Entering its fourth year, the dispute between safety-net hospitals and drug manufacturers persists, and we continue to see additional manufacturers fall in line with revising their policies to restrict 340B Program pricing for drugs dispensed through contract pharmacies.
Currently, there are 40 drug manufacturers that have imposed distribution limitations on covered outpatient drugs dispensed through the 340B Program:
In response to the restrictions, 20 states have passed legislation to prohibit drug companies from restricting access to 340B Program pricing through contract pharmacies:
Below is a summary of the most current legal and legislative battles affecting the 340B Program and considerations for how your organization can respond to these changes. You can catch up on Kodiak’s other recent 340B updates here and here.
Manufacturer updates
Jan. 1, 2026: Manufacturers add exemptions to New Mexico FQHCs
Several manufacturers, including AbbVie, Amgen, Biogen, GSK, Organon, Sanofi, and Sobi, have added New Mexico to their lists of state-specific exemptions that apply exclusively to federally qualified health centers and FQHC look-alike organizations. While each manufacturer’s exemption varies by product and policy, they generally allow eligible FQHCs in New Mexico to utilize multiple or unlimited in‑state contract pharmacy arrangements. In some instances, the exemptions also waive claims data submission or proximity requirements that would otherwise apply under the manufacturers’ standard 340B contract pharmacy policies.
Jan. 15, 2026: Eli Lilly’s update to 340B distribution program for in-house pharmacies
Effective Feb. 1, 2026, all covered entity types will be required to provide claims-level data for pharmacy dispenses and medical claims for all of Lilly’s portfolio of products (labeler codes 00002, 00077, and 66733) to the 340B ESP platform within 45 days of product dispense, with the exception of the following products, which must be submitted within 60 days of product administration: Alimta, Amyvid, Cyramza, Erbitux, Kisunla, Omvoh, Portrazza, and Tauvid.
Lilly’s notice states that covered entities in Colorado, Maine, Nebraska, North Dakota, Oregon, Rhode Island, South Dakota, Tennessee, Vermont, and West Virginia, as well as FQHCs and FQHC look-alikes in New Mexico, are exempt from the claims data requirement for now. Failure to provide timely, complete, and accurate data for all products purchased at 340B ceiling prices may result in the suspension of 340B pricing access for Lilly products until all outstanding required data has been fully submitted.
March 2, 2026: Novo Nordisk updates 340B distribution program
Effective April 1, 2026, all 340B covered entity types will be required to submit claim-level detail for in-house pharmacy dispenses, including hospital-owned retail and mixed-use locations, and medical claims for the Novo Nordisk product portfolio to the 340B ESP platform. Claims data must be submitted within 45 days of the dispense date. Failure to provide complete and accurate data within 45 days of dispense may result in suspension of access to 340B pricing.
Legislative updates
Following are key 340B-related legislative actions that have occurred since January and considerations for healthcare organizations for how to prepare for and respond to the changes.
Jan. 23, 2026: Federal court rejects drugmaker request to block contract pharmacy protections in Maine
A federal court in Maine denied a request by Pharmaceutical Research and Manufacturers of America to halt enforcement of the state’s recently enacted 340B contract pharmacy protection law. The decision from the U.S. District Court for the District of Maine denied PhRMA’s request for a preliminary injunction that would have stopped the state from being able to enforce the contract pharmacy law.
Feb. 5, 2026: HRSA scraps 340B rebate pilot
The federal government and hospital plaintiffs asked the federal court in Maine to vacate the agency’s actions associated with the current 340B rebate pilot and remand the matter to the Health Resources and Services Administration. The government agreed that any future rebate program would require HRSA to issue a new notice, solicit new rebate program applications from drug companies, and seek public comment either before or alongside that notice. The filing further states that any new rebate program could not take effect until at least 90 days after the public announcement of approvals of any new applications.
Feb. 17, 2026: Appeals court upholds Minnesota’s 340B law in PhRMA lawsuit
A recent decision by the Minnesota Court of Appeals marks a significant victory for 340B hospitals and other covered entities. The court held that Minnesota may enforce its 340B contract pharmacy access law against drug manufacturers, reversing an earlier ruling issued by the U.S. District Court for the District of Minnesota.
In its Feb. 17 opinion, the Minnesota Court of Appeals confirmed that the state’s contract pharmacy law is not preempted by federal law, does not impose unconstitutional extraterritorial regulation, and complies with the state constitution’s Single Subject and Title Clause requirements. This decision stands in contrast to the federal district court’s earlier conclusion that the statute was unenforceable because it did not expressly grant enforcement authority to either the state’s attorney general or the Minnesota Board of Pharmacy.
Feb. 23, 2026: Federal court rejects drugmaker request to block contract pharmacy protections in Hawaii
A federal court in Hawaii denied a request by AstraZeneca to halt enforcement of the state’s recently enacted 340B contract pharmacy protection law. The decision from the U.S. District Court for the District of Hawaii denied the drug company’s request for a preliminary injunction that would have stopped the state from being able to enforce the contract pharmacy law. The decision stated that AstraZeneca failed to meet the high legal standard required to block a state law from taking effect while the litigation continues.
March 3, 2026: Federal court rejects drugmaker request to block contract pharmacy protections in Tennessee
A federal court in Tennessee has rejected AbbVie’s request to halt enforcement of the state’s recently enacted 340B contract pharmacy protection law. In its decision, the U.S. District Court for the Middle District of Tennessee denied the drug company’s request to block contract pharmacy protections in the state of Tennessee, agreeing with the state’s position that the statute does not conflict with federal 340B drug pricing requirements. This ruling follows an earlier decision by the U.S. District Court for the Middle District of Tennessee, which had previously denied AbbVie’s motion for a preliminary injunction. Together, the decisions reinforce Tennessee’s authority to enforce contract pharmacy protections despite manufacturer challenges.
March 4, 2026: Child site eligibility restrictions ruled unlawful
A federal district court has issued a significant ruling in favor of hospitals in their longstanding dispute with the federal government regarding 340B eligibility for newly opened outpatient departments, commonly referred to as child sites. The court invalidated HRSA’s prior policy that required new child sites to appear on a hospital’s filed Medicare cost report and be formally registered before they could access 340B drug pricing, a process that often delayed eligibility for up to 23 months. This recent court decision enables hospitals to begin accessing 340B discounts for new child sites much earlier in their operational timeline.
Considerations for healthcare organizations
Engage internal and/or external legal counsel to assess legal implications of each manufacturer’s exception policy and the risks associated with sharing data with manufacturers. Assess prescription claims data to determine the impact of these manufacturers’ limited distribution models on your 340B Program savings over the past year.
File overcharge notices with HRSA for manufacturers who charge more than the ceiling price for a covered outpatient drug. Apexus has provided a template for submitting overcharges, which can be found here.
Continue advocacy and education efforts around how your covered entity is meeting the true intent of the 340B Program by using savings generated from purchasing discounted drugs to provide comprehensive care to more patients within your community.
Help raise awareness of the financial impact to your organization from drug company restrictions on contract pharmacies by sharing financial impact data with your elected officials in Washington. Urge them to push for an end to these drug company actions.
Use social media platforms and/or consider working with your local media to create an opinion piece from your organization regarding the impact manufacturer actions have had on prescription drug savings and your organization’s ability to serve patients. Correlate how 340B benefit loss affects patient care and healthcare service offerings.
There’s a lot to keep track of with 340B. If you have questions about the information in this article, or if Kodiak can assist you with managing your 340B compliance program, please reach out to Susan Brankin.
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