This issue covers recent manufacturer 340B policy changes, expanding contract pharmacy restrictions, and escalating lawsuits challenging state access laws. We also highlight continued pushback on HRSA’s rebate pilot and broader advocacy and reimbursement developments shaping the 340B landscape.
From Mitsubishi Tanabe to Sanofi: 340B Policy Changes Explained
Several manufacturers have recently updated their policies on 340B contract pharmacy access, adding new restrictions, exemptions, and reporting requirements. Mitsubishi Tanabe Pharma America (MTPA) became the 39th manufacturer to impose restrictions.
Effective October 1st covered entities purchasing the ALS therapy Radicava must designate a single contract pharmacy within MTPA’s limited distribution network and submit claims data within 45 days. States with contract pharmacy access laws may be exempt, though many of those laws remain under litigation.
Additional updates include:
- Sanofi: Added Rilzabrutinib to its restricted list. Certain hospital types (CAH, DSH, RRC, SCH, CH) may use in-house pharmacies or designate one contract pharmacy via 340B ESP with claims submission. Other covered entities are limited to specialty distribution channels, with non-hospital entities not required to submit claims data.
- Alkermes: Granted Oregon hospitals exemptions effective September 1st, joining carve-outs in Arkansas, Hawaii, Louisiana, Maryland, Minnesota, Missouri, Mississippi, Nebraska, South Dakota, Utah, Vermont, and West Virginia. Restrictions were reinstated earlier this year in Kansas and West Virginia following legal developments.
- Amgen: Added Vermont, Hawaii, Nebraska, and Oklahoma, effective November 1st, to its list of exempt states. Its core policy remains in place: one designated contract pharmacy per entity within 40 miles, with claims submission required.
- Astellas: Expanded its restricted drug list to include Cresemba and Xospata effective October 1, 2025, alongside existing restrictions on Xtandi and Myrbetriq. Hospitals without in-house dispensing may designate one contract pharmacy, though Xospata must be dispensed through a pharmacy in its limited distribution network. Federal grantees remain exempt, with prior carve-outs in Arkansas, Louisiana, Maryland, and Mississippi.
These changes reflect consistent trends: more manufacturers requiring claims data, varying carve-outs based on state laws, and continued focus on high-cost specialty drugs. Covered entities should track effective dates and ensure pharmacy, compliance, and finance teams remain aligned.
What to Expect Next
Monitoring effective dates (Sept. 1, Oct. 1, Nov. 1) and ensuring pharmacy, compliance, and finance teams are aligned will help minimize disruption. Proactive preparation and continued engagement in advocacy remain important as the 340B landscape evolves.
New Lawsuits Target State 340B Contract Pharmacy Laws
Drugmaker AstraZeneca has significantly escalated its legal pushback against state 340B contract pharmacy access laws, filing seven lawsuits in the past four months. These actions come as more states enact laws to protect covered entities’ access to 340B pricing through contract pharmacies.
Recent Lawsuits in the Dakotas
On August 1, AstraZeneca filed a federal lawsuit in North Dakota challenging the state’s new law (H.B. 1473), the same day it took effect. Two weeks later, on August 14, the company filed a nearly identical complaint in South Dakota against that state’s law (S.B. 154), which took effect July 1. AstraZeneca argued the laws are unconstitutional, claiming they conflict with federal patent law, violate the Contracts Clause, and constitute a taking. The company also objected to provisions banning manufacturer claims data requirements, asserting those are preempted by federal statute.
Both North and South Dakota fall under the Eighth Circuit Court of Appeals, which in 2024 upheld Arkansas’ similar contract pharmacy access law. The U.S. Supreme Court declined to review that decision, leaving it in place. AstraZeneca is pressing new legal arguments that it says were not addressed in the Arkansas ruling.
New Lawsuits in Hawaii, Tennessee, and Colorado
AstraZeneca also filed three new lawsuits at the end of August:
Hawaii: Challenging Act 143 (enacted May 30), which prohibits contract pharmacy restrictions and includes new provider reporting rules. AstraZeneca’s complaint argues the law unlawfully expands 340B discounts.
