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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8574 Introduced in House (IH)]

<DOC>

118th CONGRESS
  2d Session
                                H. R. 8574

To amend the Public Health Service Act to reform the 340B drug pricing 
                    program, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 28, 2024

Mr. Bucshon (for himself, Mr. Carter of Georgia, and Mrs. Harshbarger) 
 introduced the following bill; which was referred to the Committee on 
   Energy and Commerce, and in addition to the Committee on Ways and 
 Means, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
To amend the Public Health Service Act to reform the 340B drug pricing 
                    program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``340B Affording 
Care for Communities and Ensuring a Strong Safety-net Act'' or the 
``340B ACCESS Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Prevention of Medicaid duplicate discounts; oversight of 
                            covered entities.
Sec. 4. Hospital child site requirements.
Sec. 5. Contract pharmacies.
Sec. 6. Ensuring patient affordability of drugs purchased under section 
                            340B.
Sec. 7. Requirements for nonhospital covered entities and subgrantees.
Sec. 8. Claims modifiers; covered entity data submission.
Sec. 9. Covered entity reporting on scope of grant, contract, and 
                            project.
Sec. 10. Ensuring covered entity transparency.
Sec. 11. Revisions to existing 340B hospital eligibility requirements.
Sec. 12. Additional requirements for 340B hospitals.
Sec. 13. 340B program.
Sec. 14. Audits of private nonhospital contracts with State and local 
                            governments.
Sec. 15. Ensuring covered entity compliance with transparency 
                            requirements.
Sec. 16. 340B claims data clearinghouse.
Sec. 17. Limitation on administrator service fees and contract pharmacy 
                            fees.
Sec. 18. Clarification.
Sec. 19. Ensuring the equitable treatment of 340B covered entities and 
                            pharmacies participating in the 340B drug 
                            discount program.
Sec. 20. Effective date.

SEC. 2. DEFINITIONS.

    (a) Definition of Patient.--Section 340B(b) of the Public Health 
Service Act (42 U.S.C. 256b(b)) is amended by adding at the end the 
following:
            ``(3) Patient.--
                    ``(A) In general.--In this section, the term 
                `patient' means, with respect to a covered entity 
                described in subsection (a)(4), an individual who, on a 
                prescription-by-prescription or order-by-order basis--
                            ``(i) is dispensed or administered a 
                        covered outpatient drug that is--
                                    ``(I) directly related to the 
                                service described in clause (iii);
                                    ``(II) ordered or prescribed by a 
                                covered entity provider described in 
                                clause (ii) as a result of the service 
                                described in clause (iii); and
                                    ``(III) dispensed or administered 
                                on site at a covered entity location, a 
                                child site (as defined in subsection 
                                (a)(5)(E)), or an entity pharmacy (as 
                                defined in subsection (a)(5)(F)) listed 
                                in the identification system described 
                                in subsection (d)(2)(B)(iv), or on site 
                                at a contract pharmacy in accordance 
                                with subsection (a)(5)(F) or dispensed 
                                through a mail order pharmacy in 
                                accordance with subsection (a)(5)(F);
                            ``(ii) receives the health care service 
                        described in clause (iii) from a `covered 
                        entity provider', meaning a health care 
                        professional who either--
                                    ``(I) is an employee or independent 
                                contractor of the covered entity, such 
                                that the covered entity bills for 
                                services furnished by the health care 
                                professional and is responsible for the 
                                care furnished by such professional; or
                                    ``(II) furnishes health care 
                                services under an ongoing contractual 
                                obligation to the covered entity such 
                                that responsibility for the care 
                                provided remains with the covered 
                                entity and meets the other requirements 
                                in this paragraph, in the event State 
                                law prohibits or otherwise 
                                substantially limits the ability of the 
                                covered entity to bill for services of 
                                the health care professional;
                            ``(iii) receives a covered outpatient drug 
                        in connection with a health care service 
                        furnished at the covered entity (including a 
                        child site) and such drug and service are paid 
                        by the insurer or third-party payor as 
                        outpatient items and services (or where third-
                        party reimbursement is not made, such items and 
                        services are deemed outpatient if less than 24 
                        hours have elapsed between such individual's 
                        hospital registration and discharge);
                            ``(iv) is described in a category of 
                        individuals within the scope of, and receives a 
                        health care service at the covered entity 
                        (including a child site) that is within the 
                        scope of--
                                    ``(I) the Federal grant, project, 
                                or Federal grant-authorizing statute, 
                                as applicable, that qualifies such 
                                entity for participation in the program 
                                under this section, if the covered 
                                entity is described in one of 
                                subparagraphs (A) through (K) of 
                                subsection (a)(4); or
                                    ``(II) the contract as required in 
                                paragraphs (4)(L)(i) and (11) of 
                                subsection (a), if the covered entity 
                                is a private nonprofit hospital which 
                                has, as the basis for participating in 
                                the program under this section, a 
                                contract with a State or local 
                                government to provide health care 
                                services to specified individuals, 
                                provided that clause (iv) shall not 
                                apply with respect to a covered entity 
                                described in subsection (a)(4)(N) or a 
                                sole community hospital described in 
                                subsection (a)(4)(O); and
                            ``(v) has an ongoing relationship with the 
                        covered entity such that the covered entity 
                        creates and maintains auditable health care 
                        records which demonstrate compliance with this 
                        paragraph and that the covered entity--
                                    ``(I) has a provider-to-patient 
                                relationship with the individual;
                                    ``(II) is responsible for the 
                                individual's health care service that 
                                resulted in the prescription or order 
                                for the drug; and
                                    ``(III)(aa) has provided a health 
                                care service to the individual through 
                                an in-person visit within the past 12 
                                months, if the covered entity is a 
                                hospital described in subparagraph (L) 
                                or subparagraph (M) of subsection 
                                (a)(4) or is a rural referral center 
                                described in subparagraph (O) of such 
                                subsection; or
                                    ``(bb) has provided a health care 
                                service to the individual through an 
                                in-person visit within the past 24 
                                months, if the covered entity is 
                                described in one of subparagraphs (A) 
                                through (K) of subsection (a)(4), 
                                subparagraph (N) of such subsection, or 
                                is a sole community hospital described 
                                in subparagraph (O) of such subsection.
                    ``(B) Telehealth and telemedicine.--
                            ``(i) In general.--A prescription for a 
                        covered outpatient drug resulting from a health 
                        care service furnished to an individual through 
                        telehealth, telemedicine, or other remote 
                        health care service arrangements shall not 
                        qualify for pricing described in subsection 
                        (a)(1) unless--
                                    ``(I) the covered entity (including 
                                child site, as applicable) at which 
                                such service is furnished is a covered 
                                entity (or a child site of a covered 
                                entity, as applicable) described in one 
                                of subparagraphs (A) through (K) of 
                                subsection (a)(4), subparagraph (N) of 
                                such subsection, or is a sole community 
                                hospital described in subparagraph (O) 
                                of such subsection; and
                                    ``(II) subject to the exception in 
                                clause (ii), a covered entity provider 
                                has conducted an in-person examination 
                                of the individual within the 6-month 
                                time period immediately preceding the 
                                health care service resulting in the 
                                prescription or order for the drug.
                            ``(ii) Exception.--The requirement in 
                        clause (i)(II) shall not apply with respect to 
                        an individual for whom the covered entity 
                        maintains auditable records sufficient to 
                        demonstrate that such entity verified such 
                        individual is determined eligible for benefits 
                        under either title II of the Social Security 
                        Act or title XVI of such Act in accordance with 
                        the provisions of such applicable title.
                    ``(C) Prescriptions from non-covered entity 
                providers ineligible.--
                            ``(i) In general.--Subject to the exception 
                        for a qualifying referral described in clause 
                        (ii), a covered outpatient drug prescribed or 
                        ordered for an individual by a health care 
                        professional who is not a covered entity 
                        provider shall not qualify for pricing 
                        described in subsection (a)(1).
                            ``(ii) Exception for qualifying 
                        referrals.--In the case of a `qualifying 
                        referral', all requirements in subparagraph (A) 
                        shall apply, except for clauses (i)(I), 
                        (i)(II), (ii), (iii), and (v)(II) of such 
                        subparagraph. For purposes of this paragraph, a 
                        `qualifying referral' shall refer to the 
                        sequence of occurrences described in this 
                        clause for which a covered entity maintains 
                        documentation sufficient to demonstrate that--
                                    ``(I) a covered entity provider 
                                evaluates and recommends to the 
                                individual, during an encounter at the 
                                covered entity (including child site, 
                                as applicable), that such individual 
                                receive a specified type of specialty 
                                health care not available at the 
                                covered entity and such recommendation 
                                is contemporaneously documented, at the 
                                time of such encounter, in the medical 
                                record the covered entity creates and 
                                maintains for such individual;
                                    ``(II) within one year of the date 
                                of the encounter and recommendation 
                                described in subclause (I), the 
                                individual receives a health care 
                                service from a medical specialist of 
                                the type described in such 
                                recommendation;
                                    ``(III) within the time period 
                                specified in subclause (II), the 
                                covered entity provider making the 
                                recommendation receives, directly from 
                                the medical specialist that furnishes 
                                the health care service described in 
                                subclause (II), written documentation 
                                specifying the service or services 
                                furnished to such individual and the 
                                diagnoses made in connection with such 
                                service or services; and
                                    ``(IV) the covered entity retains 
                                overall responsibility for the care of 
                                the individual.
                            ``(iii) Covered entity eligibility for 
                        qualifying referrals.--Notwithstanding any 
                        other provision in this section, a covered 
                        entity shall not qualify for pricing described 
                        in subsection (a)(1) with respect to a 
                        prescription or order for a covered outpatient 
                        drug resulting from a qualifying referral 
                        unless such covered entity--
                                    ``(I) is described in subparagraph 
                                (N) of subsection (a)(4);
                                    ``(II) is a sole community hospital 
                                described in subparagraph (O) of such 
                                subsection; or
                                    ``(III) is described in one of 
                                subparagraphs (A) through (K) of such 
                                subsection, is not a specified 
                                nonhospital covered entity (as defined 
                                in subsection (b)(4)), and has a 
                                Federal grant that requires such entity 
                                to contract or refer for the health 
                                care service or services furnished to 
                                the individual by the medical 
                                specialist described in clause (ii).
                    ``(D) Health care service required.--For purposes 
                of this section, an individual shall not be considered 
                a patient of the covered entity described in subsection 
                (a)(4) if the individual receives from the covered 
                entity only the administration or infusion of a drug or 
                drugs, or the dispensing of a drug or drugs for 
                subsequent self-administration or administration in the 
                home setting, without a covered entity provider-to-
                patient encounter involving the provision of a health 
                care service.''.
    (b) Definition of Specified Nonhospital Covered Entity.--Section 
340B(b) of the Public Health Service Act (42 U.S.C. 256b(b)) is further 
amended by adding at the end the following:
            ``(4) Specified nonhospital covered entity.--In this 
        section, the term `specified nonhospital covered entity' means 
        a covered entity that--
                    ``(A) is described in one of subparagraphs (B) 
                through (K) of subsection (a)(4), other than a covered 
                entity described in subparagraph (G) of such 
                subsection, and--
                            ``(i) has average annual operating revenues 
                        exceeding $1,000,000,000 calculated over the 
                        most recent three-year period for which data 
                        are available, which revenue threshold shall be 
                        adjusted for inflation annually to reflect rate 
                        of change in the Consumer Price Index for All 
                        Urban Consumers published by the Bureau of 
                        Labor Statistics; or
                            ``(ii) is an affiliate of a hospital; or
                    ``(B) is described in subsection (a)(4)(A) and 
                becomes affiliated with a hospital on or after December 
                1, 2023.
        For purposes of this definition, the term `affiliate' shall 
        mean an entity that, directly or indirectly, controls, is 
        controlled by, or is under common control with the referenced 
        entity, including the referenced entity's parent, and the term 
        `control' shall mean the power to direct the management and 
        policies of an entity, directly or indirectly, whether through 
        the ownership of voting securities, by contract, or 
        otherwise.''.

SEC. 3. PREVENTION OF MEDICAID DUPLICATE DISCOUNTS; OVERSIGHT OF 
              COVERED ENTITIES.

    Section 340B(a)(5) of the Public Health Service Act (42 U.S.C. 
256b(a)(5)) is amended--
            (1) in subparagraph (A)--
                    (A) in clause (ii), by striking ``The Secretary'' 
                and inserting ``Subject to subsection (d)(2)(C), the 
                Secretary''; and
                    (B) by adding at the end the following:
                            ``(iii) Regulations.--Not later than 1 year 
                        after the date of enactment of this clause, the 
                        Secretary shall promulgate final regulations 
                        through notice-and-comment rulemaking 
                        describing--
                                    ``(I) methodologies State Medicaid 
                                programs and all covered entities under 
                                subsection (a)(4), and their contract 
                                pharmacies, shall use to identify and 
                                bill drugs purchased under the 340B 
                                program in a manner that ensures 
                                compliance with applicable prohibitions 
                                regarding duplicate discounts or 
                                rebates, including the duplicate 
                                discount prohibition under this 
                                subparagraph and the prohibitions under 
                                sections 1927(j)(1) and 
                                1903(m)(2)(A)(xiii) of the Social 
                                Security Act, to include the 
                                application of such prohibitions to 
                                340B drugs used by Medicaid managed 
                                care enrollees; and
                                    ``(II) procedures State Medicaid 
                                programs shall use to exclude requests 
                                for Medicaid rebates on covered 
                                outpatient drugs purchased under the 
                                340B program that are dispensed, 
                                administered, or otherwise furnished to 
                                a Medicaid managed care enrollee and 
                                requirements for State Medicaid 
                                programs to promulgate rules to provide 
                                affected manufacturers a prompt remedy 
                                with respect to any incorrectly billed 
                                rebates for such drugs.'';
            (2) in subparagraph (C)--
                    (A) by striking ``A covered entity shall permit'' 
                and inserting:
                            ``(i) Duplicate discounts and drug 
                        resale.--A covered entity shall permit'';
                    (B) by striking ``(A) or (B)'' and inserting ``(A), 
                (B), (J), or (K)''; and
                    (C) by adding at the end the following:
                            ``(ii) Use of margin.--A covered entity 
                        shall permit the Secretary to audit, at the 
                        Secretary's expense, the records of the entity 
                        to determine--
                                    ``(I) how the margin (as defined in 
                                subparagraph (L)(iv)) generated on 
                                covered outpatient drugs subject to an 
                                agreement under this section dispensed 
                                or furnished by such entity (or a 
                                contract pharmacy described in 
                                subsection (a)(5)(F)) is used by such 
                                entity; and
                                    ``(II) such entity's compliance 
                                with subparagraph (L).
                            ``(iii) Records retention.--Covered 
                        entities shall retain such records and provide 
                        such records and reports as determined 
                        necessary by the Secretary for carrying out 
                        this subparagraph.''; and
            (3) in subparagraph (D), by striking ``(A) or (B)'' and 
        inserting ``(A), (B), (J), or (K)''.

SEC. 4. HOSPITAL CHILD SITE REQUIREMENTS.

