340B Manufacturer Restrictions, State Laws in Court, and HRSA’s Next Moves
Pfizer Tightens 340B Contract Pharmacy Restrictions
Pfizer has notified certain 340B hospitals that it will end their contract pharmacy exemptions beginning November 1, marking a new phase in how manufacturers are enforcing limits on 340B drug distribution. Hospitals and consultants say the change could hinder patient access to discounted drugs and signal that more manufacturers may follow suit.
What’s Changing
Pfizer’s policy applies to hospitals that currently have one approved contract pharmacy exemption under the company’s defined distribution system. After reviewing shipment data between April and mid-August, Pfizer said it found deliveries to “locations inconsistent with policy.” The company told affected hospitals it will remove their exemption unless they can attest that they have no in-house pharmacy capable of dispensing 340B drugs.
Hospitals that lose their exemption will still be able to buy 340B-priced Pfizer products for use at their main facility, but not for contract pharmacy distribution. Wholesalers have been directed to stop shipments to any contract pharmacies that aren’t compliant with the company’s rules.
Why It Matters for Covered Entities
Pfizer is one of more than 20 drug manufacturers that have implemented contract pharmacy restrictions since 2020, but its new enforcement marks one of the most aggressive compliance actions to date. For hospitals, especially critical access and rural facilities that depend on contract pharmacies to reach outpatients, this change could mean less access to 340B-priced drugs and additional administrative work to verify compliance.
Consultants say hospitals are already fielding questions from wholesalers and 340B ESP, the data platform Pfizer uses to monitor compliance. Several hospitals report being asked to confirm pharmacy addresses and provide documentation showing how they dispense 340B prescriptions internally.
A Patchwork of Policies Emerging
While Pfizer is tightening access, other manufacturers are beginning to adapt to new state laws. Novartis recently lifted its restrictions in Maine after a federal judge allowed that state’s 340B access law to take effect, and Sobi expanded similar exemptions in Maine, Oregon, and Rhode Island. These changes reflect how state-level protections are increasingly shaping national 340B policy, even as manufacturers continue to test the limits of their own distribution models.
What to Expect Next
Hospitals should review their 340B ESP and OPAIS records to ensure contract pharmacy details match shipment addresses and attestations. Entities that received Pfizer’s notice should prepare documentation confirming compliance and be ready to appeal before the November 1 cutoff. CEs should anticipate additional policy reviews or state-by-state exemptions in the coming months.
CMS 340B Part D Data Plan Faces Debate Over Implementation
Providers and drugmakers agree that a national 340B claims data repository for Medicare Part D could bring long-term clarity to how 340B drugs are tracked. But they’re divided on how quickly the system should be built and how to manage claims in the meantime.
340B and the Inflation Reduction Act
The discussion stems from a Centers for Medicare & Medicaid Services (CMS) proposal in July to implement a section of the Inflation Reduction Act (IRA). That provision requires drugmakers to pay Medicare rebates when their prices rise faster than inflation but instructs CMS to exclude 340B-purchased drugs from those rebate calculations.
To do that accurately, CMS proposed a new 340B claims data repository, the first system that would allow covered entities to voluntarily report which Part D prescriptions were filled with 340B drugs. Hospitals and manufacturers agree that the repository is the right long-term fix but differ sharply on how CMS should handle data in the short term.
Hospitals Support the Concept, But Warn of Risks
Both the American Hospital Association (AHA) and America’s Essential Hospitals (AEH) endorsed creating the repository but criticized CMS’s interim plan. That plan would match prescriber and pharmacy National Provider Identifiers (NPIs) with known 340B relationships to estimate which claims are 340B.
AHA called the method “untested and unreliable,” warning it could overstate 340B use and fuel arguments that the program is larger than it is. AEH said it could support the temporary approach only if CMS limits its use to testing purposes and avoids applying it to determine program size or eligibility.
Both groups urged CMS to finalize the repository quickly, calling it a more consistent and less burdensome solution than piecemeal manufacturer reporting. AEH also noted it could help reduce duplicative efforts under HRSA’s separate 340B rebate pilot program.
