H.R. 5256 — 340B ACCESS Act

This section designates the Act as the “340B Affording Care for Communities and Ensuring a Strong Safety-net Act” or the “340B ACCESS Act” and sets forth the table of contents.

This section establishes a statutory definition of "patient" for the 340B drug pricing program (i.e., requires pharmaceutical manufacturers to provide outpatient drugs to eligible covered entities—such as safety-net hospitals, clinics, and Ryan White HIV/AIDS programs—at ceiling prices determined by reference to Medicaid average manufacturer prices less rebates). Under the definition, a patient is an individual who receives a covered outpatient drug on a prescription-by-prescription or order-by-order basis that meets all of the following: (1) the drug is directly related to, and ordered or prescribed as a result of, a health care service furnished by a covered entity provider (generally, the entity's employee, contractor, or provider under an ongoing contract for which the entity bills or remains responsible) and dispensed or administered on-site at specified covered entity locations, child sites, entity pharmacies, contract pharmacies, or via mail order; (2) the drug and service are paid (or deemed) as outpatient services; (3) the individual is within the scope of the entity's qualifying federal grant, project, or contract; and (4) the individual has an ongoing relationship with the entity, including auditable records of a provider-patient relationship, entity responsibility for the service, and an in-person visit within the past 12 months (for certain hospitals) or 24 months (for other covered entities). The definition further provides that telehealth/telemedicine prescriptions generally qualify only if an in-person exam occurred within the prior six months (except for SSI/SSDI beneficiaries) and that prescriptions from non-covered entity providers are ineligible (subject to a care coordination exception). (Thus, the definition restricts 340B discounts to drugs furnished in connection with on-site outpatient services to the entity's established patients, curbing use for non-patients such as those receiving only off-site prescriptions.)

This section strengthens duplicate discount safeguards and oversight requirements in the 340B drug discount program (i.e., requires pharmaceutical manufacturers to sell outpatient drugs to eligible safety-net providers at a ceiling price equal to average manufacturer price minus the Medicaid rebate percentage) by (1) requiring the Secretary of Health and Human Services, not later than one year after enactment, to issue final regulations specifying methodologies for state Medicaid programs, covered entities, and contract pharmacies to identify and bill 340B drugs in compliance with duplicate discount prohibitions—including for drugs furnished to Medicaid managed care enrollees—and procedures for states to exclude improper rebate claims and provide manufacturers prompt remedies; (2) expanding covered entity audit obligations to include Secretary review (at federal expense) of 340B drug margin usage (i.e., difference between acquisition cost and reimbursement) and compliance with new subparagraph (L), plus records retention requirements; and (3) broadening cross-references in diversion and resale restrictions, and related noncompliance notifications, from Medicaid fee-for-service to also include managed care and specified other programs under subparagraphs (J) and (K).

This section establishes criteria under the 340B Drug Pricing Program (i.e., requires participating drug manufacturers to sell outpatient drugs to eligible covered entities at ceiling prices equal to average manufacturer price minus the Medicaid rebate percentage) for certain covered entities—those described in 42 U.S.C. 256b(a)(4)(L) through (O) (i.e., nonprofit hospitals serving low-income uninsured under government contract, children's hospitals, freestanding children's hospitals, and certain rural hospitals)—to register wholly-owned off-campus outpatient facilities as "child sites" eligible for program participation. To qualify as a child site, the facility must (1) be listed on the covered entity's most recent Medicare cost report on a reimbursable line (or be certified as such if the entity is a non-Medicare children's hospital); (2) provide hospital outpatient department services per the cost report (or certification); (3) meet Medicare provider-based standards for off-campus outpatient departments under 42 C.F.R. 413.65; (4) offer outpatient health care services beyond only dispensing or administering drugs; (5) adhere to the covered entity's charity care and sliding fee scale policies per IRC §501(r); (6) be located in a health professional shortage area designated under 42 U.S.C. 254b(b)(3) on or before December 1, 2024, or later using the December 1, 2024, methodology; (7) independently comply with any applicable low-income care contracts; and (8) for the most recent year, report charity care costs and Medicaid/CHIP base outpatient revenue shares (excluding supplemental/indirect payments) each at least equal to the greater of the covered entity's on-campus share or the relevant state hospital average. (Thus, this enables expanded 340B drug discounts at qualifying off-campus facilities of specified safety-net and children's hospitals.)