    (a) Hospital Child Site Requirements.--Section 340B(a)(5) of the 
Public Health Service Act (42 U.S.C. 256b(a)(5)) is amended by adding 
at the end the following:
                    ``(E) Hospital child site requirements.--
                            ``(i) In general.--A covered entity 
                        described in one of subparagraphs (L) through 
                        (O) of paragraph (4) may register an off-campus 
                        outpatient facility associated with such 
                        covered entity for inclusion in the 
                        identification system described in subsection 
                        (d)(2)(B)(iv) to participate in the program 
                        under this section as an integral part of such 
                        covered entity if such covered entity 
                        demonstrates to the Secretary, in a manner 
                        specified by the Secretary, that such facility 
                        satisfies each of the requirements in this 
                        subparagraph. For purposes of this section, 
                        each facility registered to participate in the 
                        program under this section and satisfying the 
                        requirements in this subparagraph shall be 
                        referred to as a `child site').
                                    ``(I) The facility is listed on the 
                                covered entity's most recently filed 
                                Medicare cost report on a line that is 
                                reimbursable under the Medicare program 
                                (or, if the covered entity is a 
                                children's hospital that does not file 
                                a Medicare cost report, the covered 
                                entity submits to the Secretary a 
                                signed statement certifying that the 
                                facility would be correctly included on 
                                a reimbursable line of a Medicare cost 
                                report if the covered entity filed a 
                                cost report).
                                    ``(II) Such cost report 
                                demonstrates that the services provided 
                                at the facility have associated costs 
                                and charges for hospital outpatient 
                                department services under title XVIII 
                                of the Social Security Act (or, if the 
                                covered entity is a children's hospital 
                                that does not file a Medicare cost 
                                report, the covered entity submits to 
                                the Secretary a signed statement 
                                certifying that the services provided 
                                at the facility include outpatient 
                                services).
                                    ``(III) The facility is wholly 
                                owned by the covered entity.
                                    ``(IV) The Secretary has made a 
                                determination, under the process 
                                described in section 413.65(b) of title 
                                42, Code of Federal Regulations (or any 
                                successor regulations), that the 
                                facility meets the Medicare provider-
                                based standards under section 413.65 of 
                                title 42, Code of Federal Regulations 
                                (or any successor regulations) for an 
                                off-campus outpatient department of the 
                                covered entity.
                                    ``(V) The facility provides 
                                outpatient health care services that 
                                are not limited to only dispensing, 
                                administering, or otherwise furnishing 
                                covered outpatient drugs.
                                    ``(VI) The facility is subject to 
                                and adheres to all charity care and 
                                sliding fee scale policies of the 
                                covered entity and makes such policies 
                                publicly available in a manner 
                                consistent with requirements 
                                established under section 501(r) of the 
                                Internal Revenue Code of 1986 
                                applicable to hospital financial 
                                assistance policies.
                                    ``(VII) The facility is located in 
                                an area with a shortage of personal 
                                health services that is--
                                            ``(aa) initially designated 
                                        by the Secretary pursuant to 
                                        section 254b(b)(3) of title 42, 
                                        United States Code, on or 
                                        before December 1, 2023; or
                                            ``(bb) designated by the 
                                        Secretary pursuant to 
                                        subparagraphs (A) through (C) 
                                        of section 254b(b)(3) of title 
                                        42, United States Code, after 
                                        December 1, 2023, using the 
                                        scoring methodology and 
                                        criteria specified by the 
                                        Secretary as of December 1, 
                                        2023.
                                    ``(VIII) In the case of a covered 
                                entity described in one of 
                                subparagraphs (L) through (O) of 
                                paragraph (4) that is a private 
                                nonprofit hospital that has, as the 
                                basis for its participation in the 
                                program under this section, a contract 
                                with a State or local government to 
                                provide health care services to low-
                                income individuals who are uninsured, 
                                as described in paragraphs (4)(L)(i) 
                                and (11), the facility independently 
                                complies with all requirements 
                                applicable to such covered entity with 
                                respect to such contract.
                                    ``(IX) For the most recent year, 
                                the facility's total cost incurred for 
                                charity care (as such term is defined 
                                in line 23 of worksheet S-10 to the 
                                Medicare cost report, or in any 
                                successor form) furnished at such 
                                facility during such year, as a share 
                                of the facility's total patient service 
                                revenue, is greater than or equal to 
                                the amount described in item (aa) or 
                                item (bb), whichever is greater--
                                            ``(aa) for such year, the 
                                        total cost incurred for charity 
                                        care, as a share of total 
                                        patient service revenue, 
                                        furnished at the covered 
                                        entity's on-campus locations 
                                        (as `campus' is defined in 
                                        section 413.65(a)(2) of title 
                                        42, Code of Federal Regulations 
                                        (or any successor 
                                        regulations)); or
                                            ``(bb) the average cost 
                                        incurred for charity care, as a 
                                        share of total patient service 
                                        revenue, calculated for the 
                                        year prior to the most recent 
                                        year for which data is 
                                        available, across all hospitals 
                                        in the State where the facility 
                                        is located that receive 
                                        payments for inpatient hospital 
                                        services under the prospective 
                                        payment system established 
                                        under section 1886(d) of the 
                                        Social Security Act.
                                    ``(X) For the most recent year, the 
                                facility's share of total outpatient 
                                services revenue derived from base 
                                reimbursement to such entity (excluding 
                                supplemental and indirect 
                                reimbursement) under title XIX of the 
                                Social Security Act (including with 
                                respect to individuals also entitled to 
                                benefits under part A of title XVIII of 
                                such Act or enrolled in part B of title 
                                XVIII of such Act) and payments under 
                                title XXI of such Act for items and 
                                services furnished on an outpatient 
                                basis at the facility (including any 
                                cost sharing for such items and 
                                services) is greater than or equal to 
                                the amount described in item (aa) or 
                                item (bb), whichever is greater--
                                            ``(aa) for such year, the 
                                        share of total outpatient 
                                        services revenue derived from 
                                        base reimbursement to such 
                                        entity (excluding supplemental 
                                        and indirect reimbursement) 
                                        under title XIX of the Social 
                                        Security Act (including with 
                                        respect to individuals also 
                                        entitled to benefits under part 
                                        A of title XVIII of such Act or 
                                        enrolled in part B of title 
                                        XVIII of such Act) and payments 
                                        under title XXI of such Act for 
                                        items and services furnished on 
                                        an outpatient basis at the on-
                                        campus locations of the covered 
                                        entity with which the facility 
                                        is associated (including any 
                                        cost sharing for such items and 
                                        services) (`campus' shall have 
                                        the meaning given such term in 
                                        section 413.65(a)(2) of title 
                                        42, Code of Federal Regulations 
                                        (or any successor 
                                        regulations)); or
                                            ``(bb) the average share of 
                                        total outpatient services 
                                        revenue derived from base 
                                        reimbursement (excluding 
                                        supplemental and indirect 
                                        reimbursement) under title XIX 
                                        of the Social Security Act 
                                        (including with respect to 
                                        individuals also entitled to 
                                        benefits under part A of title 
                                        XVIII of such Act or enrolled 
                                        in part B of title XVIII of 
                                        such Act) and payments under 
                                        title XXI of such Act for items 
                                        and services furnished on an 
                                        outpatient basis (including any 
                                        cost sharing for such items and 
                                        services), calculated for the 
                                        year prior to the most recent 
                                        year for which data is 
                                        available, across all hospitals 
                                        in the state where the facility 
                                        is located that receive 
                                        payments for outpatient 
                                        hospital services under the 
                                        prospective payment system for 
                                        covered outpatient department 
                                        services established under 
                                        section 1833(t) of such Act.
                                    ``(XI) The covered entity 
                                certifies, at the time such facility is 
                                initially registered for inclusion in 
                                the identification system described in 
                                subsection (d)(2)(B)(iv) to participate 
                                in the drug pricing program under this 
                                section and annually thereafter as part 
                                of the recertification process, that 
                                the facility satisfies all applicable 
                                requirements under this subparagraph.
                            ``(ii) Limitation.--Only an off-campus 
                        outpatient facility that meets each of the 
                        requirements under this subparagraph may 
                        purchase covered outpatient drugs under the 
                        340B program or use covered outpatient drugs 
                        purchased under the 340B program by another 
                        part of the covered entity that is authorized 
                        to participate in such program. Any transfer of 
                        340B drugs to another facility or another part 
                        of a covered entity that is not authorized to 
                        participate in the 340B program shall be deemed 
                        a violation of subparagraph (B).
                            ``(iii) Deregistration.--If at any time 
                        following registration a requirement described 
                        in clause (i) is no longer fully satisfied with 
                        respect to a facility, the covered entity 
                        described in such clause shall immediately 
                        notify the Secretary that such facility no 
                        longer fully satisfies the relevant 
                        requirement, deregister the facility from the 
                        program under this section, remove the facility 
                        from the identification system described in 
                        subsection (d)(2)(B)(iv), and take all 
                        necessary actions to prohibit such facility 
                        from making any purchases under the program 
                        under this section or representing to third 
                        parties that such facility may purchase covered 
                        outpatient drugs under such program.
                            ``(iv) Obligation to self-disclose.--A 
                        covered entity described in clause (i) shall 
                        immediately disclose to the Secretary and the 
                        manufacturer of the affected covered outpatient 
                        drug any purchase made under the program under 
                        this section by or on behalf of the covered 
                        entity with respect to a facility that, at the 
                        time of the purchase of such drug, did not 
                        fully satisfy the requirements in such clause. 
                        Any such purchase shall require the covered 
                        entity to promptly conduct an audit supervised 
                        by the Secretary to identify the full scope of 
                        noncompliance with such requirements and to 
                        provide the written results of such audit to 
                        the Secretary and the manufacturer of the 
                        affected covered outpatient drug. The covered 
                        entity shall be liable to the manufacturer of 
                        the covered outpatient drug that is the subject 
                        of the noncompliance in an amount equal to the 
                        reduction in the price of the drugs provided 
                        under paragraph (1), plus interest on such 
                        amount, which shall be compounded monthly and 
                        equal to the current short-term interest rate 
                        as determined by the Federal Reserve for the 
                        time period for which the covered entity is 
                        liable.
                            ``(v) Civil monetary penalty.--Where a 
                        covered entity knowingly and intentionally 
                        violates clause (ii) or otherwise fails to 
                        satisfy a requirement in clause (iii) or clause 
                        (iv), the covered entity shall be required to 
                        pay a civil monetary penalty equal to $2,500 
                        for each such violation, which amount shall be 
                        adjusted for inflation annually to reflect the 
                        rate of change in the Consumer Price Index for 
                        All Urban Consumers published by the Bureau of 
                        Labor Statistics. The provisions of section 
                        1128A of the Social Security Act (other than 
                        subsections (a) and (b)) shall apply to a civil 
                        monetary penalty under this clause in the same 
                        manner as such provisions apply to a penalty or 
                        proceeding under section 1128A(a). The Office 
                        of Inspector General of the Department of 
                        Health and Human Services shall carry out the 
                        provisions related to the imposition of civil 
                        monetary penalties under this clause.
                            ``(vi) Secretarial publication of 
                        reports.--On an annual basis, the Secretary 
                        shall prepare and make available to the public 
                        in an electronic, machine readable format 
                        separate reports listing facilities that 
                        satisfy the requirements in each of subclauses 
                        (IX) and (X) of clause (i).''.
    (b) Effective Date.--The provisions in section 340B(a)(5)(E) of the 
Public Health Service Act, as added by this Act, shall become effective 
120 days after the date of enactment of this Act.
    (c) Implementation of Hospital Child Site Standards.--Not later 
than 60 days prior to the effective date of section 340B(a)(5)(E) of 
the Public Health Service Act, as added by this Act, the Secretary 
shall issue program instructions directing each covered entity 
described in section 340B(a)(5)(E)(i) of the Public Health Service Act, 
as amended by this Act, to, before the effective date of section 
340B(a)(5)(E) of the Public Health Service Act, as added by this Act, 
register in the identification system described in section 
340B(d)(2)(B)(iv) of the Public Health Service Act, or update existing 
registrations in such system for, off-campus outpatient facilities 
associated with such covered entity that satisfy the requirements in 
such section. Such instructions shall direct each such covered entity 
to, on or before the effective date of section 340B(a)(5)(E) of the 
Public Health Service Act, as added by this Act, remove from such 
system the existing registration of any off-campus outpatient facility 
associated with such covered entity that does not satisfy the 
requirements in section 340B(a)(5)(E)(i) of the Public Health Service 
Act. Clauses (iii) through (v) of section 340B(a)(5)(E) of the Public 
Health Service Act shall apply with respect to any covered entity 
described in one of subparagraphs (L) through (O) of section 340B(a)(4) 
of the Public Health Service Act that fails to remove a facility 
described in the immediately preceding sentence on or before the 
effective date of section 340B(a)(5)(E) of the Public Health Service 
Act, as added by this Act.

SEC. 5. CONTRACT PHARMACIES.