Health Centers Echo Hospital Concerns
The National Association of Community Health Centers (NACHC) also backed CMS’s long-term plan but raised similar concerns about the interim model. NACHC recommended refining CMS’s earlier “estimation percentage” approach instead, arguing it would be less likely to overcount 340B claims. The group also cautioned CMS not to add reporting requirements that could burden health centers and their contract pharmacies, emphasizing that 340B savings directly support essential services like dental, behavioral health, and prescription assistance for uninsured patients.
Manufacturers Want Mandatory Reporting and Access
PhRMA likewise supports creating a centralized repository but insists reporting should be mandatory and that drugmakers should be able to see the data. PhRMA questioned whether covered entities would voluntarily submit information and said limited participation would make the system unreliable. The group also urged CMS to align repository reporting with HRSA’s rebate pilot and opposed CMS’s plan to keep all repository data confidential.
What to Expect Next
CMS is reviewing stakeholder feedback and is expected to outline next steps in its final rule later this year. If implemented, the repository could eventually standardize how 340B Part D claims are identified – potentially reducing confusion and disputes between hospitals and manufacturers. But until then, covered entities should watch for updates on CMS’s interim plan and any new data submission requirements that could emerge before the system is fully built.
A federal judge in Arkansas has allowed AstraZeneca’s lawsuit against the state’s 340B contract pharmacy access law to move forward, marking the next stage in a closely watched legal fight that could influence how other states protect their 340B hospitals and clinics.
Arkansas Ruling Could Set the Tone for State 340B Protections
On September 30, U.S. District Judge Kristine Baker denied a request from Dallas County Medical Center, a critical access hospital defending the law, to dismiss AstraZeneca’s case. That means the lawsuit will continue toward trial, now scheduled for February 2026.
Arkansas’s law, known as Act 1103, was the first in the nation to require drug manufacturers to honor 340B pricing for drugs shipped to contract pharmacies. Most manufacturers restored access after the law was upheld by federal appeals courts earlier this year. AstraZeneca, however, filed a separate challenge, arguing the state’s requirements violate federal law and its private contracts.
Why It Matters Beyond Arkansas
Even though this case is centered in Arkansas, its outcome could have national implications. More than a dozen states have passed or are considering similar 340B access laws, modeled after Arkansas’s. If AstraZeneca succeeds, other drugmakers could use the same arguments to challenge those state protections, potentially limiting covered entities’ ability to maintain contract pharmacy relationships. For hospitals, especially smaller or rural ones that depend on contract pharmacies to serve outpatients, these protections can be critical to preserving 340B savings and patient access.
Reason for Cautious Optimism
There’s also reason for some relief. Courts have repeatedly upheld state-level 340B access laws, including rulings from both the Eighth Circuit and the U.S. Supreme Court’s decision not to intervene earlier this year. Those decisions reinforce that states have authority to protect covered entities from manufacturer restrictions, and they remain strong precedent as AstraZeneca’s case moves forward.
What to Expect Next
The trial is scheduled for February 2026, but preliminary motions throughout 2025 could offer early insight into how courts interpret the balance between federal 340B oversight and state enforcement authority. Covered entities should continue tracking this case, as it may shape how future state protections are written – or defended – in the years ahead.
Bausch Health Removes Drugs from 340B & Medicaid Programs
Bausch’s October update confirmed that a range of high-cost specialty drugs, including treatments for liver disease, gastrointestinal disorders, and certain ophthalmic and dermatologic products, are no longer available at 340B prices, effective October 1st. The manufacturer also delisted these same therapies from the Medicaid rebate program.
This means that covered entities can no longer purchase these drugs at discounted 340B prices and must instead buy them at full commercial rates, sometimes several hundred percent higher than before. Bausch has not indicated whether additional products may be removed in future updates.
Why It Matters for Covered Entities
While this policy affects a smaller portfolio of drugs than manufacturer-wide restrictions, it signals a troubling shift. Bausch’s move effectively circumvents the 340B framework altogether, bypassing contract pharmacy disputes and directly reducing the number of eligible discounted products.