This section authorizes covered entities participating in the 340B Drug Pricing Program (i.e., the program requiring drug manufacturers to provide outpatient drugs at discounted ceiling prices to eligible safety-net health care providers such as disproportionate share hospitals, clinics, and hemophilia treatment centers) to enter into written agreements with contract pharmacies to dispense such drugs to the entity's patients, subject to specified conditions. Those conditions require the covered entity to (1) be described in specified subparagraphs of subsection (a)(4) (generally, grant-funded or certain hospitals); (2) implement compliance and audit procedures; (3) register each contract pharmacy in the 340B identification system and annually certify its compliance; and (4) adhere to limitations including, for certain hospitals, no more than 5 contract pharmacies (excluding mail order pharmacies); location of contract pharmacies within the entity's service area (with exceptions for certain entities and mail order pharmacies); and patient residence requirements for mail order dispensing (generally, within the service area or rural counties). Manufacturers must make 340B drugs available to registered contract pharmacies at the entity's request but owe no discount obligation for drugs transferred to non-registered locations. (Thus, the provision clarifies and limits contract pharmacy arrangements to prevent diversion while enabling access for patients of eligible providers.)

This section requires specified hospital covered entities under the 340B drug pricing program (i.e., those listed in 340B(a)(4)(L)-(O), such as children's hospitals and cancer hospitals) to establish a sliding fee scale capping eligible patients' out-of-pocket obligations for 340B covered outpatient drugs dispensed, furnished, or administered at the entity, child sites, entity pharmacies, or contract pharmacies. (Thus, eligible patients—defined as uninsured patients or insured patients with family income below 200% of the federal poverty guidelines—pay no more than $0 if below the federal poverty guidelines, the lesser of 20% of the otherwise applicable out-of-pocket obligation or $35 if at or above the federal poverty guidelines but below 200%, or the lesser of 30% or $50 if at or above 200%, with dollar amounts adjusted annually for inflation based on the Consumer Price Index for All Urban Consumers.) Covered entities must post the scale and policies prominently, include them in billing communications, determine eligibility from patient-provided insurance and income information, and ensure point-of-sale reductions for self-administered drugs; contract pharmacies must comply as if they were covered entities. This section imposes a $2,500 civil monetary penalty (inflation-adjusted) per violation, enforced by the HHS Office of Inspector General using specified Social Security Act procedures, and directs the HHS Secretary to issue implementing regulations within 90 days of enactment (limited to necessary details for compliance) and the Office of Inspector General to conduct related studies. (As background, the 340B program requires drug manufacturers to sell covered outpatient drugs to eligible covered entities—primarily safety-net hospitals and clinics serving low-income or vulnerable patients—at ceiling prices reflecting Medicaid rebate percentages, enabling entities to stretch scarce resources.)

This section establishes additional requirements for nonhospital covered entities (i.e., those listed in 340B(a)(4)(A)-(K)) and eligibility criteria for their subgrantees to participate in the 340B drug pricing program, under which manufacturers must sell covered outpatient drugs to eligible covered entities at ceiling prices. (As background, the 340B program enables safety-net health care providers serving low-income, uninsured, or vulnerable patients to purchase outpatient drugs at discounts tied to Medicaid rebate percentages.) For nonhospital covered entities, the section requires (1) nonprofit or public status (as determined by the Secretary); (2) eligibility to purchase 340B drugs only for patients receiving services at registered sites within the scope and time period of the qualifying federal grant; (3) oversight and direct liability for subgrantee noncompliance; (4) enforceable written agreements with subgrantees covering all their sites, requiring program compliance and recordkeeping on federal funds or in-kind contributions; and (5) records demonstrating subgrantee site registration in the 340B identification system and qualifying federal support. For subgrantees of federal grants, the section requires (1) nonprofit or public status; (2) prior to purchasing 340B drugs, an enforceable written agreement with the covered entity, records on qualifying federal funds or in-kind contributions, and site registration; (3) 340B purchases only for patients at registered sites within grant scope; (4) for subgrantees of family planning grantees under 340B(a)(4)(K), demonstration (upon initial registration and annually) of a higher share of 19- to 64-year-olds enrolled in Medicaid at the site (versus the state average, per American Community Survey data); and (5) for such subgrantees receiving in-kind contributions, submission of Secretary-specified plans on contribution use, 340B purchase alignment with grant goals, and compliance.