    Section 340B(a)(5) of the Public Health Service Act (42 U.S.C. 
256b(a)(5)) is further amended by adding at the end the following:
                    ``(F) Contract pharmacies.--
                            ``(i) In general.--Subject to the 
                        conditions set forth in this subparagraph, a 
                        covered entity may enter into written 
                        agreements with contract pharmacies to dispense 
                        to patients of such entity covered outpatient 
                        drugs purchased by such entity under the 340B 
                        program. Subject to such conditions, a 
                        manufacturer of covered outpatient drugs shall 
                        ship or facilitate shipment of such drugs to 
                        contract pharmacies at the request of such 
                        covered entity. Except with respect to covered 
                        outpatient drugs shipped to and dispensed by a 
                        contract pharmacy as provided in this 
                        subparagraph, and notwithstanding any other 
                        provision in this section, a manufacturer of 
                        covered outpatient drugs shall have no 
                        obligation to pay a discount or rebate under 
                        this section with respect to covered outpatient 
                        drugs delivered or otherwise transferred to any 
                        location other than a registered address of the 
                        covered entity (including an entity pharmacy or 
                        child site, as applicable) listed in the 
                        identification system described in subsection 
                        (d)(2)(B)(iv).
                            ``(ii) Conditions for covered entity use of 
                        contract pharmacies.--In order for a covered 
                        entity to enter into a written agreement with a 
                        contract pharmacy to dispense to patients of 
                        such entity covered outpatient drugs purchased 
                        by such entity under the program under this 
                        section, the entity shall--
                                    ``(I)(aa) be described in one of 
                                subparagraphs (A) through (K) of 
                                paragraph (4) and purchase covered 
                                outpatient drugs for its patients 
                                within the scope of the Federal grant, 
                                project, or Federal grant-authorizing 
                                statute, as applicable, that qualifies 
                                such entity for participation in the 
                                program under this section; or
                                    ``(bb) be described in one of 
                                subparagraphs (L) through (O) of 
                                paragraph (4);
                                    ``(II) establish and implement 
                                compliance procedures to satisfy the 
                                requirements described in subparagraphs 
                                (A), (B), (G) (as applicable), (H) (as 
                                applicable), (J), and (K) of paragraph 
                                (5) and section 1193(d) of the Social 
                                Security Act with respect to covered 
                                outpatient drugs purchased by the 
                                covered entity under this section, 
                                including with respect to such drugs 
                                dispensed by a contract pharmacy, which 
                                compliance procedures shall be 
                                considered records of the covered 
                                entity subject to audit under 
                                subparagraph (C);
                                    ``(III) prior to purchasing covered 
                                outpatient drugs subject to an 
                                agreement under this section to be 
                                shipped to or dispensed by such 
                                pharmacy, register such pharmacy in the 
                                identification system described in 
                                subsection (d)(2)(B)(iv) as a contract 
                                pharmacy, to include such pharmacy's 
                                national provider identifier, and 
                                certify to the Secretary upon initial 
                                registration of such pharmacy in such 
                                system and annually thereafter that 
                                such pharmacy complies with all 
                                requirements under this subparagraph, 
                                including the covered entity compliance 
                                procedures described in subclause (II); 
                                and
                                    ``(IV) as applicable, comply with 
                                the requirements and limitations set 
                                forth in clauses (iii) through (vii) of 
                                this subparagraph.
                            ``(iii) Limitation on contract pharmacies 
                        for certain hospital covered entities.--
                        Notwithstanding clause (ii), a covered entity 
                        described in paragraph (4)(L), a free-standing 
                        cancer hospital described in paragraph (4)(M), 
                        and a rural referral center described in 
                        paragraph (4)(O) may not enter into written 
                        agreements with more than 5 contract pharmacies 
                        to dispense covered outpatient drugs purchased 
                        by the covered entity under this section to 
                        patients of such entity under this 
                        subparagraph. For purposes of this clause, a 
                        contract pharmacy shall not include a mail 
                        order pharmacy.
                            ``(iv) Service area requirement for 
                        eligible contract pharmacies.--A contract 
                        pharmacy with which a covered entity enters 
                        into a written agreement to dispense covered 
                        outpatient drugs to patients of such entity 
                        subject to the conditions in this subparagraph 
                        shall be located in the service area of the 
                        covered entity (as defined in clause (x)(IV)). 
                        Notwithstanding any other provision in this 
                        subparagraph, this clause (iv) shall not apply 
                        with respect to a covered entity described in 
                        paragraph (4)(G) or a contract pharmacy that is 
                        a mail order pharmacy.
                            ``(v) Requirements for use of mail order 
                        pharmacies.--
                                    ``(I) In general.--Notwithstanding 
                                any other provision in this section, a 
                                covered outpatient drug subject to an 
                                agreement under this section may be 
                                dispensed to a patient of a covered 
                                entity through a mail order pharmacy 
                                only if--
                                            ``(aa) the covered entity 
                                        dispensing such drug (or on 
                                        whose behalf such drug is 
                                        dispensed) through a mail order 
                                        pharmacy to such a patient is 
                                        described in one of 
                                        subparagraphs (A) through (K) 
                                        of paragraph (4), such entity 
                                        is not a specified nonhospital 
                                        covered entity (as defined in 
                                        subsection (b)(4)), and, except 
                                        for a covered entity described 
                                        in subparagraph (G) of such 
                                        subsection, the patient 
                                        dispensed such drug resides 
                                        within the service area of the 
                                        covered entity (as defined in 
                                        clause (x)(IV)); or
                                            ``(bb) the covered entity 
                                        dispensing such drug (or on 
                                        whose behalf such drug is 
                                        dispensed) through a mail order 
                                        pharmacy to such a patient is 
                                        described in subparagraph (N) 
                                        of paragraph (4) or is a sole 
                                        community hospital described in 
                                        subparagraph (O) of such 
                                        paragraph, and the patient 
                                        dispensed such drug resides in 
                                        a county that is not part of a 
                                        Metropolitan Statistical Area, 
                                        as defined by the Office of 
                                        Management and Budget.
                                    ``(II) Requirements for use of mail 
                                order contract pharmacies.--Subject to 
                                the conditions set forth in this 
                                subparagraph, a covered entity 
                                described in item (aa) or (bb) of 
                                subclause (I) may enter into written 
                                agreements with contract pharmacies 
                                that are mail order pharmacies to 
                                dispense to patients described in such 
                                relevant clause covered outpatient 
                                drugs purchased by such entity under 
                                the 340B program.
                            ``(vi) Requirements for covered entity 
                        compliance procedures and written agreements.--
                        Not later than 180 days following the date of 
                        enactment of the 340B ACCESS Act, the Secretary 
                        shall issue guidance to covered entities 
                        specifying requirements for--
                                    ``(I) covered entity compliance 
                                procedures described in clause (ii)(II) 
                                that the Secretary determines are 
                                sufficient to ensure that covered 
                                outpatient drugs are not subject to 
                                duplicate discounts in violation of 
                                subsection (a)(5)(A) (including with 
                                respect to such drugs used by Medicaid 
                                managed care enrollees), that such 
                                drugs cannot be resold or otherwise 
                                transferred to persons who do not meet 
                                the definition of a patient of the 
                                covered entity in violation of 
                                subparagraph (B), that the patient 
                                affordability requirements specified in 
                                subparagraphs (G) and (H), as 
                                applicable, are appropriately applied 
                                at the point of drug dispense or 
                                administration, that data and other 
                                information is submitted in accordance 
                                with subparagraphs (J) and (K), and 
                                that the nonduplication requirement in 
                                section 1193(d) of the Social Security 
                                Act is satisfied; and
                                    ``(II) written agreements between 
                                covered entities and contract 
                                pharmacies described in clause (vii).
                            ``(vii) Written agreement required.--The 
                        written agreement between a covered entity and 
                        a contract pharmacy described in this 
                        subparagraph shall include binding and 
                        enforceable obligations on the contract 
                        pharmacy to comply with the covered entity's 
                        compliance procedures described in clause 
                        (ii)(II) with respect to covered outpatient 
                        drugs dispensed to patients of such entity in 
                        accordance with this subparagraph. Within 30 
                        days of the applicable effective date of such 
                        written agreement, including any amendment or 
                        addendum thereto, the covered entity shall 
                        submit a copy of the agreement, together with 
                        any amendments or addenda, to the Secretary in 
                        a form and manner specified by the Secretary. 
                        The Secretary shall review all such agreements, 
                        including amendments and addenda, for 
                        compliance with the requirements set forth in 
                        this subparagraph and may require a covered 
                        entity and contract pharmacy to modify an 
                        agreement to conform to the requirements of 
                        this subparagraph. Such agreements, including 
                        amendments and addenda, shall be considered 
                        records of the covered entity subject to audit 
                        under subparagraph (C).
                            ``(viii) Clarification for covered 
                        outpatient drugs subject to restricted 
                        distribution.--Notwithstanding any other 
                        provision in this section, a manufacturer of a 
                        covered outpatient drug requiring exclusive use 
                        of a specialty pharmacy or a restricted 
                        distribution network shall be deemed to have 
                        satisfied its obligations under this 
                        subparagraph with respect to a contract 
                        pharmacy if such manufacturer offers each 
                        covered entity such drug for purchase at or 
                        below the applicable ceiling price described in 
                        paragraph (1) through a wholesaler, 
                        distributor, or pharmacy included in the 
                        restricted distribution network for such drug.
                            ``(ix) Penalties for contract pharmacy 
                        compliance violations.--
                                    ``(I) In general.--A contract 
                                pharmacy that is found to have violated 
                                the covered entity compliance 
                                procedures described in clause 
                                (ii)(II), violated subparagraph (A), or 
                                violated subparagraph (B) shall--
                                            ``(aa) in the first 
                                        instance of such violation, be 
                                        liable to a manufacturer of a 
                                        covered outpatient drug that is 
                                        the subject of such violation 
                                        in an amount equal to the 
                                        reduction in the price of such 
                                        drug (as described in 
                                        subsection (a)(1)), plus 
                                        interest on such amount, which 
                                        shall be compounded monthly and 
                                        equal to the current short-term 
                                        interest rate as determined by 
                                        the Federal Reserve for the 
                                        time period for which the 
                                        covered entity is liable;
                                            ``(bb) in the second 
                                        instance of such violation--

                                                    ``(AA) be liable to 
                                                a manufacturer of a 
                                                covered outpatient drug 
                                                that is the subject of 
                                                such violation in an 
                                                amount equal to the 
                                                reduction in the price 
                                                of the drug (as 
                                                described in paragraph 
                                                (1)), plus interest on 
                                                such amount, which 
                                                shall be calculated in 
                                                the manner specified in 
                                                item (aa); and

                                                    ``(BB) be required 
                                                to pay a civil monetary 
                                                penalty equal to 
                                                $13,946 for each claim 
                                                for a covered 
                                                outpatient drug that is 
                                                subject to the 
                                                violation, which amount 
                                                shall be adjusted for 
                                                inflation annually to 
                                                reflect the rate of 
                                                change in the Consumer 
                                                Price Index for All 
                                                Urban Consumers 
                                                published by the Bureau 
                                                of Labor Statistics; 
                                                and

                                            ``(cc) in the third 
                                        instance of such violation--

                                                    ``(AA) be liable to 
                                                a manufacturer of a 
                                                covered outpatient drug 
                                                that is the subject of 
                                                such violation in an 
                                                amount equal to the 
                                                reduction in the price 
                                                of the drug (as 
                                                described in paragraph 
                                                (1)), plus interest on 
                                                such amount, which 
                                                shall be calculated in 
                                                the manner specified in 
                                                item (aa);

                                                    ``(BB) be required 
                                                to pay a civil monetary 
                                                penalty equal to 
                                                $13,946 for each claim 
                                                for a covered 
                                                outpatient drug that is 
                                                subject to the 
                                                violation, which amount 
                                                shall be adjusted for 
                                                inflation annually to 
                                                reflect the rate of 
                                                change in the Consumer 
                                                Price Index for All 
                                                Urban Consumers 
                                                published by the Bureau 
                                                of Labor Statistics; 
                                                and

                                                    ``(CC) be removed 
                                                from the program under 
                                                this section and 
                                                disqualified from 
                                                reentry into such 
                                                program for a period of 
                                                not less than two 
                                                years, or such longer 
                                                period as the Secretary 
                                                may determine based on 
                                                the severity of the 
                                                violation (or 
                                                violations) and the 
                                                risk such pharmacy 
                                                presents to the 
                                                integrity of the 
                                                program, with no 
                                                ability to reenter the 
                                                program unless and 
                                                until the Secretary 
                                                determines such 
                                                pharmacy has resolved 
                                                the violation (or 
                                                violations) and taken 
                                                reasonable steps to 
                                                prevent similar future 
                                                violations.

                                    ``(II) Corrective action plan.--In 
                                the first instance of a violation 
                                described in subclause (I)(aa), in the 
                                second instance of a violation 
                                described in subclause (I)(bb), and 
                                prior to reentry into the program 
                                following a violation described in 
                                subclause (I)(cc)--
                                            ``(aa) the pharmacy shall 
                                        conduct an internal review to 
                                        identify the cause of the 
                                        violation (or violations) that 
                                        is inclusive of all calendar 
                                        quarters within the period in 
                                        which such violation (or 
                                        violations) occurred and all 
                                        covered outpatient drugs 
                                        subject to an agreement under 
                                        this section dispensed during 
                                        such period;
                                            ``(bb) the pharmacy shall 
                                        prepare a written corrective 
                                        action plan, in a form 
                                        specified by the Secretary, 
                                        which shall include, at a 
                                        minimum, the results of such 
                                        internal review, the pharmacy's 
                                        methodology for identifying the 
                                        full scope of such violation 
                                        (or violations), and the 
                                        pharmacy's proposed corrective 
                                        actions, and submit such plan 
                                        to the Secretary in a form and 
                                        manner specified by the 
                                        Secretary; and
                                            ``(cc) the Secretary shall 
                                        review such plan, notify the 
                                        pharmacy of any revisions to 
                                        such plan, including additional 
                                        corrective actions, necessary 
                                        for the Secretary to approve 
                                        such plan, and publish the 
                                        approved plan on a public 
                                        website of the Department of 
                                        Health and Human Services (with 
                                        redactions of any confidential 
                                        or proprietary information).
                                    ``(III) Civil monetary penalty for 
                                violations by removed pharmacy.--A 
                                contract pharmacy removed from the 
                                program under this section pursuant to 
                                subclause (I)(cc) that dispenses a 
                                covered outpatient drug subject to an 
                                agreement under this section during a 
                                time period that such pharmacy is 
                                removed from the program and is not 
                                approved for reentry shall be required 
                                to pay a civil monetary penalty equal 
                                to $13,946 for each claim for each such 
                                drug dispensed during such period, 
                                which amount shall be adjusted for 
                                inflation annually to reflect the rate 
                                of change in the Consumer Price Index 
                                for All Urban Consumers published by 
                                the Bureau of Labor Statistics.
                                    ``(IV) Procedures and delegation.--
                                The provisions of section 1128A of the 
                                Social Security Act (other than 
                                subsections (a) and (b)) shall apply 
                                for purposes of any payment, civil 
                                monetary penalty, or removal described 
                                in this clause in the same manner as 
                                such provisions apply to a penalty or 
                                proceeding under section 1128A(a). The 
                                Office of Inspector General of the 
                                Department of Health and Human Services 
                                shall carry out the provisions of this 
                                clause.
                            ``(x) Definitions.--In this subparagraph:
                                    ``(I) Contract pharmacy.--The term 
                                `contract pharmacy' means, with respect 
                                to a covered entity described in clause 
                                (ii), any individual pharmacy (as 
                                determined by a national provider 
                                identifier unique to the pharmacy 
                                address) that is--
                                            ``(aa) licensed as a 
                                        pharmacy by the relevant State 
                                        (or States);
                                            ``(bb) authorized to 
                                        dispense covered outpatient 
                                        drugs subject to an agreement 
                                        under this section to patients 
                                        of such entity (as defined in 
                                        subsection (b)(3)) pursuant to 
                                        a valid written agreement with 
                                        such entity (as described in 
                                        this subparagraph); and
                                            ``(cc) not an entity 
                                        pharmacy.
                                    ``(II) Entity pharmacy.--The term 
                                `entity pharmacy' means any individual 
                                pharmacy (as determined by a national 
                                provider identifier unique to the 
                                pharmacy address) that is--
                                            ``(aa)(AA) licensed as a 
                                        pharmacy by the relevant State 
                                        (or States); and
                                            ``(BB) the same legal 
                                        entity as the covered entity 
                                        and located within the covered 
                                        entity's service area, if the 
                                        covered entity is described in 
                                        one of subparagraphs (A) 
                                        through (K) of paragraph (4) 
                                        and is not a specified 
                                        nonhospital covered entity (as 
                                        defined in subsection (b)(4)); 
                                        or
                                            ``(bb) the same legal 
                                        entity as the covered entity 
                                        and located within the covered 
                                        entity's four walls, if the 
                                        covered entity is described in 
                                        one of subparagraphs (L) 
                                        through (O) of paragraph (4) or 
                                        is a specified nonhospital 
                                        covered entity (as defined in 
                                        subsection (b)(4)).
                                    ``(III) Mail order pharmacy.--The 
                                term `mail order pharmacy' is a 
                                pharmacy that is licensed as a pharmacy 
                                by the State (or States) and that 
                                dispenses prescription medications to 
                                individuals primarily through the mail, 
                                as determined in accordance with 
                                guidance issued by the Secretary in 
                                connection with part 447, subpart I of 
                                title 42 of the Code of Federal 
                                Regulations (or any successor 
                                regulations).
                                    ``(IV) Service area.--The term 
                                `service area' means, with respect to a 
                                covered entity described in paragraph 
                                (4), other than a covered entity 
                                described in subparagraph (G) of such 
                                paragraph, the Public Use Microdata 
                                Area (as defined by the United States 
                                Census Bureau) in which such entity is 
                                located and up to three additional 
                                Public Use Microdata Areas that are 
                                contiguous with the Public Use 
                                Microdata Area in which such entity is 
                                located, which shall be listed in the 
                                identification system described in 
                                subsection (d)(2)(B)(iv).
                            ``(xi) Rules of construction.--
                                    ``(I) Location.--For purposes of 
                                this subparagraph, the location of a 
                                covered entity shall be determined 
                                based on the physical address of the 
                                entity listed in the identification 
                                system described in subsection 
                                (d)(2)(B)(iv) without regard to any 
                                off-campus outpatient facilities.
                                    ``(II) Same legal entity.--For 
                                purposes of this subparagraph, a 
                                pharmacy is the same legal entity as 
                                the covered entity if the name, 
                                ownership, and employer identification 
                                number of the pharmacy is identical to 
                                the name, ownership, and employer 
                                identification number of the covered 
                                entity.''.

SEC. 6. ENSURING PATIENT AFFORDABILITY OF DRUGS PURCHASED UNDER SECTION 
              340B.

