenues, charity care, and patient demographics. They must demonstrate enforceable contracts with state or local governments to serve low-income patients. New hospitals registered after December 1, 2024 may face barriers to program entry.

Contract pharmacies (independent pharmacies that dispense 340B drugs on behalf of covered entities) face new compliance requirements, fee limitations, and potential penalties including removal from the program for violations.

Third-party administrators providing 340B services face strict limitations on fees they can charge, which must be flat dollar amounts not tied to drug prices or discounts.

Key Provisions

• Patient affordability mandate: Hospitals must establish sliding fee scales so eligible low-income patients pay no more than a defined maximum out-of-pocket cost for 340B drugs

• Hospital child site requirements: Off-campus outpatient facilities must meet specific requirements to participate in the program, including being located within 35 miles of the parent hospital and accepting Medicaid

• Claims data clearinghouse: Creates a third-party clearinghouse to track 340B claims and prevent duplicate discounts between 340B and Medicaid

• Transparency reporting: Hospitals must submit detailed annual reports including charity care amounts, revenue from 340B drug sales, and how savings were used

• Contract pharmacy limitations: Caps fees, requires compliance procedures, and establishes penalties including program removal for violations

• State preemption: Federal 340B rules supersede any conflicting state or local laws regarding the drug discount program