This section establishes requirements under the 340B drug discount program (i.e., provides covered entities such as safety-net hospitals and clinics with outpatient drugs at discounted ceiling prices) for claims modifiers and data submission. Specifically, it (1) requires covered entities and contract pharmacies to include the relevant 340B modifier (e.g., Medicare Part B "JG" or "TB," or NCPDP Submission Clarification Code "20," or successors) on claims to payers—including Medicare and Medicaid—for 340B-acquired drugs, and a non-340B modifier (to be established by the Secretary or NCPDP) for non-340B drugs; and (2) requires covered entities to submit specified claim-level data (e.g., prescription or claim number, drug NDC, quantity dispensed or administered, prescriber and pharmacy NPIs, 340B identifier and modifier, wholesaler invoice number, and care coordination indicator) for 340B drugs to a designated clearinghouse within 45 days of dispensing, furnishing, or administration, in a secure, machine-readable format consistent with HIPAA security standards. It further mandates data standardization, prohibits modifications to reported data, and addresses non-reporting covered entities.

This section requires covered entities eligible under the 340B Drug Pricing Program (i.e., safety-net providers such as disproportionate share hospitals and federally qualified health centers, listed in 340B(a)(4)(A)-(K)) to submit specified information at least annually to the program's identification system on the scope of their eligibility-basis Federal grant, project, or authorizing statute, including copies of subgrantee agreements. The Secretary must make such information available to requesting covered outpatient drug manufacturers.

This section requires covered entities described in section 340B(a)(4)(L) of the Public Health Service Act (42 U.S.C. 256b(a)(4)(L))—and any others specified by the Secretary—to submit annual reports to the Secretary beginning in the first year on or after 14 months after enactment. The reports must cover, for the entity and each child site in the preceding year: (1) total individuals and numbers by patient category (i.e., covered under group or individual health insurance, Medicare, Medicaid, CHIP, or uninsured and not under a federal health care program) dispensed or administered 340B drugs; (2) percentages of total patients and patients by category receiving such drugs; (3) total costs and charity care costs (per Medicare cost report Worksheet S-10); (4) costs of services to Medicare, Medicaid, and uninsured patients minus payments received; (5) margins on 340B drugs dispensed by the entity, entity pharmacy, or contract pharmacy (with components listed separately); and (6) for entities under 340B(a)(4)(A)-(K), use of 340B margins for specified expenditures (e.g., medical care, dental care, mental health, pharmaceuticals) consistent with Health Resources and Services Administration Uniform Data System reporting. The Secretary must publish the data annually on a public Department of Health and Human Services website in searchable format, both in aggregate and identified by entity (including disproportionate patient percentages if applicable). (The 340B Drug Pricing Program requires drug manufacturers to provide covered outpatient drugs at discounted ceiling prices to eligible safety-net providers.)

This section revises eligibility requirements for certain hospitals to qualify as covered entities under the 340B Drug Pricing Program (i.e., program requiring drug manufacturers to provide outpatient drugs at discounted prices to entities serving vulnerable patients). Specifically, it (1) requires public hospitals under subparagraph (L)(i) to have been registered in the 340B covered entity identification system by December 1, 2024, and replaces the condition of not being entitled to benefits under title XVIII of the Social Security Act (Medicare) with a requirement to serve uninsured patients (as defined in subsection (a)(11)); (2) redefines subparagraph (N) to include only critical access hospitals (as defined in 42 U.S.C. 1395i–4(c)(2)) or rural emergency hospitals (as defined in 42 U.S.C. 1395x(kkk)) that meet the requirements of subparagraph (L)(i); and (3) requires hospitals under subparagraph (O) to demonstrate that at least 60% of annual inpatient discharges for cost reporting periods beginning after December 1, 2024, are for inpatients residing in counties not part of a Metropolitan Statistical Area.