    (a) In General.--Section 340B(a)(5) of the Public Health Service 
Act (42 U.S.C. 256b(a)(5)) is further amended by adding at the end the 
following:
                    ``(G) Patient affordability requirements for 
                hospital covered entities.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of law, a covered entity 
                        described in one of subparagraphs (L) through 
                        (O) of paragraph (4) shall establish a sliding 
                        fee scale that results in the covered entity 
                        providing, on behalf of an eligible patient (as 
                        defined in clause (iv)), a discount that 
                        results in such patient paying no more than the 
                        maximum out-of-pocket obligation (as defined in 
                        clause (ii)), with respect to each covered 
                        outpatient drug subject to an agreement under 
                        this section dispensed, furnished, or 
                        administered to such patient at such covered 
                        entity, any child site, or any entity pharmacy. 
                        The sliding fee scale and related policies 
                        shall be written and posted prominently at each 
                        such covered entity location, including any 
                        child site and entity pharmacy, and shall be 
                        included in any billing-related communications 
                        sent by such covered entity to any patient 
                        dispensed, furnished, or administered a covered 
                        outpatient drug at such covered entity 
                        location, including any child site or entity 
                        pharmacy. Eligibility for a reduced out-of-
                        pocket obligation pursuant to this clause shall 
                        be based on insurance and income information 
                        provided by the eligible patient. With respect 
                        to covered outpatient drugs that are self-
                        administered by an eligible patient, the out-
                        of-pocket reductions described in this clause 
                        shall apply at the point of sale.
                            ``(ii) Maximum out-of-pocket obligation.--
                        For each dispense or administration of a 
                        covered outpatient drug, the maximum out-of-
                        pocket obligation for an eligible patient with 
                        family income--
                                    ``(I) below the Federal poverty 
                                guidelines is $0;
                                    ``(II) at or above the Federal 
                                poverty guidelines but below 200 
                                percent of the Federal poverty 
                                guidelines is the lesser of 20 percent 
                                of the otherwise applicable out-of-
                                pocket obligation or $35, which shall 
                                be adjusted for inflation annually to 
                                reflect rate of the change in the 
                                Consumer Price Index for All Urban 
                                Consumers published by the Bureau of 
                                Labor Statistics; and
                                    ``(III) at or above 200 percent of 
                                the Federal poverty guidelines is the 
                                lesser of 30 percent of the otherwise 
                                applicable out-of-pocket obligation or 
                                $50, which shall be adjusted for 
                                inflation annually to reflect rate of 
                                the change in the Consumer Price Index 
                                for All Urban Consumers published by 
                                the Bureau of Labor Statistics.
                            ``(iii) Applicability to contract 
                        pharmacies.--With respect to an eligible 
                        patient of a covered entity described in clause 
                        (i) dispensed a covered outpatient drug subject 
                        to an agreement under this section on behalf of 
                        such covered entity at a contract pharmacy 
                        pursuant to subparagraph (F), such covered 
                        entity shall require such contract pharmacy to 
                        provide discounts to eligible patients on 
                        behalf of such covered entity and comply with 
                        all other requirements described in clauses (i) 
                        and (ii) as if such contract pharmacy were a 
                        covered entity described in clause (i).
                            ``(iv) Definitions.--In this subparagraph:
                                    ``(I) Child site.--The term `child 
                                site' shall have the meaning given such 
                                term in subparagraph (E).
                                    ``(II) Contract pharmacy.--The term 
                                `contract pharmacy' shall have the 
                                meaning given such term in subparagraph 
                                (F).
                                    ``(III) Eligible patient.--The term 
                                `eligible patient' means a patient, as 
                                defined in subsection (b)(3), who is 
                                not covered under minimum essential 
                                coverage as defined under section 
                                5000A(f) of the Internal Revenue Code 
                                of 1986 or has family income below 200 
                                percent of the Federal poverty 
                                guidelines and is covered under a group 
                                health plan, health insurance coverage 
                                in the individual market or group 
                                market (as such terms are defined in 
                                section 2791 of the Public Health 
                                Service Act) or coverage described in 
                                section 156.602(a), title 45, Code of 
                                Federal Regulations or successor 
                                regulation.
                                    ``(IV) Entity pharmacy.--The term 
                                `entity pharmacy' shall have the 
                                meaning given such term in subparagraph 
                                (F).
                                    ``(V) Federal poverty guidelines.--
                                The term `Federal poverty guidelines' 
                                means the poverty guidelines updated 
                                periodically in the Federal Register by 
                                the Department of Health and Human 
                                Services pursuant to section 9902(2) of 
                                title 42, United States Code.
                                    ``(VI) Out-of-pocket obligation.--
                                The term `out-of-pocket obligation' 
                                means any copayment, coinsurance, 
                                deductible, or other cost sharing 
                                amount or payment required from an 
                                eligible patient in connection with 
                                such patient's receipt of a specific 
                                health care item or service, including 
                                a covered outpatient drug.
                            ``(v) Civil monetary penalty.--A covered 
                        entity or contract pharmacy that violates a 
                        requirement of this subparagraph shall be 
                        subject to a civil monetary penalty of $2,500 
                        for each such violation, which amount shall be 
                        adjusted for inflation annually to reflect the 
                        rate of change in the Consumer Price Index for 
                        All Urban Consumers published by the Bureau of 
                        Labor Statistics. The provisions of section 
                        1128A of the Social Security Act (other than 
                        subsections (a) and (b)) shall apply to a civil 
                        monetary penalty under this clause in the same 
                        manner as such provisions apply to a penalty or 
                        proceeding under section 1128A(a). The Office 
                        of Inspector General of the Department of 
                        Health and Human Services shall carry out the 
                        provisions of this clause.
                            ``(vi) Regulations.--The Secretary shall 
                        promulgate regulations through notice and 
                        comment rulemaking to implement the 
                        requirements described in this subparagraph and 
                        shall issue final regulations not later than 90 
                        days after the date of enactment of this 
                        subparagraph. The authority to promulgate 
                        regulations under this clause is limited to 
                        specifying the obligations of covered entities 
                        and contract pharmacies under this subparagraph 
                        and other details necessary to carry out the 
                        requirements of this subparagraph efficiently, 
                        effectively, and in conformity with this 
                        subparagraph.
                            ``(vii) OIG studies.--The Office of 
                        Inspector General of the Department of Health 
                        and Human Services shall conduct and publish 
                        annual studies of covered entity (including 
                        child site and entity pharmacy) and contract 
                        pharmacy practices with respect to the 
                        requirements under this subparagraph and 
                        evaluate whether eligible patients are 
                        receiving assistance to reduce their out-of-
                        pocket obligations in accordance with this 
                        subparagraph.
                    ``(H) Patient affordability requirements for 
                certain nonhospital covered entities.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of law, a covered entity 
                        described in one of subparagraphs (A) through 
                        (K) of paragraph (4) that is required by the 
                        Federal statute authorizing the grant, project, 
                        or contract that is the basis for such entity's 
                        participation in the program under this section 
                        to provide affordability assistance to eligible 
                        individuals receiving health care items or 
                        services from such entity shall, with respect 
                        to an eligible patient (as defined in clause 
                        (iii)) dispensed or administered a covered 
                        outpatient drug subject to an agreement under 
                        this section at a covered entity site, 
                        including an entity pharmacy, establish a 
                        policy that provides a discount to reduce the 
                        out-of-pocket obligation of an eligible patient 
                        with respect to such drug to an amount 
                        sufficient to ensure such patient is not denied 
                        access to such drug based on such patient's 
                        ability to pay for such drug.
                            ``(ii) Applicability to contract 
                        pharmacies.--With respect to an eligible 
                        patient of a covered entity described in clause 
                        (i) dispensed a covered outpatient drug subject 
                        to an agreement under this section on behalf of 
                        such covered entity at a contract pharmacy 
                        pursuant to subparagraph (F), such covered 
                        entity shall require such contract pharmacy to 
                        provide discounts to eligible patients on 
                        behalf of such covered entity in accordance 
                        with the covered entity's policy described in 
                        clause (i).
                            ``(iii) Definitions.--In this subparagraph:
                                    ``(I) Contract pharmacy.--The term 
                                `contract pharmacy' shall have the 
                                meaning given such term in subparagraph 
                                (F).
                                    ``(II) Eligible patient.--The term 
                                `eligible patient' means a patient, as 
                                defined in subsection (b)(3), who is 
                                not covered under minimum essential 
                                coverage as defined under section 
                                5000A(f) of the Internal Revenue Code 
                                of 1986 or has family income below 200 
                                percent of the Federal poverty 
                                guidelines and is covered under a group 
                                health plan, health insurance coverage 
                                in the individual market or group 
                                market (as such terms are defined in 
                                section 2791 of the Public Health 
                                Service Act) or coverage described in 
                                section 156.602(a), title 45, Code of 
                                Federal Regulations or successor 
                                regulation.
                                    ``(III) Entity pharmacy.--The term 
                                `entity pharmacy' shall have the 
                                meaning given such term in subparagraph 
                                (F).
                                    ``(IV) Federal poverty 
                                guidelines.--The term `Federal poverty 
                                guidelines' means the poverty 
                                guidelines updated periodically in the 
                                Federal Register by the Department of 
                                Health and Human Services pursuant to 
                                section 9902(2) of title 42, United 
                                States Code.
                                    ``(V) Out-of-pocket obligation.--
                                The term `out-of-pocket obligation' 
                                means any copayment, coinsurance, 
                                deductible, or other cost sharing 
                                amount or payment required from an 
                                eligible patient in connection with 
                                such patient's receipt of a specific 
                                health care item or service, including 
                                a covered outpatient drug.''.

SEC. 7. REQUIREMENTS FOR NONHOSPITAL COVERED ENTITIES AND SUBGRANTEES.

    Section 340B(a)(5) of the Public Health Service Act (42 U.S.C. 
256b(a)(5)) is further amended by adding at the end the following:
                    ``(I) Additional requirements for nonhospital 
                covered entities; requirements for subgrantees.--
                            ``(i) Additional requirements for 
                        nonhospital covered entities.--A covered entity 
                        described in one of subparagraphs (A) through 
                        (K) of paragraph (4) shall, as a condition of 
                        participation in the program under this 
                        section--
                                    ``(I) be a nonprofit or public 
                                entity (as determined by the 
                                Secretary);
                                    ``(II) be eligible to purchase a 
                                covered outpatient drug subject to an 
                                agreement under this section only with 
                                respect to a patient receiving a health 
                                care service at a registered covered 
                                entity site, and such service and such 
                                drug are within the scope and time 
                                period of the Federal grant, project, 
                                or Federal grant-authorizing statute, 
                                as applicable, that qualifies such 
                                covered entity for participation in the 
                                program under this section;
                                    ``(III) oversee the participation 
                                in the program under this section of 
                                any subgrantee with which such covered 
                                entity enters into an enforceable 
                                written agreement in accordance with 
                                subclause (IV) and be directly liable 
                                for noncompliance by any such 
                                subgrantee with any requirement under 
                                this section;
                                    ``(IV) have an enforceable written 
                                agreement with any subgrantee, which 
                                shall apply to all registered sites of 
                                such subgrantee, and require such 
                                subgrantee to comply with all 
                                requirements under this section 
                                otherwise applicable to the covered 
                                entity and to maintain written records, 
                                which shall be made available to the 
                                Secretary upon request, sufficient to 
                                demonstrate such subgrantee's receipt 
                                of eligible Federal funds or an in-kind 
                                contribution purchased with such funds, 
                                as described in clause (iii), and the 
                                grant under which such subgrantee 
                                receives such funds or contribution; 
                                and
                                    ``(V) maintain written records 
                                sufficient to demonstrate such entity 
                                authorized such subgrantee to, prior to 
                                purchasing covered outpatient drugs 
                                subject to an agreement under this 
                                section, register each subgrantee site 
                                in the covered entity identification 
                                system established under subsection 
                                (d)(2)(B)(iv) to participate in the 
                                program under this section as a 
                                subgrantee of such entity and provide 
                                the Secretary with such registration 
                                information as requested to demonstrate 
                                such subgrantee's receipt of eligible 
                                Federal funds or an in-kind 
                                contribution purchased with such funds, 
                                as described in clause (iii), and the 
                                grant under which the subgrantee 
                                receives such funds or contribution.
                            ``(ii) Requirements for subgrantees.--
                        Notwithstanding any other provision in this 
                        section, a subrecipient of a Federal grant 
                        shall be eligible to participate in the program 
                        under this section only if such subrecipient is 
                        a subgrantee (as defined in clause (iii)) and 
                        such subgrantee--
                                    ``(I) is a nonprofit or public 
                                entity (as determined by the 
                                Secretary);
                                    ``(II) prior to purchasing covered 
                                outpatient drugs subject to an 
                                agreement under this section--
                                            ``(aa) enters into an 
                                        enforceable written agreement 
                                        with the covered entity 
                                        providing eligible Federal 
                                        funds or an in-kind 
                                        contribution, pursuant to 
                                        clause (i)(IV);
                                            ``(bb) maintains written 
                                        records, which shall be made 
                                        available to the Secretary upon 
                                        request, sufficient to 
                                        demonstrate such subgrantee's 
                                        receipt of eligible Federal 
                                        funds or an in-kind 
                                        contribution purchased with 
                                        such funds, as described in 
                                        clause (iii), and the grant 
                                        under which such subgrantee 
                                        receives such funds or 
                                        contribution; and
                                            ``(cc) registers each 
                                        subgrantee site to participate 
                                        in the program under this 
                                        section in the covered entity 
                                        identification system 
                                        established under subsection 
                                        (d)(2)(B)(iv);
                                    ``(III) purchases covered 
                                outpatient drugs subject to an 
                                agreement under this section only with 
                                respect to a patient receiving a health 
                                care service at a registered subgrantee 
                                site, and such service and such drug 
                                are within the scope and time period of 
                                the Federal grant, project, or grant-
                                authorizing statute, as applicable, 
                                that qualifies such subgrantee for 
                                participation in the program under this 
                                section;
                                    ``(IV) in the case of a subgrantee 
                                that receives an in-kind contribution 
                                from a covered entity described in 
                                paragraph (4)(K), demonstrates to such 
                                covered entity and to the Secretary, 
                                upon initial registration to 
                                participate in the program under this 
                                section and on an annual basis 
                                thereafter, that the number of 
                                individuals aged 19 to 64 years 
                                receiving a health care service at the 
                                registered subgrantee site during the 
                                most recent calendar year who are 
                                enrolled under a State plan under title 
                                XIX of the Social Security Act (or a 
                                waiver of such plan), as a share of all 
                                individuals aged 19 to 64 years 
                                receiving a health care service at the 
                                registered subgrantee site during such 
                                calendar year, exceeds the number of 
                                individuals aged 19 to 64 years who 
                                reside in the State where such 
                                subgrantee site is located and are 
                                enrolled under a State plan under title 
                                XIX of such Act (or a waiver of such 
                                plan), as a share of all individuals 
                                aged 19 to 64 who reside in such State, 
                                each as measured by data available from 
                                the American Community Survey of the 
                                Bureau of the Census for the calendar 
                                year preceding the most recent calendar 
                                year;
                                    ``(V) in the case of a subgrantee 
                                that receives an in-kind contribution 
                                from a covered entity described in 
                                paragraph (4)(K), submits to such 
                                covered entity and to the Secretary, 
                                upon receipt of each in-kind 
                                contribution described in clause 
                                (iii)--
                                            ``(aa) a written plan in a 
                                        form specified by the Secretary 
                                        describing how such 
                                        contribution will be used to 
                                        further the goals of the 
                                        relevant Federal grant, how 
                                        such subgrantee will ensure 
                                        that purchases of covered 
                                        outpatient drugs under the 
                                        program under this section are 
                                        consistent with the goals of 
                                        such grant, and how such 
                                        subgrantee will ensure 
                                        compliance with the 
                                        requirements under subparagraph 
                                        (A) and (B); and
                                            ``(bb) a written plan in a 
                                        form specified by the Secretary 
                                        and using criteria established 
                                        by the Secretary to determine 
                                        the date upon which its 
                                        eligibility to participate in 
                                        the program under this section, 
                                        as a result of such 
                                        contribution, shall terminate 
                                        (absent such subgrantee's 
                                        receipt of additional funds or 
                                        contributions described in 
                                        clause (iii));
                                    ``(VI) subject to subclause (VII), 
                                immediately notifies the Secretary, 
                                disenrolls from the program under this 
                                section, and discontinues making 
                                purchases under such program and 
                                representing to third parties that it 
                                may purchase under such program as of 
                                the date described in subclause (V)(bb) 
                                or if, at any time during its 
                                participation in the program under this 
                                section, it no longer meets one or more 
                                applicable requirements under this 
                                section; and
                                    ``(VII) not later than 30 days 
                                following the date on which the covered 
                                entity with which such subgrantee has 
                                an agreement pursuant to clause (i) 
                                ceases participation in the program 
                                under this section, such subgrantee 
                                either--
                                            ``(aa) disenrolls from the 
                                        program under this section and 
                                        discontinues making purchases 
                                        under such program and 
                                        representing to third parties 
                                        that such subgrantee may 
                                        purchase under such program; or
                                            ``(bb) enters into an 
                                        enforceable written agreement 
                                        with a different covered entity 
                                        described in one of 
                                        subparagraphs (A) through (K) 
                                        of paragraph (4) that is 
                                        participating in the program 
                                        under this section, and 
                                        satisfies all applicable 
                                        requirements under this section 
                                        with respect to such different 
                                        covered entity.
                            ``(iii) Subgrantee defined.--
                                    ``(I) In general.--In this 
                                subparagraph, the term `subgrantee' 
                                means a subrecipient of a Federal grant 
                                that--
                                            ``(aa) receives eligible 
                                        Federal funds from a covered 
                                        entity described in one of 
                                        subparagraphs (A) through (K) 
                                        of paragraph (4) in the form of 
                                        nonnominal and ongoing payments 
                                        by such covered entity directly 
                                        to such subrecipient to 
                                        directly support the provision 
                                        of health care services by such 
                                        subrecipient to individuals 
                                        within the scope and time 
                                        period of the Federal grant, 
                                        project, or Federal grant-
                                        authorizing statute, as 
                                        applicable, that qualifies such 
                                        covered entity for 
                                        participation in the program 
                                        under this section; or
                                            ``(bb) receives in-kind 
                                        contributions from a covered 
                                        entity described in paragraph 
                                        (4)(K) and such contributions--

                                                    ``(AA) are ongoing 
                                                and are in the form of 
                                                real property, 
                                                equipment, supplies, or 
                                                services;

                                                    ``(BB) subject to 
                                                subclause (II), have a 
                                                value exceeding $25,000 
                                                per year, which shall 
                                                be adjusted for 
                                                inflation annually to 
                                                reflect the rate of 
                                                change in the Consumer 
                                                Price Index for All 
                                                Urban Consumers 
                                                published by the Bureau 
                                                of Labor Statistics and 
                                                determined by the 
                                                subrecipient and 
                                                approved by the covered 
                                                entity providing such 
                                                contribution in a 
                                                manner specified by the 
                                                Secretary;

                                                    ``(CC) are 
                                                specifically 
                                                identifiable and 
                                                provided by such 
                                                covered entity directly 
                                                to such subrecipient; 
                                                and

                                                    ``(DD) directly 
                                                support the provision 
                                                of health care items 
                                                and services by such 
                                                subrecipient solely to 
                                                individuals within the 
                                                scope and time period 
                                                of the Federal grant 
                                                that qualifies such 
                                                covered entity for 
                                                participation in the 
                                                program under this 
                                                section.

