340B update: The latest legal/legislative battles

The dispute between safety-net hospitals and drug manufacturers has surpassed the four-year mark. 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 39 drug manufacturers that have imposed distribution limitations on covered outpatient drugs dispensed through the 340B Program:  

In response to the restrictions, 12 states have passed legislation to prohibit drug companies from restricting access to 340B Program pricing through contract pharmacies: 

Below is a summary of the current legal and legislative updates affecting the 340B Program this year so far and considerations for your organization when navigating their impacts. 

Manufacturer updates  

Feb. 28: Pfizer updates contract pharmacy policies  

Effective April 1, 2025, Pfizer added Paxlovid to its defined distribution policy, which prohibits hospitals with in-house pharmacies from using contract pharmacies. Hospitals without an in-house pharmacy will be limited to one contract pharmacy for dispensing the affected products and must register the pharmacy on the 340B ESP platform and submit claims data via the 340B ESP platform. 

March 9: AbbVie expands restrictions to accessing 340B pricing 

Beginning March 9, 2025, AbbVie added Elahere (mirvetuximab soravtansine-gynx) and Vyalev (foscarbidopa/foslevodopa) to its list of restricted drugs. AbbVie communicated that covered entities without an in-house pharmacy must designate a single contract pharmacy location to continue dispensing the drugs after the expanded restriction takes effect.

March 12: AstraZeneca expands contract pharmacy restrictions 

Beginning April 1, 2025, AstraZeneca added Lynparza (olaparib), Tagrisso (osimertinib), and Truqap (capivasertib) to its product list of restricted drugs. AstraZeneca communicated that covered entities without an in-house pharmacy capable of dispensing these drugs can designate a single specialty pharmacy location for each of the drugs to continue dispensing the drugs after the expanded restriction takes effect. 

March 20: Merck updates contract pharmacy policy 

Beginning March 31, 2025, Merck will impose previous requirements for hospitals and consolidated health center covered entities without an in-house pharmacy. Hospitals and CHCs without an in-house pharmacy can designate one contract pharmacy location to receive 340B pricing if they submit 340B claims data for claims originating from the designated contract pharmacy through the 340B ESP platform. In addition, the designated contract pharmacy must be located within 40 miles of the covered entity parent site. 

Legislative updates 

March 11: South Dakota enacts contract pharmacy protections 

South Dakota became the ninth state to enact a law protecting covered entities’ access to 340B pricing on drugs dispensed at contract pharmacies. Similar statutes have been enacted in Arkansas, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Montana, and West Virginia, which resulted in changes in manufacturers’ policies restricting access to 340B pricing. 

The South Dakota statue states, “neither a pharmacy benefit manager nor a pharmacy benefit manager affiliate may, directly or indirectly, discriminate against a 340B entity or a pharmacy under contract with a 340B entity, on the basis that the 340B entity or a pharmacy under contract with a 340B entity participates in the 340B drug discount program by imposing terms or conditions that differ from a similarly situated entity that does not participate in the 340B drug discount program.” 

 

April 1: Idaho mandates 340B reporting from covered entities 

Idaho’s Governor Brad Little signed legislation requiring 340B covered entities to submit annual reports to the state related to 340B drug acquisition costs, payments received, payments made to contract pharmacies, and charity care amounts. The law takes effect July 1 and will make Idaho the fourth state to mandate reporting requirements related to the 340B Program. Other states include Maine, Minnesota, and Washington. 

 

April 4: North Dakota enacts contract pharmacy protections 

Like South Dakota, North Dakota enacted a law protecting covered entities’ access to 340B pricing on drugs dispensed at contract pharmacies, becoming the 11th state to do so. Per legislation signed on April 4, 2025, “It is a class B misdemeanor for a manufacturer, an agent or affiliate of that manufacturer, virtual manufacturer, or third-party logistics provider of a manufacturer’s drugs, to: (1) Directly or indirectly deny, restrict, prohibit, or otherwise interfere with the acquisition of a drug by a contract pharmacy on behalf of a covered entity unless receipt of the drug is prohibited by federal law. (2) Prohibit a contract pharmacy from dispensing a drug by denying access to the drug. (3) Require a covered entity or contract pharmacy to submit any claims, encounter, or utilization data as a condition for acquiring or receiving a drug, unless the claims, encounter, or utilization data sharing is required by federal law. (4) Interfere with the ability of a covered entity or contract pharmacy to dispense a drug to an eligible patient of the covered entity. (5) Offer or otherwise make available a drug in the form of a rebate, unless in the form of a discount at the time of sale and authorized under federal law. 

  

April 10: Nebraska enacts contract pharmacy protections  

Nebraska became the 12th state to enact a law protecting covered entities’ access to 340B pricing on drugs dispensed at contract pharmacies, like North Dakota and South Dakota, above. The Nebraska statute states, “Any manufacturer, agent or affiliate of such manufacturer, or third-party logistics provider of such manufacturer’s drugs shall not, either directly or indirectly, deny, restrict, or prohibit the acquisition of any 340B drug by or delivery of any 340B drug to any location authorized by any 340B entity to receive such 340B drug, unless receipt of such 340B drug is prohibited by federal law.” In addition, the Nebraska law prohibits manufacturers from requiring covered entities to submit any data as a condition of acquiring or receiving deliveries of 340B drugs, unless federal law mandates such data.  

 

Considerations for healthcare organizations

• Engage internal and/or external legal counsel to assess legal implications of each drug 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 the Health Resources and Services Administration 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 about 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.