This section establishes additional eligibility standards for private nonprofit hospitals participating in the 340B drug pricing program (i.e., program requiring drug manufacturers to provide outpatient drugs at discounted prices to covered safety-net health care providers, including certain disproportionate share hospitals (DSH)) that rely on contracts with state or local governments to provide health care services to low-income uninsured individuals (i.e., family income at or below 200% of the federal poverty guidelines lacking minimum essential coverage). Specifically, for such hospitals to qualify under current law, (1) the contract must be submitted to the HHS Secretary, who must determine it imposes an enforceable obligation to provide direct medical care representing at least 10% of the hospital's total costs of care using the full range of hospital services, with the contract publicly available; (2) hospitals must deregister from the program, cease discounted purchases, and notify the Secretary if requirements cease to be met; (3) noncompliant purchases require self-disclosure, a Secretary-supervised audit, and repayment to manufacturers of the discount amount plus monthly compounded interest at the Federal Reserve short-term rate; and (4) failures to comply trigger civil monetary penalties of $2,500 per violation (adjusted annually for inflation using the Consumer Price Index for All Urban Consumers), enforced by the HHS Office of Inspector General. The section further requires private nonprofit DSH hospitals in metropolitan statistical areas—whether qualifying via such contracts or formally granted governmental powers by state or local units—to rank in the top 40% of hospitals on each of two state-specific lists prepared by the Secretary for the prior year. (Thus, failure to meet these standards terminates program participation.)

This section states the intent of the 340B Drug Pricing Program (i.e., the program requiring pharmaceutical manufacturers to provide covered outpatient drugs to eligible covered entities—such as safety-net providers serving low-income, uninsured, or vulnerable patients—at discounted ceiling prices equal to average manufacturer price minus the Medicaid rebate percentage). The stated purpose is to enable such entities to increase access to affordable drugs and health services for underserved or otherwise vulnerable communities.

This section requires the Secretary of Health and Human Services to conduct annual audits of contracts between specified private nonprofit hospital covered entities under the 340B drug discount program (i.e., those described in §340B(a)(4)(L), (M), or (O) with respect to rural referral centers, subject to §340B(a)(4)(L)(i) and (a)(11)) and state or local governments, covering at least 10% of all such participating entities. The Secretary must develop and publicly disclose standards to determine whether such contracts satisfy program eligibility requirements and publicly disclose audit findings. This section further directs the Secretary to remove any noncompliant entity from the 340B program; requires the removed entity to conduct a Secretary-supervised audit identifying ineligible discounted drug purchases, report results to the Secretary and relevant manufacturers, and repay manufacturers the discount amount under §340B(a)(1) plus monthly compounded interest at the Federal Reserve short-term rate; and imposes a civil monetary penalty of $1,000 per claim (annually adjusted for inflation per the Consumer Price Index for All Urban Consumers) for knowing and intentional violations, enforced by the HHS Office of Inspector General as under SSA §1128A (other than subsections (a) and (b)).

This section authorizes the Secretary to impose civil monetary penalties, in amounts determined appropriate by the Secretary, on covered entities under the 340B drug discount program that fail to comply with transparency requirements under section 340B(a)(5)(L). (As background, the 340B program requires pharmaceutical manufacturers to provide covered outpatient drugs to eligible entities—such as disproportionate share hospitals and clinics serving low-income or uninsured patients—at ceiling prices equal to average manufacturer price reduced by the Medicaid rebate percentage.)