                                    ``(II) Exclusion.--The requirement 
                                specified in subclause (I)(bb)(BB) 
                                shall not apply with respect to a 
                                subrecipient of a Federal grant that 
                                receives in-kind contributions from a 
                                covered entity described in paragraph 
                                (4)(K) if--
                                            ``(aa) as of January 1, 
                                        2024, such subrecipient is 
                                        participating in the program 
                                        under this section as such a 
                                        subrecipient and is in 
                                        compliance with all 
                                        requirements under this section 
                                        otherwise applicable to such 
                                        subrecipient; and
                                            ``(bb) with respect to any 
                                        in-kind contribution such 
                                        subrecipient receives after 
                                        January 1, 2024, such 
                                        subrecipient has continuously 
                                        participated in the program 
                                        under this section as such a 
                                        subrecipient in compliance with 
                                        all requirements under this 
                                        section for the period 
                                        beginning on January 1, 2024 
                                        and continuing through the date 
                                        on which program participation 
                                        ends as determined in the plan 
                                        submitted to the Secretary 
                                        pursuant to clause (ii)(V)(bb) 
                                        or any such earlier date on 
                                        which program participation 
                                        ends.
                            ``(iv) Rule of construction.--For purposes 
                        of this section, any subgrantee that is not 
                        itself a covered entity described in one of 
                        subparagraphs (A) through (K) of paragraph (4) 
                        shall be subject to the obligations under this 
                        section applicable to the covered entity with 
                        which such subgrantee has an enforceable 
                        written agreement pursuant to clause (i). 
                        Further, for purposes of this section, each 
                        registered site of such subgrantee shall be 
                        subject to the requirements set forth in 
                        subparagraph (F) as if such site were the 
                        covered entity with which such subgrantee has 
                        an enforceable written agreement pursuant to 
                        clause (i).''.

SEC. 8. CLAIMS MODIFIERS; COVERED ENTITY DATA SUBMISSION.

    Section 340B(a)(5) of the Public Health Service Act (42 U.S.C. 
256b(a)(5)) is further amended by adding at the end the following:
                    ``(J) Claims modifier and covered entity data 
                submission.--
                            ``(i) Claims modifier.--All claims 
                        submitted to a payor, including, without 
                        limitation, Medicare and Medicaid, by a covered 
                        entity or a contract pharmacy under a contract 
                        with a covered entity in compliance with 
                        subparagraph (F) for reimbursement of a unit of 
                        a covered outpatient drug purchased under the 
                        program under this section shall include the 
                        relevant 340B modifier established by the 
                        Secretary under Medicare Part B (that is `JG', 
                        `TB', or any successor modifier) or the 
                        Submission Clarification Code of `20' or any 
                        successor modifier developed by the National 
                        Council for Prescription Drug Programs (NCPDP) 
                        to identify claims for covered outpatient drugs 
                        purchased under such program. All claims 
                        submitted by a covered entity or a contract 
                        pharmacy described in this clause to a payor, 
                        including, without limitation, Medicare and 
                        Medicaid, for reimbursement of a unit of a 
                        covered outpatient drug not purchased under 
                        such program shall also include a relevant non-
                        340B modifier, which shall be established by 
                        the Secretary, or a non-340B modifier developed 
                        by the NCPCP to identify such claims.
                            ``(ii) Covered entity data submission.--A 
                        covered entity described in paragraph (4) shall 
                        (and shall cause any entity acting on its 
                        behalf to) furnish to the clearinghouse 
                        described in subsection (d)(2)(C) the data 
                        described in clause (iii), in a machine-
                        readable format, with respect to each covered 
                        outpatient drug dispensed, furnished, or 
                        administered by the covered entity (including 
                        such drugs dispensed by a contract pharmacy 
                        under contract with such covered entity in 
                        compliance with subparagraph (F)), for which 
                        such covered entity seeks or has received 
                        discounted pricing under this section. Such 
                        covered entity shall provide, or cause to be 
                        provided, such data to the clearinghouse within 
                        45 days after the date on which the covered 
                        outpatient drug was dispensed, furnished, or 
                        administered (or such shorter time period as 
                        may be specified by the Secretary through 
                        notice-and-comment rulemaking) in an electronic 
                        format specified by the Secretary. The covered 
                        entity shall require (and shall cause any 
                        entity acting on its behalf to require) that 
                        data on pharmacy-dispensed drugs described in 
                        this subparagraph be submitted to the 
                        clearinghouse directly by the pharmacy 
                        dispensing such drug.
                            ``(iii) Claim level data elements.--The 
                        data described in this clause shall include the 
                        following, as applicable:
                                    ``(I) Self-administered drugs.--
                                With respect to a self-administered 
                                drug dispensed at a pharmacy, by a mail 
                                order service, or by another 
                                dispenser--
                                            ``(aa) prescription number;
                                            ``(bb) prescribed date;
                                            ``(cc) prescription fill 
                                        date;
                                            ``(dd) national drug code 
                                        (NDC) of the drug;
                                            ``(ee) quantity dispensed;
                                            ``(ff) bank identification 
                                        number, processor control 
                                        number, and group number of the 
                                        plan receiving the claim (as 
                                        applicable);
                                            ``(gg) national provider 
                                        identifier (NPI) of the 
                                        prescriber;
                                            ``(hh) NPI of the 
                                        dispensing pharmacy;
                                            ``(ii) name and 340B 
                                        identifier of the covered 
                                        entity dispensing the drug, or 
                                        on whose behalf the drug is 
                                        dispensed;
                                            ``(jj) 340B/non-340B claim 
                                        modifier;
                                            ``(kk) wholesaler invoice 
                                        number; and
                                            ``(ll) an indicator, which 
                                        shall be specified by the 
                                        clearinghouse or the Secretary, 
                                        denoting that the drug was or 
                                        was not dispensed as a result 
                                        of a qualifying referral 
                                        described in subsection (b)(3).
                                    ``(II) Provider-administered 
                                drugs.--With respect to a drug 
                                furnished or administered by a 
                                physician or other provider of services 
                                or a supplier--
                                            ``(aa) drug billing and 
                                        payment code/HCPCS code;
                                            ``(bb) NDC of the drug;
                                            ``(cc) claim number;
                                            ``(dd) Medicare provider 
                                        number of prescriber (as 
                                        applicable);
                                            ``(ee) NPI of the 
                                        prescriber;
                                            ``(ff) name and 340B 
                                        identifier of the covered 
                                        entity furnishing or 
                                        administering the drug;
                                            ``(gg) date drug furnished 
                                        or administered;
                                            ``(hh) claim adjudication 
                                        date;
                                            ``(ii) quantity furnished 
                                        or administered;
                                            ``(jj) 340B/non-340B claim 
                                        modifier; and
                                            ``(kk) an indicator, which 
                                        shall be specified by the 
                                        clearinghouse or the Secretary, 
                                        denoting that the drug was or 
                                        was not furnished or 
                                        administered as a result of a 
                                        qualifying referral described 
                                        in subsection (b)(3).
                            ``(iv) Information privacy and security.--A 
                        covered entity described in paragraph (4) shall 
                        provide the data specified in clause (iii) to 
                        the clearinghouse in a secure manner, 
                        consistent with such entity's obligations under 
                        the Security Standards for the Protection of 
                        Electronic Protected Health Information 
                        described in part 164 of subpart C of title 45, 
                        Code of Federal Regulations (or any successor 
                        regulations). A covered entity shall not be 
                        required to obtain an individual authorization 
                        under part 164 of subpart E of title 45, Code 
                        of Federal Regulations (or any successor 
                        regulations) for its reporting of such data to 
                        the clearinghouse.
                            ``(v) Standardization of reported data 
                        elements; prohibition on modifications.--A 
                        covered entity described in paragraph (4) shall 
                        take reasonable steps to ensure the data 
                        specified in clause (iii) submitted to the 
                        clearinghouse fully complies with the data 
                        submission standards (including field 
                        descriptors and definitions) specified by the 
                        clearinghouse or the Secretary following 
                        consultation with relevant stakeholders, 
                        including manufacturers of covered outpatient 
                        drugs. A covered entity described in paragraph 
                        (4) is prohibited, and shall prohibit any 
                        entity acting on its behalf (including any 
                        affiliate of such entity), from taking or 
                        refraining from taking any action that would 
                        cause such information to no longer comply with 
                        the standards described in this clause. In 
                        specifying the data submission standards 
                        described in this clause, the clearinghouse and 
                        the Secretary, as applicable, shall seek to 
                        minimize administrative burden on covered 
                        entities while ensuring such data satisfies the 
                        intent of this subparagraph.
                            ``(vi) Covered entities that fail to 
                        report.--A covered entity that fails to furnish 
                        the information as required under this 
                        subparagraph shall be subject to a civil 
                        monetary penalty in the amount of $2,500 for 
                        each day of such violation, which amount shall 
                        be adjusted for inflation annually to reflect 
                        the rate of change in the Consumer Price Index 
                        for All Urban Consumers published by the Bureau 
                        of Labor Statistics. The provisions of section 
                        1128A of the Social Security Act (other than 
                        subsections (a) and (b)) shall apply to a civil 
                        monetary penalty under this clause in the same 
                        manner as such provisions apply to a penalty or 
                        proceeding under section 1128A(a). The Office 
                        of Inspector General of the Department of 
                        Health and Human Services shall carry out the 
                        provisions of this clause.''.

SEC. 9. COVERED ENTITY REPORTING ON SCOPE OF GRANT, CONTRACT, AND 
              PROJECT.

    Section 340B(a)(5) of the Public Health Service Act (42 U.S.C. 
256b(a)(5)) is further amended by adding at the end the following:
                    ``(K) Reporting on scope of grant, contract, and 
                project.--A covered entity described in one of 
                subparagraphs (A) through (K) of paragraph (4) shall 
                submit information specified by the Secretary to the 
                identification system described in subsection 
                (d)(2)(B)(iv) at least annually, in a form and manner 
                specified by the Secretary, describing the scope of its 
                Federal grant or project, or the Federal grant-
                authorizing statute, as applicable, that is the basis 
                for such entity's eligibility for the program under 
                this section. Such information shall include copies of 
                agreements between such entity and any subgrantee, as 
                described in subparagraph (I). Access to information 
                described in this subparagraph shall be made available 
                to a manufacturer of a covered outpatient drug, upon 
                request, in a manner specified by the Secretary.''.

SEC. 10. ENSURING COVERED ENTITY TRANSPARENCY.

    (a) In General.--Section 340B(a)(5) of the Public Health Service 
Act (42 U.S.C. 256b(a)(5)) is further amended by adding at the end the 
following:
                    ``(L) Reporting.--
                            ``(i) In general.--During the first year 
                        beginning on or after the date that is 14 
                        months after the date of enactment of this 
                        subparagraph and during each subsequent year, 
                        each covered entity described in subparagraph 
                        (L) of paragraph (4) (and any other covered 
                        entity specified by the Secretary) shall report 
                        to the Secretary (at a time and in a form and 
                        manner specified by the Secretary) the 
                        following information with respect to the 
                        preceding year:
                                    ``(I) With respect to such covered 
                                entity and each child site, as 
                                applicable, of such entity--
                                            ``(aa) the total number of 
                                        individuals who were dispensed 
                                        or administered covered 
                                        outpatient drugs during such 
                                        preceding year that were 
                                        subject to an agreement under 
                                        this section; and
                                            ``(bb) the number of such 
                                        individuals described in a 
                                        category specified in clause 
                                        (iii), broken down by each such 
                                        category.
                                    ``(II) With respect to such covered 
                                entity and each child site, as 
                                applicable, of such entity--
                                            ``(aa) the percentage of 
                                        the total number of individuals 
                                        furnished items and services 
                                        during such preceding year who 
                                        were dispensed or administered 
                                        covered outpatient drugs during 
                                        such preceding year that were 
                                        subject to an agreement under 
                                        this section; and
                                            ``(bb) for each category 
                                        specified in clause (iii), the 
                                        percentage of the total number 
                                        of individuals described in 
                                        such category furnished items 
                                        and services during such 
                                        preceding year who were 
                                        dispensed or administered 
                                        covered outpatient drugs during 
                                        such preceding year that were 
                                        subject to an agreement under 
                                        this section.
                                    ``(III) With respect to such 
                                covered entity and each child site, as 
                                applicable, of such entity, the total 
                                costs incurred during the year at each 
                                such site and the cost incurred at each 
                                such site for charity care (as defined 
                                in line 23 of worksheet S-10 to the 
                                Medicare cost report, or in any 
                                successor form).
                                    ``(IV) With respect to such covered 
                                entity and each child site, as 
                                applicable, of such entity, the costs 
                                incurred during the year of furnishing 
                                items and services at each such entity 
                                or site to patients of such entity who 
                                were entitled to benefits under part A 
                                of title XVIII of the Social Security 
                                Act or enrolled under part B of such 
                                title, enrolled in a State plan under 
                                title XIX of such Act (or a waiver of 
                                such plan), or who were uninsured for 
                                services, minus the sum of--
                                            ``(aa) payments under title 
                                        XVIII of such Act for such 
                                        items and services (including 
                                        any cost sharing for such items 
                                        and services);
                                            ``(bb) payments under title 
                                        XIX of such Act for such items 
                                        and services (including any 
                                        cost sharing for such items and 
                                        services); and
                                            ``(cc) payments by 
                                        uninsured patients for such 
                                        items and services.
                                    ``(V) With respect to such covered 
                                entity and each child site, as 
                                applicable, of such entity, the margin 
                                (as defined in clause (iv)) generated 
                                on covered outpatient drugs subject to 
                                an agreement under this section 
                                dispensed or furnished by such entity 
                                or site (and any entity pharmacy or 
                                contract pharmacy dispensing such drugs 
                                on behalf of such entity in accordance 
                                with subparagraph (F)), with each 
                                component of the margin calculation 
                                described in item (aa) through (cc) of 
                                such clause listed as a separate line 
                                item.
                                    ``(VI) To the extent the Secretary 
                                requires covered entities described in 
                                one of subparagraphs (A) through (K) of 
                                paragraph (4) to report information 
                                pursuant to this subparagraph, with 
                                respect to each such covered entity, 
                                use of margin (as defined in clause 
                                (iv)) generated on covered outpatient 
                                drugs subject to an agreement under 
                                this section in the following 
                                categories of expenditures, if 
                                applicable, which the Secretary shall 
                                define in interim final regulations in 
                                a manner consistent with reporting 
                                under the Health Resources and Services 
                                Administration Uniform Data System 
                                (UDS)--
                                            ``(aa) medical care;
                                            ``(bb) dental care;
                                            ``(cc) mental health;
                                            ``(dd) pharmaceuticals, 
                                        which shall include margin used 
                                        to provide free and discounted 
                                        covered outpatient drugs 
                                        subject to an agreement under 
                                        this section dispensed or 
                                        furnished to eligible patients 
                                        (as defined in subparagraph 
                                        (H)), notwithstanding any UDS 
                                        reporting requirement that may 
                                        limit or interfere with the 
                                        inclusion of margin used for 
                                        such purpose;
                                            ``(ee) sliding fee 
                                        discounts;
                                            ``(ff) case management;
                                            ``(gg) transportation;
                                            ``(hh) patient and 
                                        community education;
                                            ``(ii) community health 
                                        workers;
                                            ``(jj) outreach;
                                            ``(kk) eligibility 
                                        assistance; and
                                            ``(ll) nutritional 
                                        assessment and referral.
                            ``(ii) Publication.--The Secretary shall 
                        publish data reported under clause (i) with 
                        respect to a year annually on the public 
                        website of the Department of Health and Human 
                        Services in an electronic and searchable 
                        format, which may include the 340B Office of 
                        Pharmacy Affairs Information System (or a 
                        successor to such system), in a manner that 
                        shows each category of data reported in the 
                        aggregate and identified by the specific 
                        covered entity submitting such data. The 
                        Secretary shall include in such publication the 
                        disproportionate patient percentage (as defined 
                        in section 1886(d)(5)(F)(vi) of the Social 
                        Security Act) of each such covered entity (if 
                        applicable) for each cost reporting period 
                        occurring during such year.
                            ``(iii) Categories specified.--For purposes 
                        of clause (i), the categories specified in this 
                        clause are the following:
                                    ``(I) Individuals covered under a 
                                group health plan or group or 
                                individual health insurance coverage 
                                (as such terms are defined in section 
                                2791).
                                    ``(II) Individuals entitled to 
                                benefits under part A or enrolled under 
                                part B of title XVIII of the Social 
                                Security Act.
                                    ``(III) Individuals enrolled under 
                                a State plan under title XIX of such 
                                Act (or a waiver of such plan).
                                    ``(IV) Individuals enrolled under a 
                                State child health plan under title XXI 
                                of such Act (or a waiver of such plan).
                                    ``(V) Individuals not described in 
                                any preceding subclause and not covered 
                                under any Federal health care program 
                                (as defined in section 1128B of such 
                                Act but including the program 
                                established under chapter 89 of title 
                                5, United States Code).
                            ``(iv) Definitions.--In this subparagraph:
                                    ``(I) Child site.--The term `child 
                                site' shall have the meaning given such 
                                term in subparagraph (E).
                                    ``(II) Entity pharmacy.--The term 
                                `entity pharmacy' shall have the 
                                meaning given such term in subparagraph 
                                (F).
                                    ``(III) Margin.--The term `margin' 
                                means, with respect to covered 
                                outpatient drugs purchased by a covered 
                                entity under an agreement under this 
                                section, the following amount for such 
                                drugs dispensed, furnished, or 
                                administered to an individual by such 
                                entity or a child site of such entity 
                                (and any entity pharmacy or contract 
                                pharmacy dispensing such drugs on 
                                behalf of such entity in accordance 
                                with subparagraph (F))--
                                            ``(aa) aggregate payments 
                                        received by the covered entity 
                                        for such drugs from individuals 
                                        (including cost-sharing 
                                        amounts) and third parties, 
                                        including government and 
                                        private payors; minus
                                            ``(bb) aggregate costs to 
                                        acquire such drugs at either 
                                        the ceiling price described in 
                                        paragraph (1) or any voluntary 
                                        subceiling price at which the 
                                        covered entity purchased such 
                                        drug or drugs, as applicable; 
                                        minus
                                            ``(cc) aggregate costs 
                                        incurred by the covered entity 
                                        that are necessary for such 
                                        entity to participate in the 
                                        program under this section and 
                                        to comply with such program's 
                                        requirements, including 
                                        program-related compliance, 
                                        legal, educational, and 
                                        administrative costs (such 
                                        costs shall be determined in 
                                        accordance with Generally 
                                        Accepted Accounting 
                                        Principles), and compensation 
                                        paid to third-party 
                                        administrators or contract 
                                        pharmacies to carry out 
                                        program-related functions.''.
    (b) Rulemaking.--Not later than 180 days after the date of 
enactment of this Act, the Secretary of Health and Human Services shall 
issue an interim final rule to carry out section 340B(a)(5)(L) of the 
Public Health Service Act, as added by subsection (a).