For critical access hospitals and community health centers, which often use 340B savings to offset uncompensated care and pharmacy services, the change is already being felt in rising acquisition costs. Some covered entities have reported pausing or reevaluating patient assistance and chronic disease programs tied to affected therapies.
Advocacy groups, including 340B Health, say the action could set a dangerous precedent if HRSA does not step in to clarify whether manufacturers can voluntarily remove drugs from 340B pricing altogether. Federal law generally requires participation in 340B as a condition of Medicaid coverage, but enforcement has been inconsistent.
What Covered Entities Should Do Now
- Identify affected NDCs. Review purchasing data from wholesalers to determine which Bausch products were previously purchased under 340B and what price changes have occurred.
- Recalculate savings projections. Adjust 2025 – 2026 budgets to account for the higher acquisition costs of affected drugs.
- Evaluate therapeutic alternatives. Where clinically appropriate, explore alternative products still available under 340B pricing.
- Document impact. Maintain internal records of how the loss of these discounts affects patient programs or pharmacy operations. These examples may support advocacy or compliance discussions later.
Broader 340B Implications
Bausch’s decision adds a new layer to ongoing manufacturer–provider tensions. While companies like Pfizer, Eli Lilly, and Novartis have limited contract pharmacy use, Bausch is one of the first to fully withdraw specific products from 340B participation. If others follow, hospitals could see their 340B portfolios shrink even without official policy changes.
This development also raises questions about how state-level contract pharmacy laws will interact with manufacturer product removals. Even in states where access protections exist, if a drug is removed from the 340B or rebate program altogether, there may be no pricing mechanism left to enforce.
What to Watch Next
HRSA has not yet commented publicly on Bausch’s withdrawal, but covered entities should monitor for agency updates or clarifying guidance. Industry analysts expect this move to draw congressional attention if other manufacturers attempt similar moves in the months ahead.
Policy Watch: HRSA’s Rebate Pilot Update
Since our last update, the proposed 340B rebate pilot has continued to face resistance, this time over the scope and cost of its implementation. The American Hospital Association (AHA) recently submitted a second letter to HRSA, estimating that hospitals could face at least $400 million in new annual costs if the rebate model moves forward as planned.
New Concerns Over Administrative Burden
In its September 30 filing, AHA argued that HRSA vastly underestimated the time and staff hospitals would need to manage rebate claims, warning that many would require two full-time employees just to process submissions. The group cited the pilot’s tight reporting windows, 45 days for hospitals to submit claims and 10 days for manufacturers to issue rebates, as unrealistic and potentially harmful for smaller or rural facilities that already operate with lean administrative teams.
AHA’s new estimates were submitted as part of HRSA’s Paperwork Reduction Act notice, a separate step meant to evaluate administrative burdens before federal programs are finalized. Stakeholders have until November 12 to submit comments on that notice.
Timeline Uncertainty Persists
HRSA had expected to announce the first approved manufacturer rebate models by October 15, but that timeline appears delayed, in part due to the federal funding standoff that has slowed nonessential administrative actions. Industry observers now expect HRSA to publish approvals and technical guidance closer to the end of the year or early 2026.
Potential Overlap with Other Federal Initiatives
Policy analysts are also watching how the rebate pilot could interact with CMS’s proposed Medicare Part D 340B data repository, which would also collect 340B claims information to prevent duplicate discounts. If both systems advance separately, covered entities may face two reporting pipelines with overlapping data requirements, an added complexity for hospitals already managing multiple audits and ESP uploads.
Beacon Registration Now Open
Covered entities can now begin registering for Beacon, the platform handling rebate submissions under the pilot model. Beacon also offers educational materials and training resources that entities can start reviewing to prepare for the transition. Registration requires a company email address, supporting documentation (EIN, IRS letter, Articles of Incorporation, and W-9), and a bank letter.
Check out our newest blog post to read more updates on HRSA’s Rebate Pilot here. For additional information and resources, visit HRSA’s Rebate Model Program page.