Legal and legislative battles affecting the 340B Program 

The dispute between safety-net hospitals and drug manufacturers has officially entered its fourth year, 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: 

• Arkansas  
• Colorado  
• Hawaii  
• Kansas  
• Louisiana  
• Maine  
• Maryland  
• Minnesota 
• Mississippi 
• Missouri 
• Nebraska 
• North Dakota 
• Oklahoma 
• Oregon 
• Rhode Island  
• South Dakota  
• Tennessee  
• Utah  
• Vermont  
• West Virginia 

Below is a summary of the 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  

November 22, 2025: Walgreens carving out 340B rebate pilot drugs from contract pharmacy arrangements 

Walgreens has informed covered entities that it will begin removing the 10 drugs included in the 340B rebate pilot from its 340B contract pharmacy arrangements effective December 23, ahead of the pilot’s official launch on January 1, 2026.  Walgreens has indicated plans to eventually reintegrate the rebate pilot drugs into its 340B contract pharmacy arrangements for all payers except Medicare Part D. The company is currently implementing “system enhancements” required to enable participation in the pilot; however, it has not yet established a timeline for completing these upgrades. 

November 25, 2025: AstraZeneca expands contract pharmacy restrictions  

Effective Jan. 1, 2026, AstraZeneca will expand its contract pharmacy restrictions by adding Fasenra to its limited distribution network (LDN) list. Under the policy, covered entities without an in-house pharmacy capable of dispensing AstraZeneca’s specialty products may designate one contract pharmacy per LDN product. Covered entities with an in-house pharmacy that cannot dispense these specialty therapies may designate up to four specialty contract pharmacies. AstraZeneca products requiring specialty pharmacy designation are Fasenra, Lynparza, Tagrisso, and Truqap. 

December 2, 2025: Puma Biotechnology announces new contract pharmacy policy 

Beginning January 1, 2026, Puma Biotechnology will restrict access to drugs dispensed through contract pharmacies. For Puma products that are part of a limited specialty pharmacy distribution network, covered entities may select a single contract pharmacy designation to obtain 340B pricing, provided the entity registers the contract pharmacy location on Truzo and provides claims data. 

December 4, 2025: Merck updates contract pharmacy policy  

Effective January 1, 2026, Merck will implement 340B pricing for Januvia through rebates using the Beacon platform and will no longer accept 340B contract pharmacy claims for the drug through 340B ESP. 

Legislative updates  

Following are key 340B-related legislative actions that have occurred since May and considerations for healthcare organizations for how to prepare for and respond to the changes.  

November 1, 2025: Walgreens to carve-out 340B IRA rebate pilot drugs from contract pharmacies 

Walgreens has informed covered entities that, effective December 23, it will remove the 10 drugs included in the 340B rebate pilot from its 340B contract pharmacy arrangements, ahead of the pilot’s January 1, 2026, launch. Walgreens is the first national pharmacy chain to announce such carve-outs; however, other contract pharmacies may implement similar policies in response to the 340B rebate pilot and provisions of the Inflation Reduction Act (IRA). 

November 5, 2025: Federal court rejects drugmaker request to block contract pharmacy protections in Colorado 

A federal court in Colorado denied a request by AbbVie 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 Colorado denied the drug companies’ request for a preliminary injunction that would have stopped the state from being able to enforce the contract pharmacy law. The decision stated that AbbVie had not shown they were likely to succeed in their constitutional challenges to the law. 

November 17, 2025: Appeals Court hold oral arguments over manufacturer rebate model 

The U.S. Court of Appeals for the District of Columbia Circuit held oral arguments in a critical case addressing drug manufacturers’ efforts to impose 340B rebate models without federal approval. The litigation centers on lawsuits filed by Bristol Myers Squibb (BMS), Eli Lilly, Johnson & Johnson (J&J), and Novartis, which challenge Health Resources & Services Administration (HRSA) rulings that prohibit replacing upfront 340B discounts with unauthorized back-end rebates for certain drugs. Previously, a lower court in D.C. issued two decisions in favor of the government, affirming HRSA’s authority to require pre-approval of any drugmaker rebate models.  

November 21, 2025: Medicare releases final outpatient prospective payment system rule for calendar year 2026. 

The Centers for Medicare & Medicaid Services (CMS) has finalized its proposal to conduct an outpatient drug acquisition cost survey of all hospitals paid under the Outpatient Prospective Payment System (OPPS). This survey is widely viewed as a precursor to potential future reductions in Medicare Part B reimbursement for 340B drugs. CMS will collect data on OPPS hospitals’ net acquisition costs and total drug units purchased between July 1, 2024, and June 30, 2025. Hospitals will be required to report acquisition costs separately for 340B and non-340B drugs. 

December 1, 2025: CMS finalizes plans to conduct drug acquisition cost survey  

CMS has finalized plans to conduct its drug acquisition cost survey from January 1, 2026, through March 31, 2026. This initiative stems from an executive order issued earlier this year under the Trump administration, aimed at reducing drug prices. The order directed the Secretary of Health and Human Services (HHS) to conduct the survey and consider proposing “any appropriate adjustments that would align Medicare payment with the cost of acquisition.” 

December 17 & 19, 2025: Federal courts reject drugmaker request to block contract pharmacy protections in Colorado, Nebraska, and South Dakota 

Federal district courts in Colorado, Nebraska, and South Dakota have denied denied pharmaceutical manufacturers’ motions to block enforcement of state laws designed to protect covered entities’ access to 340B pricing through contract pharmacies. These rulings reinforce a growing trend in which courts consistently reject drugmakers’ attempts to halt these state protections while they pursue litigation aimed at overturning the laws. 

December 29, 2025: Federal judge issue preliminary injunction against 340B rebate pilot programs 

A federal judge in the U.S. District Court for the District of Maine issued a ruling granting a temporary injunction against the Department of Health and Human Services’ (HHS) new 340B Rebate Model Pilot Program. The court found that hospital groups challenging the program demonstrated they would suffer irreparable harm if the initiative were implemented. The decision marks a significant victory for the American Hospital Association, the Maine Hospital Association, and other safety-net health systems that filed suit on December 1. The plaintiffs allege that HHS violated the Administrative Procedure Act by disregarding stakeholder feedback on the proposed shift to a rebate-based model. 

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.