Tennessee: Challenging S.B. 1414 (enacted May 5), which bans new restrictions after July 1 and bars claims data requirements. AstraZeneca argues the law’s claims-data prohibition is preempted by federal law.
Colorado: Challenging S.B. 71 (enacted May 30), which prohibits contract pharmacy restrictions, adds hospital reporting requirements, and limits how some hospitals can use 340B savings. AstraZeneca’s complaint focuses on the ban on restrictions, arguing it conflicts with federal law.
Wider Litigation Landscape
In total, 21 states have enacted contract pharmacy access laws. Drugmakers including AstraZeneca, AbbVie, and PhRMA have filed dozens of lawsuits against them. So far, manufacturers have seen limited success:
- Federal judges in Louisiana, Maryland, Mississippi, Missouri, and Tennessee have ruled against the drug industry.
- A federal judge in West Virginia sided with drugmakers, blocking enforcement while litigation continues.
- Most cases remain under appeal.
What This Means for Covered Entities
Short-term: State contract pharmacy protections remain in effect in most places, though outcomes may change as lawsuits move forward.
Medium-term: The Eighth Circuit’s prior ruling upholding Arkansas’ law is significant, as it is the only federal appeals court to weigh in so far. Two other appeals courts are currently reviewing similar cases.
Practical impact: Hospitals and clinics in states with contract pharmacy access laws should continue to rely on those protections but remain aware that enforcement may shift depending on court rulings. Close monitoring of effective dates, ongoing litigation, and carve-outs remains critical.
What to Expect Next
The coming months will be shaped by how the federal courts handle these lawsuits. With cases pending in several circuits, appellate decisions could determine whether state contract pharmacy laws remain enforceable, and a split among circuits could eventually draw in the U.S. Supreme Court. At the same time, more states are likely to pursue new access laws, adding to the patchwork of protection and challenges. Even in states with laws on books, enforcement is uneven as manufacturers test provisions such as bans on claims data requirements.
For covered entities, this means continuing to operate under existing state protection while staying prepared for rapid changes if courts shift the balance.
Growing Pushback Against HRSA’s 340B Rebate Pilot
The American Hospital Association (AHA) is urging the Health Resources and Services Administration (HRSA) to reconsider its recently announced 340B rebate pilot program, warning that it could undermine hospitals’ ability to serve vulnerable patients.
In an August 27 letter to HRSA Administrator Thomas Engels, AHA General Counsel Chad Golder described the pilot as “a solution in search of a problem” and stressed that the 340B program’s long-standing upfront discount model has worked effectively for more than three decades. He warned that replacing discounts with rebates would create “a host of problems” for hospitals providing care in rural and underserved communities.
Details of the Pilot
Announced on July 31, the pilot would allow manufacturers of the first 10 drugs selected for Medicare negotiation under the Inflation Reduction Act to submit rebate models for HRSA approval. The public comment period closed September 8, with HHS receiving more than 1,200 comments from hospitals, clinics, drugmakers, pharmacists, and advocacy groups. Many warned the proposal would delay savings, add administrative burden, and reduce resources for patient care. Manufacturers’ formal proposals were due September 15.
AHA’s Concerns
In an August 27 letter, AHA General Counsel Chad Golder called the pilot “a solution in search of a problem,” arguing that the upfront discount model has worked for more than three decades. He warned the rebate approach could create financial and administrative burdens for hospitals, especially those serving rural and underserved patients. If HRSA moves forward, AHA urged it to impose “crystal clear guardrails” with robust enforcement to ensure manufacturers comply fully.
Congressional Pushback
On September 8, a bipartisan group of 163 House members — including 21 Republicans — sent a letter to HHS Secretary Robert F. Kennedy, Jr. urging the agency to abandon the rebate pilot. Lawmakers argued that rebate models run counter to congressional intent and three decades of HRSA precedent distinguishing rebates from upfront discounts. The letter also posed seven detailed questions to HHS, requesting responses by September 15.