SEC. 11. REVISIONS TO EXISTING 340B HOSPITAL ELIGIBILITY REQUIREMENTS.

    Section 340B(a)(4) of the Public Health Service Act (42 U.S.C. 
256b(a)(4)) is amended--
            (1) in subparagraph (L)(i)--
                    (A) by inserting ``and that was registered with the 
                340B program in the covered entity identification 
                system established under subsection (d)(2)(B)(iv) as 
                such a hospital on or before December 1, 2023'' after 
                ``formally granted governmental powers by a unit of 
                state or local government''; and
                    (B) by striking ``not entitled to benefits under 
                title XVIII of the Social Security Act'' and all that 
                follows up to the semicolon at the end and inserting 
                ``uninsured, as such terms are defined in subsection 
                (a)(11)'';
            (2) by amending subparagraph (N) to read as follows:
                    ``(N) An entity that is a critical access hospital 
                (as determined under section 1820(c)(2) of the Social 
                Security Act (42 U.S.C. 1395i-4(c)(2))) or a rural 
                emergency hospital (as determined under the 
                requirements in section 1861(kkk) of the Social 
                Security Act (42 U.S.C. 1395x(kkk) and in implementing 
                regulations set forth in parts 419, 424, 485, 488, and 
                489 of title 42 of the Code of Federal Regulations in 
                effect as of January 1, 2023)), and that meets the 
                requirements of subparagraph (L)(i).''; and
            (3) in subparagraph (O) by inserting ``that demonstrates to 
        the Secretary that at least 60 percent of annual inpatient 
        discharges for cost reporting periods beginning after December 
        1, 2023 are for inpatients who reside in a county that is not 
        part of a Metropolitan Statistical Area, as defined by the 
        Director of the Office of Management and Budget'' before ``, or 
        a sole community hospital''.

SEC. 12. ADDITIONAL REQUIREMENTS FOR 340B HOSPITALS.

    Section 340B(a) of the Public Health Service Act (42 U.S.C. 
256b(a)) is amended by adding at the end the following:
            ``(11) Clarification of eligibility standards for private 
        nonprofit hospitals with a contract with a state or local 
        government to provide health care services.--
                    ``(A) Contract requirements.--For purposes of 
                paragraph (4)(L)(i) and cross-references to 
                subparagraph (L) or clause (i) of such paragraph 
                appearing in subparagraph (M) and subparagraph (O) of 
                such paragraph with respect to a rural referral center, 
                a private nonprofit hospital has a contract with a 
                State or local government to provide health care 
                services to low-income individuals who are uninsured 
                if--
                            ``(i) the hospital submits a copy of the 
                        contract (including any appendices or addenda 
                        or subsequent amendments) to the Secretary for 
                        review;
                            ``(ii) the Secretary determines that the 
                        contract creates an enforceable obligation for 
                        the hospital to provide direct medical care to 
                        low-income individuals who are uninsured in an 
                        amount that represents at least 10 percent of 
                        the hospital's total costs of care;
                            ``(iii) the Secretary further determines, 
                        based on a review of the contract (as described 
                        in clause (i)) that the contract creates an 
                        enforceable obligation for the hospital to 
                        furnish the individuals described in clause 
                        (ii) the full range of services provided at the 
                        hospital (including any child sites); and
                            ``(iv) the contract (as described in clause 
                        (i)) is available to the public as part of the 
                        information describing the hospital in the 
                        covered entity identification system 
                        established under subsection (d)(2)(B)(iv).
                    ``(B) Deregistration.--If at any time a hospital 
                not owned or operated by a unit of State or local 
                government that has been participating in the program 
                under this section on the basis of having a contract 
                with a State or local government to provide health care 
                services that is subject to subparagraph (A) no longer 
                satisfies a requirement under such subparagraph, the 
                hospital shall immediately notify the Secretary that 
                the hospital no longer satisfies the relevant 
                requirement, deregister the hospital from the program 
                under this section and the identification system 
                described in subsection (d)(2)(B)(iv), and cease making 
                purchases under such program and representing to third 
                parties that it may purchase under such program.
                    ``(C) Obligation to self-disclose.--A covered 
                entity described in subparagraph (B) shall immediately 
                disclose to the Secretary and the manufacturer of the 
                affected covered outpatient drug any purchase made 
                under the program under this section by such covered 
                entity that, at the time of the purchase of such drug, 
                did not fully satisfy the requirements in subparagraph 
                (A). Any such purchase shall require the covered entity 
                to promptly conduct an audit supervised by the 
                Secretary to identify the full scope of noncompliance 
                with such requirements and to provide the written 
                results of such audit to the Secretary and the 
                manufacturer of the affected covered outpatient drug. 
                The covered entity shall be liable to the manufacturer 
                of the covered outpatient drug that is the subject of 
                the noncompliance in an amount equal to the reduction 
                in the price of the drugs provided under subsection 
                (a)(1), plus interest on such amount, which shall be 
                compounded monthly and equal to the current short-term 
                interest rate as determined by the Federal Reserve for 
                the time period for which the covered entity is liable.
                    ``(D) Civil monetary penalty.--Where a covered 
                entity fails to satisfy a requirement in subparagraph 
                (B) or (C), the covered entity shall be required to pay 
                a civil monetary penalty equal to $2,500 for each 
                violation, which amount shall be adjusted for inflation 
                annually to reflect the rate of change in the Consumer 
                Price Index for All Urban Consumers published by the 
                Bureau of Labor Statistics. The provisions of section 
                1128A of the Social Security Act (other than 
                subsections (a) and (b)) shall apply to a civil 
                monetary penalty under this subparagraph in the same 
                manner as such provisions apply to a penalty or 
                proceeding under section 1128A(a). The Office of 
                Inspector General of the Department of Health and Human 
                Services shall carry out the provisions related to the 
                imposition of civil monetary penalties under this 
                subparagraph.
                    ``(E) Definitions.--In this paragraph:
                            ``(i) Federal poverty guidelines.--The term 
                        `Federal poverty guidelines' means the poverty 
                        guidelines updated periodically in the Federal 
                        Register by the Department of Health and Human 
                        Services pursuant to section 9902(2) of title 
                        42, United States Code.
                            ``(ii) Low-income individual.--The term 
                        `low-income individual' means an individual 
                        with family income at or below 200 percent of 
                        the Federal poverty guidelines.
                            ``(iii) Uninsured.--The term `uninsured' 
                        means lacking minimum essential coverage, as 
                        defined in subsection 5000A(f) of the Internal 
                        Revenue Code (26 U.S.C. 5000A(f)) and 
                        implementing regulations.
            ``(12) Additional requirement for private nonprofit 
        disproportionate share hospitals located in urban areas.--
                    ``(A) In general.--A covered entity described in 
                paragraph (4)(L)(i) that is either a private nonprofit 
                hospital that has as the basis for its participation in 
                the program under this section a contract with a State 
                or local government as described in such paragraph and 
                in paragraph (11), or that is a private nonprofit 
                corporation which is formally granted governmental 
                powers by a unit of State or local government, and such 
                entity is located in a county that is part of a 
                Metropolitan Statistical Area, as defined by the Office 
                of Management and Budget, must, for the preceding year, 
                fall within the top 40 percent of hospitals on each of 
                the lists described in subparagraphs (B) and (C) 
                prepared by the Secretary with respect to the State in 
                which the covered entity is located. As described 
                further in subparagraph (D), placement in the top 40 
                percent of hospitals on both of such lists is a 
                condition of such covered entity's participation in the 
                program under this section and failure to meet this 
                condition shall require deregistration and self-
                disclosure using the procedures described in 
                subparagraphs (B) and (C) of paragraph (11). Such 
                covered entity shall be subject to a civil monetary 
                penalty described in paragraph (11)(D) for failure to 
                deregister and self-disclose in accordance with the 
                preceding sentence.
                    ``(B) Medicaid and chip outpatient revenue.--Within 
                90 days following the conclusion of a year, the 
                Secretary shall prepare and make available to the 
                public in an electronic, machine-readable format for 
                each State for the concluded year, a list that ranks 
                all acute care hospitals in such State in descending 
                order based on each hospital's share of total 
                outpatient services revenue derived from base 
                reimbursement to such hospital (excluding supplemental 
                and indirect reimbursement) under title XIX of the 
                Social Security Act (including with respect to 
                individuals also entitled to benefits under part A of 
                title XVIII of such Act or enrolled in part B of title 
                XVIII of such Act) and payments under title XXI of such 
                Act for items and services furnished on an outpatient 
                basis at the hospital (including any cost sharing for 
                such items and services). The Secretary shall specify 
                the threshold for the top 40 percent of hospitals on 
                the list.
                    ``(C) Uncompensated outpatient care.--Within 90 
                days following the conclusion of a year, the Secretary 
                shall prepare and make available to the public in an 
                electronic, machine-readable format for each State for 
                the concluded year, a list that ranks all acute care 
                hospitals in such State in descending order based on 
                each hospital's total cost of uncompensated care for 
                items and services furnished on an outpatient basis as 
                a share of the hospital's total outpatient services 
                revenue. For purposes of this list, costs of 
                uncompensated outpatient care shall be determined in a 
                manner consistent with the instructions on worksheet S-
                10 to the Medicare cost report (or any successor form), 
                with adjustments to limit uncompensated outpatient care 
                costs to those incurred in providing items and services 
                on an outpatient basis at the hospital. The Secretary 
                shall specify the threshold for the top 40 percent of 
                hospitals on the list.
                    ``(D) Deregistration.--Within 30 days following the 
                Secretary's publication of the lists described in 
                subparagraphs (B) and (C), each covered entity subject 
                to this paragraph that is not included in the top 40 
                percent of hospitals on both lists shall notify the 
                Secretary that the covered entity does not satisfy one 
                or more requirements described in this paragraph, 
                deregister the entity from the program under this 
                section and the identification system described in 
                subsection (d)(2)(B)(iv), and cease making purchases 
                under such program and representing to third parties 
                that it may purchase under such program. Such an entity 
                may seek to register under another covered entity 
                category described in paragraph (4) if such entity 
                meets the criteria for such a category and applicable 
                requirements under this section.
                    ``(E) Obligation to self-disclose.--A covered 
                entity described in subparagraph (D) shall immediately 
                disclose to the Secretary and the manufacturer of the 
                affected covered outpatient drug any purchase made 
                under the program under this section by such covered 
                entity that, at the time of the purchase of such drug, 
                did not fully satisfy the requirements in subparagraphs 
                (B) and (C). Any such purchase shall require the 
                covered entity to promptly conduct an audit supervised 
                by the Secretary to identify the full scope of 
                noncompliance with such requirements and to provide the 
                written results of such audit to the Secretary and the 
                manufacturer of the affected covered outpatient drug. 
                The covered entity shall be liable to the manufacturer 
                of the covered outpatient drug that is the subject of 
                the noncompliance in an amount equal to the reduction 
                in the price of the drugs provided under paragraph (1), 
                plus interest on such amount, which shall be compounded 
                monthly and equal to the current short-term interest 
                rate as determined by the Federal Reserve for the time 
                period for which the covered entity is liable.
                    ``(F) Civil monetary penalty.--Where a covered 
                entity fails to satisfy a requirement in subparagraph 
                (D) or (E), the covered entity shall be required to pay 
                a civil monetary penalty equal to $2,500 for each 
                violation, which amount shall be adjusted for inflation 
                annually to reflect the rate of change in the Consumer 
                Price Index for All Urban Consumers published by the 
                Bureau of Labor Statistics. The provisions of section 
                1128A of the Social Security Act (other than 
                subsections (a) and (b)) shall apply to a civil 
                monetary penalty under this subparagraph in the same 
                manner as such provisions apply to a penalty or 
                proceeding under section 1128A(a). The Office of 
                Inspector General of the Department of Health and Human 
                Services shall carry out the provisions related to the 
                imposition of civil monetary penalties under this 
                subparagraph.
            ``(13) Prohibition against extraordinary collection 
        actions.--
                    ``(A) Ecas prohibited.--A covered entity described 
                in subparagraphs (L) through (O) of paragraph (4) is 
                prohibited from engaging in extraordinary collection 
                actions (ECAs), as such term is described in section 
                501(r)(6) of the Internal Revenue Code and its 
                implementing regulations set forth in section 1.501(r)-
                6 of title 26 of the Code of Federal Regulations (or 
                any successor regulations), with respect to health care 
                items and services furnished to uninsured individuals 
                or low-income individuals.
                    ``(B) Audits.--The Secretary shall audit for 
                covered entity compliance with this paragraph, 
                establish a process for individuals to report suspected 
                violations of this paragraph to the Secretary, and 
                promptly and fully investigate such reports of 
                suspected violations.
                    ``(C) Civil monetary penalty.--Where a covered 
                entity violates the prohibition in this paragraph, the 
                covered entity shall be required to pay a civil 
                monetary penalty equal to $2,500 for each extraordinary 
                collection action taken with respect to an individual 
                described in this paragraph, which amount shall be 
                adjusted for inflation annually to reflect the rate of 
                change in the Consumer Price Index for All Urban 
                Consumers published by the Bureau of Labor Statistics. 
                The provisions of section 1128A of the Social Security 
                Act (other than subsections (a) and (b)) shall apply to 
                a civil monetary penalty under this paragraph in the 
                same manner as such provisions apply to a penalty or 
                proceeding under section 1128A(a). The Office of 
                Inspector General of the Department of Health and Human 
                Services shall carry out the provisions related to the 
                imposition of civil monetary penalties under this 
                paragraph.
                    ``(D) Definitions.--In this paragraph, the terms 
                `low-income individual' and `uninsured' have the 
                meanings given such terms in paragraph (11).
            ``(14) Additional requirement for certain hospitals.--
                    ``(A) In general.--During the first calendar year 
                beginning on or after the date that is 24 months after 
                the date of enactment of this paragraph and during each 
                subsequent calendar year, a covered entity described in 
                paragraph (4)(L) shall determine by October 1 of each 
                such year, based on the most recent year of data it has 
                reported to the Secretary under paragraph (5)(L) at 
                that point in time, whether the annual charity care 
                costs it incurred for the year reported were greater 
                than or equal to the margin it realized under the 
                program under this section for that same year. As 
                described further in subparagraph (D), for the period 
                specified in the preceding sentence, having annual 
                charity care costs that equal or exceed the margin for 
                the most recently reported year is a condition of such 
                covered entity's participation in the program under 
                this section for the upcoming calendar year, and 
                failure to meet this condition shall require 
                deregistration and self-disclosure using the procedures 
                described in subparagraphs (D) and (E). Such covered 
                entity shall be subject to a civil monetary penalty 
                described in subparagraph (F) for failure to deregister 
                and self-disclose in accordance with the preceding 
                sentence.
                    ``(B) Annual charity care costs.--The term `annual 
                charity care costs' means the total costs incurred 
                during the year by the covered entity and its child 
                sites (as defined in paragraph (5)(E)(i)) for charity 
                care (as defined in line 23 of worksheet S-10 to the 
                Medicare cost report, or in any successor form).
                    ``(C) Margin.--The term `margin' means the margin 
                reported by the covered entity for the year pursuant to 
                paragraph (5)(L)(i)(V).
                    ``(D) Deregistration and conditions for subsequent 
                registration.--
                            ``(i) De-registration.--On October 1 of 
                        each year beginning on or after the date that 
                        is 24 months after the date of enactment of 
                        this paragraph, each covered entity subject to 
                        this paragraph that has reported at least one 
                        year of data to the Secretary under paragraph 
                        (5)(L) and that does not have, for the most 
                        recently reported year, annual charity care 
                        costs greater than or equal to the margin, 
                        shall notify the Secretary that it does not 
                        meet the condition of participation under this 
                        paragraph for the upcoming calendar year, 
                        deregister the entity from the program under 
                        this section and the identification system 
                        described in subsection (d)(2)(B)(iv) for the 
                        upcoming calendar year, cease making purchases 
                        under such program as of the start of the 
                        upcoming calendar year, cease representing to 
                        third parties that it may purchase under such 
                        program beyond the current calendar year, and 
                        refrain from purchasing covered outpatient 
                        drugs under this section in quantities 
                        exceeding such entity's bona fide needs for the 
                        remainder of the current calendar year.
                            ``(ii) Registration following de-
                        registration.--
                                    ``(I) Registration under another 
                                covered entity category.--A covered 
                                entity that must deregister under this 
                                subparagraph shall not be prohibited 
                                from registering to participate in the 
                                program under this section under 
                                another covered entity category 
                                described in paragraph (4) if such 
                                entity meets the criteria for such a 
                                category and applicable requirements 
                                under this section.
                                    ``(II) Registration under paragraph 
                                (4)(l).--In order to register under 
                                paragraph (4)(L), a hospital that has 
                                been required to deregister under this 
                                subparagraph must demonstrate to the 
                                Secretary (in a form and manner 
                                specified by the Secretary, and in 
                                addition to demonstrating that it 
                                satisfies the other applicable 
                                registration criteria under paragraph 
                                (4)(L)) that its annual charity care 
                                cost (as defined in subparagraph (B)) 
                                for the most recent year that the 
                                hospital would have reported under 
                                paragraph (4)(L) absent the 
                                deregistration exceeded by at least one 
                                percent point the annual charity care 
                                cost for the year preceding 
                                deregistration by the hospital. If the 
                                hospital is found to meet this 
                                requirement and approved by the 
                                Secretary for registration under 
                                paragraph (4)(L), then the hospital 
                                will be required to resume reporting 
                                under paragraph (5)(L) and (once the 
                                entity has reported at least one year 
                                of data to the Secretary under 
                                paragraph (5)(L)) to meet the condition 
                                of participation described in this 
                                paragraph for the most recently 
                                reported year as of October 1 of each 
                                year.
                    ``(E) Obligation to self-disclose.--A covered 
                entity described in subparagraph (D) shall immediately 
                disclose to the Secretary and the manufacturer of the 
                affected covered outpatient drug any purchase it made 
                under this section during a calendar year in which it 
                was ineligible to participate in the program under this 
                section. Any such purchase shall require the covered 
                entity promptly to conduct an audit supervised by the 
                Secretary to identify the full scope of noncompliance 
                and to provide the written results of such audit to the 
                Secretary and the manufacturer of the affected covered 
                outpatient drug. The covered entity shall be liable to 
                the manufacturer of the covered outpatient drug that is 
                the subject of the noncompliance in an amount equal to 
                the reduction in the price of the drugs provided under 
                paragraph (1), plus interest on such amount, which 
                shall be compounded monthly and equal to the current 
                short-term interest rate as determined by the Federal 
                Reserve for the time period for which the covered 
                entity is liable.
                    ``(F) Civil monetary penalty.--Where a covered 
                entity fails to satisfy a requirement in subparagraph 
                (D) or (E), the covered entity shall be required to pay 
                a civil monetary penalty equal to $2,500 for each 
                violation, which amount shall be adjusted for inflation 
                annually to reflect the rate of change in the Consumer 
                Price Index for All Urban Consumers published by the 
                Bureau of Labor Statistics. The provisions of section 
                1128A of the Social Security Act (other than 
                subsections (a) and (b)) shall apply to a civil 
                monetary penalty under this subparagraph in the same 
                manner as such provisions apply to a penalty or 
                proceeding under section 1128A(a). The Office of 
                Inspector General of the Department of Health and Human 
                Services shall carry out the provisions related to the 
                imposition of civil monetary penalties under this 
                subparagraph.''.

