Contract pharmacies continue to be the dominant issue in 340B. As Congress mulls various proposals, seven states have enacted laws prohibiting drug manufacturers from restricting contract pharmacy use. And while that trend is surely giving drugmakers heartburn, the industry did notch a big legal win in May.

In a 3-0 decision, the U.S. Court of Appeals for the D.C. Circuit sided with Novartis and United Therapeutics in saying that the 340B statute does not prohibit drugmakers from placing conditions on distributing drugs under the program. Though the judges in their opinion left open “the possibility that other, more onerous conditions might violate the statute,” the decision upholds a lower court ruling stemming from the companies’ 2021 lawsuit. It’s also similar to a federal appellate ruling from Philadelphia in 2023 that also delivered a win for Big Pharma.

Still pending is a decision from a federal appeals court in Chicago in a case involving Eli Lilly, expected any time now. If that case also goes to the drugmakers, then all three federal appellate courts will have ruled in favor of drugmakers, making it unlikely that the Supreme Court would agree to take up the case. That would leave Congress as the last hope for protecting 340B contract pharmacies at the federal level.

There’s been some activity on that front. ASAP 340B, the odd-bedfellows partnership between drugmakers and the National Coalition of Community Health Centers, or NACHC, enlisted Rep. Larry Bucshon, R-Ind., to introduce the curiously named 340B ACCESS Act along with two Republican co-sponsors (no Democrat has joined in). Among other things, the bill would:

  • Require covered entities to pass along program discounts directly to patients to reduce their out-of-pocket costs
  • Set limits on the definition of an eligible patient and which drugs can qualify for 340B discounts
  • Codify contract pharmacies in the statute and enact rules on their usage
  • Establish new eligibility requirements for hospitals
  • Require new reporting and transparency measures

We’re still waiting for the bipartisan SUSTAIN 340B Act in the Senate. There’s also Democratic Rep. Doris Matsui’s 340B PATIENTS Act, but her bill appears to be languishing in the GOP-controlled House.

Seven states … and counting

The picture is more hopeful in the states, where seven have now enacted laws protecting 340B contract pharmacy access (the list could soon become eight, after Missouri lawmakers sent a bill to Gov. Mike Parson). Maryland Gov. Wes Moore signed a contract pharmacy law in May, and Minnesota Gov. Tim Walz signed a measure that was included in legislation regulating cannabis.

The Minnesota contract pharmacy provision expires July 1, 2027. Meanwhile, two Democratic lawmakers have introduced bills that would expand the state’s 340B reporting requirements, which started April 1. If this is a harbinger of compromise legislation from Congress — contract pharmacy protections in exchange for reporting requirements — it raises the question: How much “transparency” will covered entities be willing to accept? The amount of data Minnesota providers will have to divulge will be a gift to payers when it comes to negotiating contracts.

Elsewhere, we’d like to commend Kansas Gov. Laura Kelly, who stood up for her state’s new 340B contract pharmacy bill by rejecting lawmakers’ efforts to delay it indefinitely. The new law takes effect July 1.

Lastly, Virginia Gov. Glenn Youngkin vetoed a bill that would have prohibited contract pharmacy restrictions, caving to a pressure campaign from a mysterious political group (more on that below).

Meanwhile, the U.S. 8th Circuit Court of Appeals rejected PhRMA’s request to rehear its lawsuit challenging the state of Arkansas’ law prohibiting drugmakers from restricting access to 340B pricing at contract pharmacies. The trade group in March was on the losing end of a unanimous ruling from a three-judge panel, which rejected its argument that the state law conflicts with federal laws.

Lastly, a federal judge scheduled a trial date for April 2025 in AstraZeneca’s lawsuit targeting Arkansas’ law.

More dishonest politics

Yet another dark-money political action committee, called Stand For Us, has emerged from the morass to attack 340B. The group spent $400,000 against Craig Blair, the outgoing president of the West Virginia state Senate, over his support for that state’s 340B contract pharmacy law, helping to seal his re-election loss to a Republican primary opponent.

Stand For Us is a hardline, anti-illegal immigration organization that has raised more than $6 million from 2023-2024, according to Open Secrets, a nonpartisan website that tracks money in politics. It’s chaired by Katie Miller, wife of Stephen Miller, a controversial advisor to former President Donald Trump.

"Over the last month, Stand for Us spent over $400,000 to defeat Blair, with the majority of our resources going to informing the Senate President’s constituents about how he led the charge to strengthen a federal program that uses taxpayer dollars to subsidize health care for illegal immigrants," she said in a Pinocchio-worthy statement. To be clear, there are ZERO taxpayer dollars funding 340B. That’s the way the program was designed by Congress.

The group isn’t required to divulge the source of its funding, so it’s impossible to say who is bankrolling it (though by specifically targeting 340B, the list of possibilities seems short). But it illustrates how opponents continue to twist the truth about 340B to build opposition to it.

Other federal 340B legislation

Two members of Congress from Michigan — Reps. Jack Bergman, a Republican, and Democrat Debbie Dingell — introduced a bill to extend 340B eligibility to rural emergency hospitals. The REH designation took effect in 2023 and allows certain rural hospitals at risk of closure to receive additional Medicare reimbursement and other monthly payments — but they also have to give up their 340B status, which has tempered adoption.

There’s also news from the Senate. Sens. Ron Wyden (D-Ore.) and Mike Crapo (R-Idaho) have released draft legislation that would give hospitals, GPOs and physician groups increased Medicare payments if they agree to stockpile certain generic drugs and forgo any rebates or 340B discounts on them. The legislation is intended to alleviate shortages of generics, though it should be noted, many experts dispute any connection between drug shortages and 340B.

The momentum we’re seeing in the states to protect 340B is incredibly encouraging. I encourage each of you to work with your employer’s government relations team to implore lawmakers in your state to support our safety net program.

If you'd like to continue the conversation with me, please contact me at [email protected].