Why It Matters for Covered Entities
The debate centers on whether 340B discounts should remain upfront at the point of sale or shift into a rebate model with delayed reimbursement. For hospitals and clinics, the implications could be significant:
- A rebate structure could put pressure on cash flow, since savings would no longer be immediate.
- Administrative demands would increase, requiring new systems to manage rebate claims and reconcile payments.
- Without safeguards, hospitals could face delayed or incomplete payments from manufacturers.
- Less predictable revenue could reduce funding for charity care, rural services, and patient programs.
What to Watch Next
With comments closed and proposals submitted, HRSA will review feedback and determine whether the pilot moves forward. The agency’s response to lawmakers and stakeholders will signal whether upfront discounts remain the foundation of the 340B program or whether a rebate approach is tested on a broader scale. For covered entities, the outcome could represent the most significant structural change to 340B in decades, making ongoing monitoring and engagement essential.
Key Dates:
- July 31, 2025: HRSA announces rebate pilot
- August 27, 2025: AHA letter to HRSA opposing pilot
- September 8, 2025: Public comment period closes; bipartisan House letter sent to HHS
- September 15, 2025: Manufacturer proposals due; HHS response to Congress requested
- Fall 2025 (TBD): HRSA expected to outline next steps on pilot
340B Remains a Major Focus in Washington Lobbying
Advocacy around the 340B program stayed strong this spring, with nearly 330 organizations reporting 340B-related lobbying in the second quarter of 2025. The filings show that both hospitals and drugmakers continue to invest heavily in influencing the future of the program.
Why It Matters
Although Congress spent the spring focused on a major budget bill that cut Medicaid, 340B remained a top issue for many advocacy groups. Medicaid changes could indirectly affect hospital eligibility for 340B, and with the budget fight now resolved, lawmakers are expected to return their attention to health care debates where 340B could feature prominently.
Who’s Lobbying
- Hospitals and associations: The American Hospital Association, 340B Health, and America’s Essential Hospitals all reported significant lobbying activity tied to 340B.
- Coalitions:
- The 340B Working Table — a mix of hospitals, health centers, and drugmakers — is supporting the proposed SUSTAIN 340B Act, a bipartisan bill expected to include a package of reforms that could both help and challenge providers.
- The ASAP 340B coalition, backed by PhRMA and the National Association of Community Health Centers, supports the ACCESS Act, a proposal that would scale back hospital eligibility and limit the use of contract pharmacies.
- Drug industry: Manufacturers including Merck, Pfizer, Bristol-Myers Squibb, and Amgen, along with trade groups like PhRMA, spent millions on health policy lobbying that included 340B.
The Takeaway for Covered Entities
The sustained level of lobbying shows that 340B remains a live issue in Washington. While no major reforms have advanced yet this year, the direction of the SUSTAIN 340B Act and the reemergence of the ACCESS Act could directly affect eligibility and operations for hospitals and clinics. Covered entities should continue monitoring developments and engaging with associations that represent their interests on Capitol Hill.
What to Watch Next
With Congress moving past budget debates, health care policy is expected to take center stage in late 2025. Introduction of the SUSTAIN 340B Act, alongside ongoing discussions about HRSA’s rebate pilot, will be key signs of where the program may head.
Key Numbers: 340B Lobbying, Q2 2025
- 330 organizations reported lobbying on 340B (April–June 2025).
- $7.58 million: PhRMA’s total health care lobbying spend, including 340B.
- $6.15 million: AHA’s lobbying spend, which included 340B.
- $371,483: 340B Health’s lobbying spend.
- $4.98 million: Merck’s lobbying spend on health care issues including 340B.
PhRMA Launches Largest 340B Ad Campaign to Date
The Pharmaceutical Research and Manufacturers of America (PhRMA) has launched what is being described as its largest advertising campaign yet focused on the 340B program. The effort comes as the trade group, which represents 32 major drugmakers, continues to push for reforms that would shift 340B from an upfront discount to a rebate model.