SEC. 13. 340B PROGRAM.

    Section 340B(a) of the Public Health Service Act (42 U.S.C. 
256b(a)) is further amended by adding at the end the following:
            ``(15) 340B program.--The intent of this section is to 
        provide for manufacturer price reductions that enable covered 
        entities, whose mission is to serve underserved or otherwise 
        vulnerable communities, to increase access to affordable drugs 
        and health services for these communities.''.

SEC. 14. AUDITS OF PRIVATE NONHOSPITAL CONTRACTS WITH STATE AND LOCAL 
              GOVERNMENTS.

    Section 340B(d)(2)(B) of the Public Health Service Act (42 U.S.C. 
256b(d)(2)(B)) is amended by adding at the end the following:
                            ``(vi) The conducting of annual audits by 
                        the Secretary of contracts between a covered 
                        entity described in subparagraph (L) or 
                        subparagraph (M) of subsection (a)(4), or 
                        subparagraph (O) of such subsection with 
                        respect to a rural referral center, that is a 
                        private nonprofit hospital subject to the 
                        requirements in subsections (a)(4)(L)(i) and 
                        (a)(11) and a State or local government for at 
                        least 10 percent of all such entities 
                        participating in the program under this 
                        section. The Secretary shall develop and 
                        publicly disclose standards used to determine 
                        whether such contracts satisfy the applicable 
                        requirements described in subsections 
                        (a)(4)(L)(i) and (a)(11) and publicly disclose 
                        the findings from such audits. The Secretary 
                        shall remove from the program under this 
                        section any such entity that does not have a 
                        contract in effect with a State or local 
                        government that satisfies the applicable 
                        requirements set forth in subsections 
                        (a)(4)(L)(i) and (a)(11), and such removal 
                        shall require such covered entity to promptly 
                        conduct an audit supervised by the Secretary to 
                        identify discounts on covered outpatient drugs 
                        purchased at a discount under this section to 
                        which such covered entity was not eligible and 
                        provide the written results of such audit to 
                        the Secretary and the manufacturer of the 
                        affected covered outpatient drug. Such covered 
                        entity shall be liable to the manufacturer of 
                        such covered outpatient drug in an amount equal 
                        to the reduction in the price of the drugs 
                        provided under subsection (a)(1), plus interest 
                        on such amount, which shall be compounded 
                        monthly and equal to the current short-term 
                        interest rate as determined by the Federal 
                        Reserve for the time period for which the 
                        covered entity is liable. Where a covered 
                        entity described in this clause knowingly and 
                        intentionally violates a requirement in 
                        subsection (a)(4)(L)(i) or (a)(11), the covered 
                        entity shall be required to pay a civil 
                        monetary penalty equal to $1,000 for each claim 
                        for a covered outpatient drug that is subject 
                        to the violation, which amount shall be 
                        adjusted for inflation annually to reflect the 
                        rate of change in the Consumer Price Index for 
                        All Urban Consumers published by the Bureau of 
                        Labor Statistics. The provisions of section 
                        1128A of the Social Security Act (other than 
                        subsections (a) and (b)) shall apply to a civil 
                        monetary penalty under this clause in the same 
                        manner as such provisions apply to a penalty or 
                        proceeding under section 1128A(a). The Office 
                        of Inspector General of the Department of 
                        Health and Human Services shall carry out the 
                        provisions related to the imposition of civil 
                        monetary penalties under this clause.''.

SEC. 15. ENSURING COVERED ENTITY COMPLIANCE WITH TRANSPARENCY 
              REQUIREMENTS.

    Section 340B(d)(2)(B) of the Public Health Service Act (42 U.S.C. 
256b(d)(2)(B)) is further amended by adding at the end the following:
                            ``(vii) The imposition of civil monetary 
                        penalties in amounts determined appropriate by 
                        the Secretary in the case that the Secretary 
                        determines that a covered entity is not in 
                        compliance with subsection (a)(5)(L).''.

SEC. 16. 340B CLAIMS DATA CLEARINGHOUSE.