This section establishes a 340B claims data clearinghouse by amending sec. 340B(d)(2) of the Public Health Service Act to require the Secretary of HHS, not later than one year after enactment, to contract with a qualified third-party entity (i.e., independent of covered entities, with claims adjudication experience, confidentiality obligations, and HIPAA-compliant security) to perform specified functions. (As background, the 340B program requires drug manufacturers to provide outpatient drugs at steep discounts to covered entities such as safety-net hospitals and clinics, and disputes have arisen over duplicate discounts or rebates when the same drugs also receive Medicaid or Medicare rebates.) The clearinghouse must (1) identify 340B claims reimbursed under Medicaid to ensure proper exclusion from state rebate requests; (2) verify compliance with Medicare Drug Price Negotiation nonduplication requirements for selected drugs; (3) identify 340B Part B or D rebatable drugs and notify the Secretary to exclude them from inflation rebate calculations; (4) detect and prevent duplicate rebates or discounts for the same drug unit across entities; and (5) provide manufacturers access to their 340B claims data. The clearinghouse must review claims data submitted by covered entities, state Medicaid agencies, managed care organizations, Medicare contractors, Medicare Advantage plans, and Part D plans; issue violation notices within 5 days; access 340B ceiling prices; and share relevant data with manufacturers within 10 days (subject to confidentiality limits).

This section establishes requirements under the 340B drug pricing program (i.e., requires manufacturers to provide outpatient drugs to eligible covered entities such as safety-net hospitals and clinics at discounted ceiling prices) for remuneration paid by covered entities to third-party administrators (TPAs) and contract pharmacies for related services. Specifically, it provides that (1) TPA remuneration must be a flat dollar amount per unit of service not based on drug prices or discounts, consistent with fair market value, and compliant with applicable law including the anti-kickback statute; (2) contract pharmacy remuneration must be a flat dollar amount per dispense not exceeding 125% of the pharmacy's average per-prescription dispensing fee from all third-party payors in the most recent full calendar year (calculated across all locations if applicable), consistent with fair market value, and compliant with applicable law; (3) covered entities must retain and provide agreements with TPAs and contract pharmacies to the Secretary upon request; and (4) non-compliant TPAs or contract pharmacies are subject to a civil monetary penalty of 10 times the remuneration received, enforced by the HHS Office of Inspector General using procedures under SSA section 1128A (other than subsections (a) and (b)). (Thus, these limits prevent remuneration tied to 340B discounts and cap contract pharmacy fees relative to standard dispensing fees.)

This section establishes a new subsection (g) to Section 340B of the Public Health Service Act clarifying that the 340B Drug Pricing Program's provisions—which require pharmaceutical manufacturers to provide covered outpatient drugs to eligible covered entities (e.g., certain safety-net health care providers) at discounted ceiling prices—supersede any state or local law establishing, implementing, or continuing a standard or requirement that differs from or relates to those provisions, the program, or the drugs' distribution. The preemption does not apply to state regulations issued to carry out subsection (a)(5)(A)(iii), and, subject to that exception, no state or local law may grant additional rights or impose additional obligations related to the 340B program.

This section amends the Public Health Service Act to establish requirements prohibiting group health plans, health insurance issuers offering group or individual health insurance coverage, and pharmacy benefit managers acting on their behalf from discriminating against 340B covered entities (i.e., safety-net providers eligible for discounted outpatient drugs under the 340B drug discount program), contract pharmacies, or plan enrollees on the basis of 340B participation. Prohibited actions include (1) reimbursing 340B entities or contract pharmacies at lower rates than similarly situated non-340B pharmacies; (2) imposing differing terms for fees, clawbacks, dispensing fees, network participation, audits, or other policies; (3) interfering with patient choice of 340B drugs; (4) limiting claims identification for 340B drugs; (5) refusing to contract for 340B-related reasons; and (6) denying coverage of 340B drugs. The section further prohibits restrictions on out-of-pocket cost reductions or subsidies for 340B drugs required or authorized under the 340B program (with such contractual provisions void); directs the Secretary to impose civil monetary penalties of up to $5,000 per violation per day on violating pharmacy benefit managers (with proposed regulations due within 60 days of enactment and final regulations within 180 days); and defines key terms including "340B drug" and "contract pharmacy."