Details of the Campaign
The “Meet Mark” campaign debuted on September 3rd with a 30-second television spot in the Washington, D.C. market. The ad features a faceless hospital worker named Mark who “marks up medicines,” claiming that hospitals buy 340B drugs at steep discounts and then resell them at much higher prices. The campaign is expected to run through the end of 2025 and reportedly involves a seven-figure media buy.
PhRMA has used similar messaging before, including during televised coverage of the British Open, which analysts said was aimed at drawing attention from lawmakers and policymakers. In a Sept. 3 blog post, PhRMA argued that hospitals pocket excessive profits from the program and called the rebate pilot proposal from the Trump administration a “positive first step” toward greater transparency.
Industry and Provider Reaction
The ad immediately drew pushback from hospital advocates and 340B experts, who criticized it as misleading. They pointed out that so-called “penny pricing” only occurs when manufacturers raise prices faster than inflation — a penalty written into federal law, not a feature created by hospitals. Critics also noted that hospitals do not set drug markups through 340B; rather, reimbursement rates are set by insurers and payers.
The American Hospital Association called the ad “classic PhRMA,” arguing that it shifts blame for high drug costs away from manufacturers. Other provider voices stressed that hospitals are central to drug development and clinical trials and rely on 340B savings to fund patient care, particularly for underserved communities.
Why It Matters for Covered Entities
PhRMA’s campaign represents a high-profile attempt to sway public opinion and policymakers ahead of potential 340B reforms. The focus on hospital “markups” signals that manufacturers will continue to frame 340B as a program that benefits providers more than patients, even as hospitals emphasize the role of 340B savings in sustaining uncompensated care and community services. For covered entities, the campaign underscores the importance of clearly demonstrating how 340B savings are used and staying engaged as federal debate over the program intensifies.
What to Watch Next
The ad buy will continue through the end of the year and may expand. In parallel, PhRMA is expected to keep advocating for structural reforms, including broader use of a rebate model. Lawmakers will weigh these arguments alongside strong provider opposition as Congress considers potential changes to the program in the coming months.
Ruling on 340B Repayments Highlights Bigger Cuts Still Ahead
A federal judge in Washington, D.C. has dismissed a lawsuit from the University of Alabama Health System that sought interest on Medicare’s repayments for earlier 340B payment cuts. In an August 6 decision, Judge Rudolph Contreras ruled that the Centers for Medicare & Medicaid Services (CMS) is not required to pay extra interest on top of the lump sums hospitals already received.
From 2018 through 2022, CMS reduced Medicare Part B reimbursement for 340B drugs by nearly 30%, arguing that hospitals were being overpaid since they acquired the drugs at discounted prices.
In 2022, the U.S. Supreme Court unanimously struck down the policy, ruling that CMS violated federal law by not conducting the required survey of hospital drug acquisition costs before changing payment rates. As a result, CMS was required to repay hospitals for those years of underpayment.
In late 2023, CMS issued about $9 billion in lump sum repayments to affected hospitals. To keep Medicare spending budget neutral, CMS also announced it would recover those funds over time by reducing future outpatient payments across all hospitals — the process now known as the claw back.
Impact on Covered Entities
Hospitals have already received repayments, and this ruling means no additional interest dollars will be added. The bigger issue now is CMS’s plan to claw back those funds to keep Medicare’s budget balanced. To do this, CMS will reduce future outpatient payments (OPPS) for all hospitals.
Originally, CMS planned to spread these reductions over 16 years at about 0.5% per year. In its new proposal, CMS wants to shorten the recovery period to 6 years, which would raise the annual cut to about 2% per year. While the total repayment amount does not change, the yearly financial impact on hospitals would be much sharper.
At the same time, the administration has ordered a new drug acquisition cost survey. If CMS uses those results to argue that hospitals’ actual drug costs are lower than expected, it could justify additional reductions to 340B reimbursement in the future. Together, these steps could leave hospitals with tighter margins and less predictable 340B savings in the years ahead.
What to Expect Next
The dismissal closes one of the last disputes from the Supreme Court case, but CMS’s 2026 OPPS rule and the results of the new drug survey will determine whether additional cuts are imposed. Covered entities should expect continued policy shifts, and likely more legal challenges, around 340B reimbursement.