New bipartisan 340B reform bill curbs HHS' rebate pilot

The SUSTAIN 340B Act, introduced by a bipartisan group of senators, aims to revise the controversial 340B drug discount program. The bill, which was shaped by input from stakeholders, seeks to implement significant reforms while maintaining the program's essential advantages. A key proposal within the legislation involves establishing an independent, third-party data clearinghouse to address industry apprehensions regarding improper diversion and duplicate discounts.

This intermediary would coordinate 340B transaction data between parties, identify any issues, and be funded through fees charged to program participants.

The bill also instructs the Department of Health and Human Services to terminate the 340B Rebate Model Pilot Program, which plans to replace statutory upfront discounts with manufacturer-directed rebates, within a year of its enactment. The administration has expressed concerns that an intermediary-based model is not explicitly authorized under current statute, as accurate and timely reporting of 340B transaction data is crucial for the program's success.

Other aspects of the new bill include the continued use of contract pharmacies, a definition of a "patient" eligible for the program, and new requirements and restrictions on child sites. The legislation also explicitly prevents insurers and related entities from discriminating against participating providers, pharmacies, or patients by imposing different requirements, exclusions, reimbursement terms, or fees.

In addition to these reforms, the bill sets patient financial assistance policies for participants, introduces annual reporting requirements for covered entities, and grants HHS new authority to audit and enforce compliance. Advocacy groups, such as the American Hospital Association, have expressed appreciation for the senators' bipartisan efforts to strengthen the 340B program and ensure its accessibility to serve patients and communities for years to come.

However, the program's increasing record-high budget of $100 billion in 2025 has drawn criticism, particularly from large nonprofit health systems that have been accused of over-reliance on the discounts to increase margins, contributing to the nation's high healthcare spending.