340B reporting law enacted by sixth state

The growing number of states enacting laws to require 340B provider reporting presages a wider transparency push, says a national hospital advocate.

On June 20, Maine Gov. Janet Mills signed legislation requiring hospitals to report 340B revenue and other data. Maine joined five other states with 340B reporting laws.

“It really feels like this transparency concept is coming and there’s not going to be a way around that,” said Maureen Testoni, president and CEO of 340B Health, at the HFMA Annual Conference in Denver.

The Maine bill will require hospitals to provide:

• Annual 340B reports that will be publicly posted starting in July 2026
• The aggregated acquisition cost for 340B prescription drugs
• Aggregated payment amounts received for 340B drugs
• Number of pricing units dispensed or administered
• The number of claims for prescription drugs

Hospitals will need to provide payer-specific information and by child sites (off-site outpatient facilities).

The other states that already have their own versions of 340B reporting laws are Idaho, Indiana, Maryland, Minnesota and Washington, according to 340B Health.

Testoni said such reporting laws inflate the revenue hospitals garner through 340B because they define it as the difference between acquisition costs and payer reimbursements for those drugs. Instead, she said it should be defined as the difference between acquisition costs and the cost from their group purchasing organization.

Federal 340B reporting legislation advanced in the last Congress but did not pass. No new version of such legislation has been introduced in the current Congress.

Contract pharmacy protection

The new Maine law also includes language shielding hospital’s contract pharmacies from restrictions or requirements of drug manufacturers. It joined 17 other states that also have such protections, according to 340B Health.

The manufacturer restrictions under the Maine law include:

• Not interfering with acquisition or delivery of 340B drugs
• Requiring submission of claims or utilization data
• Undertaking discriminatory actions with respect to reimbursement of 340B entities

The law also barred any health insurance company, pharmacy benefits manager or other third parties from paying for 340B drugs at a lower rate.

340B rebate model

The next federal action on the 340B discount drug program is the expected release of federal rules on the use of rebate models by drug manufacturers.

“340B Rebate Guidance” has been under review by the Office of Management and Budget since June 1. That is the last stage before it is released publicly, although there is no set timeframe for its release.

The guidance was required by a federal judge in one of two cases challenging the use of manufacturer rebates in the 340B discount drug program. Five manufacturers have tried to require 340B covered entities (CEs), including hospitals, to accept a switch from the standard approach of upfront discounts on 340B drugs to receiving back-end rebates on the amounts CEs pay for the drugs.

The judge had required the guidance after the Health Resources and Services Administration (HRSA) initially challenged manufacturers’ use of rebates.

Hospital leaders were concerned the rebate process would lead to both long delays in 340B revenue and create burdens by requiring CEs to provide various information — well beyond contract pharmacy data — in order to obtain the rebates.

“The idea that you’re going to be able to submit a claim and get paid right away is just craziness,” Testoni said.

Other federal rulemaking was expected to implement an executive order to retry a cut in Medicare 340B payments previously attempted in the first Trump administration. That cut was reversed by the Supreme Court because a required survey of hospital acquisition costs was not conducted.

Testoni expects the new effort to cut Medicare 340B payments to include the required survey. She said she worried the new attempt also will cut hospital 340B payments closer to acquisition costs.

Not included in advancing legislation

The budget reconciliation bill advancing through Congress does not include explicit 340B provisions but it remains possible they could be added, she said.

Several 340B bills in the previous Congress have yet to be reintroduced but several are likely, including one from a bipartisan group of senators and another from Sen. Bill Cassidy (R-La). Cassidy, chairman of the Senate Health, Education, Labor and Pensions Committee, issued a report this year critical of how two health systems were using 340B revenue and was expected to offer 340B transparency legislation requiring hospitals to identify how they use 340B revenue.

Testoni believes he will push to limit hospitals use of 340B revenue to direct benefit of 340B patients, only.

Charlton Park, CFO of the University of Utah Health Care, urged hospital leaders to create and make available to state and federal policymakers their 340B “impact file,” to identify improvements at their organization funded by 340B revenue.

Inflation Reduction Act

An ongoing rollout of the Inflation Reduction Act’s (IRA’s) drug price negotiation provisions will continue to affect 340B revenue.

Already, two manufacturers of drugs targeted under the law have cut prices to the extent that they have reduced 340B revenue from them.

Testoni also warned hospitals that they should not spend the rebates from manufacturers for IRA-targeted drugs in 340B because 340B money can be clawed back by drugmakers under federal rules.