Bipartisan Lawmakers Are Fighting HHS’ 340B Rebate Push

A bipartisan group of senators introduced a new bill this week aimed at boosting transparency and efficiency in the 340B Drug Pricing Program. Notably, the bill would put an end to HHS’ campaign for 304B rebates. 

A week ago, HHS, through the Health Resources and Services Administration (HRSA), unveiled a plan to reintroduce a program replacing upfront discounts with rebates for a subset of 340B drugs. This is not the first time HRSA has tried to instate a rebate model for 340B drugs — its original pilot was scheduled to go live on the first of the year, but courts blocked implementation before it could take effect, citing procedural and legal issues. 

The 340B program allows hospitals to buy outpatient drugs at steep discounts, with the goal of helping them fund care for low-income and uninsured patients. It has been criticized by pharma companies and their trade groups for decades, who argue it’s become a more of a profit center for hospitals and less of a tool to help patients who need it.

The bipartisan bill put forward this week — introduced by a group of three Republicans and three Democrats — seeks to address these concerns while also protecting the program’s core discount structure for covered entities.

The legislation would codify covered entities’ ability to use contract pharmacies and would require manufacturers to offer 340B pricing whether drugs go through a covered entity or a contract pharmacy, while barring manufacturers from imposing conditions on 340B access or restricting drug delivery to contract pharmacies. Essentially, it would lock in hospitals’ access to contract pharmacies and stop drugmakers from restricting it.

In addition, it creates a statutory definition of a “340B patient” and adds new documentation and compliance requirements for covered entities, along with registration rules for contract pharmacies and their satellite sites — all meant to crack down on misuse of the program.

The bill also requires covered entities to adopt a standard financial assistance policy for patients at or below 200% of the federal poverty level, as well as bans payers from penalizing or discriminating against 340B hospitals and their contract pharmacies. To pay for all this new oversight, the bill sets up a user-fee program starting in fiscal year 2031.

As for rebates, the bill would kill HHS’ pilot within a year and block the department from trying a similar program in the future. Provider groups have criticized the rebate model, saying it burdens already cash-strapped hospitals with new administrative and financial costs.

The new bill would replace the rebate program with a national data clearinghouse meant to address duplicate-discount concerns. The senators said this approach gives regulators one central system to spot when a drug gets discounted twice. 

Next, the legislation heads to committee for review, where drugmakers will likely push back — even as the courts separately decide whether HHS had the authority to try its rebate model in the first place.

Photo: Mike Kline, Getty Images