    (a) 340B Claims Data Clearinghouse.--Section 340B(d)(2) of the 
Public Health Service Act (42 U.S.C. 256b(d)(2)) is amended by adding 
at the end the following:
                    ``(C) 340B claims data clearinghouse.--
                            ``(i) In general.--The improvements 
                        described in subparagraph (A) shall include the 
                        establishment of a claims data clearinghouse 
                        described in this subparagraph. Not later than 
                        one year after the date of enactment of this 
                        subparagraph, the Secretary shall enter into a 
                        contract with a third-party entity that meets 
                        the criteria specified in clause (ii) (such 
                        entity is hereinafter referred to as the 
                        `clearinghouse') for purposes of--
                                    ``(I) identifying claims for 
                                covered outpatient drugs purchased 
                                under the program under this section 
                                for which reimbursement was made under 
                                a State plan (or waiver of such plan) 
                                and ensuring such claims are or were 
                                not included in any State rebate 
                                request under section 1927 of the 
                                Social Security Act in violation of 
                                sections 1903(m)(2)(A)(xiii) or 
                                1927(j)(1) of such Act or section 
                                340B(a)(5)(A) of this Act;
                                    ``(II) identifying claims for 
                                covered outpatient drugs purchased 
                                under the program under this section 
                                that are selected drugs (as defined in 
                                section 1192(c) of the Social Security 
                                Act) and ensuring that, for each such 
                                claim, the nonduplication requirements 
                                of section 1193(d) of such Act have 
                                been met;
                                    ``(III) identifying claims for 
                                covered outpatient drugs purchased 
                                under the program under this section 
                                that are either Part B rebatable drugs 
                                or Part D rebatable drugs and providing 
                                all relevant information regarding such 
                                claims to the Secretary to ensure that 
                                claims that are subject to a discount 
                                under the program under this section 
                                are excluded from inflation rebate 
                                calculations pursuant to section 
                                1847A(i)(3)(B)(ii)(I) of the Social 
                                Security Act (with respect to Part B 
                                rebatable drugs) and section 1860D-
                                14B(b)(1)(B) of such Act (with respect 
                                to Part D rebatable drugs);
                                    ``(IV) identifying duplicate claims 
                                for a rebate or discount submitted by 
                                two or more covered entities (or an 
                                entity or entities acting on their 
                                behalf) with respect to the same unit 
                                of a covered outpatient drug purchased 
                                under the program under this section 
                                and implementing a process to ensure a 
                                manufacturer of such a drug does not 
                                pay more than one rebate or discount 
                                under this section with respect to such 
                                unit; and
                                    ``(V) providing to manufacturers of 
                                covered outpatient drugs, in a form and 
                                manner specified by the Secretary in 
                                consultation with manufacturers, access 
                                to the data described in subsection 
                                (a)(5)(J) with respect to each dispense 
                                or administration of a manufacturer's 
                                covered outpatient drugs for which a 
                                covered entity receives a discount 
                                under this section.
                            ``(ii) Criteria for clearinghouse.--The 
                        criteria described in this clause include the 
                        following:
                                    ``(I) The clearinghouse shall not 
                                be owned by, overseen by, or affiliated 
                                with a covered entity described in 
                                subsection (a)(4) and shall not 
                                currently be a party to a contractual 
                                arrangement with the Health Resources 
                                and Services Administration.
                                    ``(II) The clearinghouse shall have 
                                demonstrated experience adjudicating 
                                claims for health care items and 
                                services in real time for self- and 
                                provider-administered drugs and working 
                                with protected health information and 
                                confidential pricing information.
                                    ``(III) The clearinghouse shall 
                                agree to confidentiality obligations 
                                that prohibit the clearinghouse from 
                                using information it receives under 
                                this subparagraph for any purpose other 
                                than a purpose set forth in this 
                                subparagraph, or disclosing such 
                                information to any individual or entity 
                                other than the Secretary, provided the 
                                Secretary shall not use such 
                                information for purposes of making 
                                reimbursement or coverage 
                                determinations, or a manufacturer in 
                                accordance with this subparagraph (and 
                                only with respect to such 
                                manufacturer's covered outpatient 
                                drugs).
                                    ``(IV) The clearinghouse shall 
                                maintain the security of the data 
                                reported pursuant to this subsection 
                                (a)(5)(J) in a manner consistent with 
                                the HIPAA Security Standards set forth 
                                in sections 164.304-164.312 and 164.316 
                                of title 45, Code of Federal 
                                Regulations (or any successor 
                                regulations), as if the clearinghouse 
                                were subject to those standards as a 
                                HIPAA covered entity.
                            ``(iii) Duties of clearinghouse.--The 
                        clearinghouse shall--
                                    ``(I) review claims level data for 
                                covered outpatient drugs described in 
                                subsection (a)(5)(J) submitted by 
                                covered entities in accordance with 
                                such subsection;
                                    ``(II) review claims level data, 
                                including rebate file data, submitted 
                                to the clearinghouse by State agencies 
                                and Medicaid managed care organizations 
                                for covered outpatient drugs subject to 
                                an agreement under this section 
                                dispensed or administered to 
                                individuals enrolled under a State plan 
                                (or a waiver of such plan) and claims 
                                level data submitted by Medicare 
                                Administrative Contractors, Medicare 
                                Advantage organizations (including 
                                Medicare Advantage Organizations 
                                offering an MA-PD plan), and PDP 
                                sponsors for covered outpatient drugs 
                                subject to an agreement under this 
                                section dispensed or administered to 
                                individuals enrolled under Part B, Part 
                                C, or Part D of title XVIII of the 
                                Social Security Act;
                                    ``(III) within 5 days of 
                                identification, provide written notice 
                                of a duplicate discount or rebate to 
                                the State agency, the Secretary, the 
                                covered entity, and the affected drug 
                                manufacturer itemizing any violation 
                                described in clause (i)(I);
                                    ``(IV) within 5 days of 
                                identification, provide written notice 
                                to the Secretary, the covered entity 
                                (or entities, as applicable), and the 
                                affected drug manufacturer itemizing 
                                any violation described in subclauses 
                                (II) or (IV) of clause (i);
                                    ``(V) have access to the internet 
                                website described in paragraph 
                                (1)(B)(iii) containing applicable 
                                ceiling prices for covered outpatient 
                                drugs for purposes of identifying 
                                violations described in clause (i)(II);
                                    ``(VI) subject to clauses (i)(V) 
                                and (ii)(III), make the data described 
                                in subclauses (I) and (II) available to 
                                the manufacturer in electronic format 
                                not later than 10 days after such data 
                                is provided to the clearinghouse;
                                    ``(VII) upon request by the Centers 
                                for Medicare & Medicaid Services, make 
                                the data described in subclauses (I) 
                                and (II) available for purposes of 
                                excluding 340B purchased units of Part 
                                B rebatable drugs or Part D rebatable 
                                drugs from Part B or Part D inflation 
                                rebates pursuant to section 
                                1847A(i)(3)(B)(ii)(I) or section 1860D-
                                14B(b)(1)(B) of the Social Security 
                                Act; and
                                    ``(VIII) identify claims for 
                                covered outpatient drugs subject to an 
                                agreement under this section that are 
                                submitted by pharmacies removed from 
                                the 340B program pursuant to subsection 
                                (a)(5)(F)(ix)(III) and notify the 
                                Secretary of the submission of any such 
                                claims by any such pharmacies.
                            ``(iv) Resolution of violations.--
                                    ``(I) Medicaid duplicate 
                                discounts.--The Secretary, in 
                                consultation with the State, as 
                                appropriate, shall take prompt action 
                                to fairly and adequately resolve 
                                violations described in clause (i)(I) 
                                reported by the clearinghouse in 
                                accordance with clause (iii)(III).
                                    ``(II) Nonduplication with maximum 
                                fair price.--The Secretary shall take 
                                prompt action to fairly and adequately 
                                resolve violations described in clause 
                                (i)(II) reported by the clearinghouse 
                                in accordance with clause (iii)(IV).
                                    ``(III) Duplicate covered entity 
                                discounts.--The Secretary shall develop 
                                and implement a process to resolve 
                                duplicate claims for a rebate or 
                                discount under this section described 
                                in clause (i)(IV) such that the 
                                manufacturer pays only one rebate or 
                                discount under this section with 
                                respect to the same unit of a covered 
                                outpatient drug purchased under the 
                                program under this section. Covered 
                                entities (and any entities acting on 
                                their behalf) shall be subject to 
                                determinations made by the Secretary to 
                                resolve such duplicate claims (and the 
                                Secretary may contract this function to 
                                the clearinghouse to make such 
                                determinations). In making such 
                                determinations, the Secretary shall 
                                investigate duplicate claims for 
                                rebates or discounts and require 
                                covered entities (and any entities 
                                acting on their behalf) to take action 
                                to avoid or pay refunds to reverse a 
                                duplicate claim.
                                    ``(IV) Refunds to manufacturers.--
                                The Secretary shall be responsible for 
                                promptly refunding affected 
                                manufacturers of covered outpatient 
                                drugs for violations described in 
                                subclauses (I) and (II) of clause (i) 
                                and seeking subsequent repayment from 
                                covered entities or States (with 
                                respect to violations described in 
                                clause (i)(I)), or providers or 
                                dispensers (with respect to violations 
                                described in clause (i)(II)). Subject 
                                to the determination by the Secretary 
                                or clearinghouse under subclause (III), 
                                the covered entity (or entities) shall 
                                be liable to the manufacturer of the 
                                covered outpatient drug that is the 
                                subject of the violation described in 
                                clause (i)(IV) in an amount equal to 
                                the reduction in the price of the drug 
                                (as described in subsection (a)(1)) and 
                                shall repay such amount to such 
                                manufacturer within 60 days of 
                                receiving a notice described in clause 
                                (iii)(IV).''.
    (b) Provision of Drug Claims Data by Medicaid; Removal of Duplicate 
Claims.--
            (1) Medicaid.--Section 1902(a) of the Social Security Act 
        (42 U.S.C. 1396a(a)) is amended--
                    (A) in paragraph (86), by striking ``and'' at the 
                end;
                    (B) in paragraph (87)(D), by striking the period 
                and inserting ``; and''; and
                    (C) by inserting after paragraph (87) the following 
                new paragraph:
            ``(88) provide for a mechanism for the State agency to 
        furnish, and for the State agency to require each Medicaid 
        managed care organization (as defined in section 1903(m)(1)(A)) 
        to furnish, to the clearinghouse, in a machine-readable format, 
        within 5 days following the date of claim payment, claims level 
        data, including rebate file data, for covered outpatient drugs 
        dispensed, furnished, or administered to individuals enrolled 
        under a State plan (or a waiver of such plan) that includes, 
        with respect to each dispense, furnishing, or administration of 
        such a drug, the data elements described in subsection 
        340B(a)(5)(J)(iii) of the Public Health Service Act, and for 
        the State agency to remove from any rebate request described in 
        section 340B(d)(2)(C)(i)(I) of such Act any claim that is the 
        subject of a notice submitted by such entity under section 
        340B(d)(2)(C)(iii)(III) of such Act.''.
    (c) Provision of Drug Claims Data by Medicare.--
            (1) Medicare part b.--Section 1842 of the Social Security 
        Act (42 U.S.C. 1395u) is amended by adding at the end the 
        following:
    ``(v) Provision of Drug Claims Data; Mechanism To Refund Duplicated 
Amounts.--Each Medicare administrative contractor shall furnish to the 
clearinghouse, in a machine-readable format, claims level data for 
covered outpatient drugs furnished or administered to individuals 
enrolled under this part that includes, with respect to each furnishing 
or administration of such a drug, the data elements described in 
section 340B(a)(5)(J)(iii) of the Public Health Service Act. Each 
Medicare administrative contractor shall furnish such data to the 
clearinghouse within 5 days following the date the claim for such drug 
is paid by the Medicare administrative contractor.''.
            (2) Medicare advantage organizations.--Section 1857(e) of 
        the Social Security Act (42 U.S.C. 1395w-27(e)) is amended by 
        adding at the end the following:
            ``(6) Provision of drug claims data; mechanism to refund 
        duplicated amounts.--A contract under this part shall require a 
        Medicare+Choice organization to furnish to the clearinghouse, 
        in a machine-readable format, claims level data for covered 
        outpatient drugs furnished or administered to individuals 
        enrolled with the organization under this part that includes, 
        with respect to each furnishing or administration of such a 
        drug, the data elements described in section 340B(a)(5)(J)(iii) 
        of the Public Health Service Act. Such contract shall require 
        the Medicare+Choice organization to furnish such data to the 
        clearinghouse within 5 days following the date the claim for 
        such drug is paid by the Medicare+Choice organization.''.
            (3) Prescription drug plans.--Section 1860D-12(b) of the 
        Social Security Act (42 U.S.C. 1395w-112(b)) is amended by 
        adding at the end the following:
            ``(9) Provision of drug claims data; mechanism to refund 
        duplicated amounts.--A contract under this part shall require a 
        PDP sponsor to furnish to the clearinghouse in a machine-
        readable format, claims level data for covered outpatient drugs 
        dispensed to individuals enrolled in a prescription drug plan 
        offered by such sponsor under this part that includes, with 
        respect to each dispense of such drug, the data elements 
        described in section 340B(a)(5)(J)(iii) of the Public Health 
        Service Act. Such contract shall require a PDP sponsor to 
        furnish such data to the clearinghouse within 5 days following 
        the date the claim for such drug is paid by the PDP sponsor.''.
            (4) MA-pds.--Section 1857(f)(3) of the Social Security Act 
        (42 U.S.C. 1395w-27(f)(3)) is amended by adding at the end the 
        following:
                    ``(E) Provision of drug claims data; mechanism to 
                refund duplicated amounts.--Section 1860D-12(b)(9).''.

SEC. 17. LIMITATION ON ADMINISTRATOR SERVICE FEES AND CONTRACT PHARMACY 
              FEES.

    Section 340B of the Public Health Service Act (42 U.S.C. 256b) is 
amended by adding at the end the following:
    ``(f) Requirements for TPA and Contract Pharmacy Remuneration.--
            ``(1) Third-party administrator fees.--A third-party 
        administrator furnishing 340B program-related services on 
        behalf of a covered entity described in subsection (a)(4), 
        including reviewing or processing claims or other information 
        to identify covered outpatient drugs dispensed to individuals 
        who are patients of the covered entity (as defined in 
        subsection (b)(3)) may receive remuneration from such covered 
        entity for the performance of such services only if--
                    ``(A) such remuneration is a flat dollar amount not 
                directly or indirectly based on any price of, or 
                discount or other remuneration provided with respect 
                to, a covered outpatient drug, paid for each unit of 
                service furnished to the covered entity, regardless of 
                whether a prescription was dispensed to an individual 
                who is a patient of the covered entity;
                    ``(B) the amount of such remuneration is consistent 
                with fair market value in an arm's-length transaction 
                for the bona fide, itemized 340B-related services 
                actually performed on behalf of the covered entity; and
                    ``(C) such remuneration complies with applicable 
                State and Federal law, including section 1128B(b) of 
                the Social Security Act.
            ``(2) Contract pharmacy fees.--A contract pharmacy that has 
        entered into a written agreement with a covered entity pursuant 
        to and satisfies the applicable requirements in subsection 
        (a)(5)(F) may receive remuneration from such covered entity for 
        the performance of services associated with dispensing covered 
        outpatient drugs subject to an agreement under this section to 
        individuals who are patients of the covered entity (as defined 
        in subsection (b)(3)) only if--
                    ``(A) such remuneration is a flat dollar amount not 
                directly or indirectly based on any price of, or 
                discount or other remuneration provided with respect 
                to, a covered outpatient drug, paid for each dispense 
                of such a drug to a patient of the covered entity;
                    ``(B) the amount of remuneration for each dispense 
                does not exceed 125 percent of the average per-
                prescription dispensing fee paid to such pharmacy by 
                all third-party payors, based on data from the most 
                recent full calendar year for which such data is 
                available;
                    ``(C) the amount of such remuneration is consistent 
                with fair market value in an arm's-length transaction 
                for the bona fide, itemized 340B-related services 
                actually performed on behalf of the covered entity; and
                    ``(D) such remuneration complies with applicable 
                State and Federal law, including section 1128B(b) of 
                the Social Security Act.
        For purposes of subparagraph (B), if a covered entity has 
        entered into an agreement for contract pharmacy services 
        pursuant to subsection (a)(5)(F) that permits the contract 
        pharmacy service provider to dispense covered outpatient drugs 
        on behalf of the covered entity at more than one pharmacy 
        location, the average dispensing fee shall be calculated across 
        all pharmacy locations subject to such agreement.
            ``(3) Auditable records.--A covered entity shall retain 
        copies of written agreements with third-party administrators or 
        contract pharmacies described in this subsection for a period 
        of time specified by the Secretary and shall make copies of 
        such agreements available to the Secretary or their designee 
        upon request.
            ``(4) Civil monetary penalty.--A third-party administrator 
        or contract pharmacy described in this subsection that fails to 
        comply with the applicable requirements specified in this 
        subsection shall be required to pay a civil monetary penalty 
        equal to 10 times the amount such third-party administrator or 
        contract pharmacy received for the performance of relevant 
        services described in this subsection. The provisions of 
        section 1128A of the Social Security Act (other than 
        subsections (a) and (b)) shall apply to a civil monetary 
        penalty under this paragraph in the same manner as such 
        provisions apply to a penalty or proceeding under section 
        1128A(a). The Office of Inspector General of the Department of 
        Health and Human Services shall carry out the provisions 
        related to the imposition of civil monetary penalties under 
        this paragraph.''.

SEC. 18. CLARIFICATION.

    Section 340B of the Public Health Service Act (42 U.S.C. 256b) is 
further amended by adding at the end the following:
    ``(g) Clarification.--The provisions of this section supersede any 
provision or requirement of State or local law insofar as that State or 
local law may establish, implement, or continue in effect a standard or 
requirement that differs from or relates in any way to the provisions 
of this section or, except for any State regulations issued to carry 
out subsection (a)(5)(A)(iii), relates in any way to the drug discount 
program under this section or covered outpatient drugs subject to an 
agreement under this section, including the distribution of such drugs. 
Except for any State regulations issued to carry out subsection 
(a)(5)(A)(iii), no provision or requirement of State or local law shall 
grant additional rights or impose additional obligations related to the 
340B program.''.

SEC. 19. ENSURING THE EQUITABLE TREATMENT OF 340B COVERED ENTITIES AND 
              PHARMACIES PARTICIPATING IN THE 340B DRUG DISCOUNT 
              PROGRAM.

    (a) Group Health Plan and Health Insurance Issuer Requirements.--
Subpart II of part A of title XXVII of the Public Health Service Act 
(42 U.S.C. 300gg-11 et seq.) is amended by adding at the end the 
following:

``SEC. 2730. REQUIREMENTS RELATING TO THE 340B DRUG DISCOUNT PROGRAM.

    ``(a) In General.--A group health plan, a health insurance issuer 
offering group or individual health insurance coverage, or a pharmacy 
benefit manager acting on behalf of such plan or issuer, may not 
discriminate against a covered entity (as defined in subsection 
(e)(1)), a contract pharmacy (as defined in subsection (e)(2)), or a 
participant, beneficiary, or enrollee of such plan or coverage by 
imposing requirements, exclusions, reimbursement terms, or other 
conditions on such entity or pharmacy that differ from those applied to 
entities or pharmacies that are not covered entities or contract 
pharmacies on the basis that the entity or pharmacy is a covered entity 
or contract pharmacy or that the entity or pharmacy dispenses 340B 
drugs, by taking any action prohibited under subsection (b).
    ``(b) Specified Prohibited Actions.--A group health plan, a health 
insurance issuer offering group or individual health insurance 
coverage, or a pharmacy benefit manager acting on behalf of such plan 
or issuer, may not discriminate against a covered entity, a contract 
pharmacy, or a participant, beneficiary, or enrollee of such plan or 
coverage by doing any of the following:
            ``(1) Reimbursing a covered entity or contract pharmacy for 
        a quantity of a 340B drug (as defined in subsection (e)) in an 
        amount less than such plan, issuer, or pharmacy benefit manager 
        (as applicable) would pay to any other similarly situated (as 
        specified by the Secretary) entity or pharmacy that is not a 
        covered entity or a contract pharmacy for such quantity of such 
        drug on the basis that the entity or pharmacy is a covered 
        entity or contract pharmacy or that the entity or pharmacy 
        dispenses 340B drugs.
            ``(2) Imposing any terms or conditions on covered entities 
        or contract pharmacies with respect to any of the following 
        that differ from such terms or conditions applied to other 
        similarly situated entities or pharmacies that are not covered 
        entities or contract pharmacies on the basis that the entity or 
        pharmacy is a covered entity or contract pharmacy or that the 
        entity or pharmacy dispenses 340B drugs:
                    ``(A) Fees, chargebacks, clawbacks, adjustments, or 
                other assessments.
                    ``(B) Professional dispensing fees.
                    ``(C) Restrictions or requirements regarding 
                participation in standard or preferred pharmacy 
                networks.
                    ``(D) Requirements relating to the frequency or 
                scope of audits or to inventory management systems 
                using generally accepted accounting principles.
                    ``(E) Any other restrictions, conditions, 
                practices, or policies that interfere with the ability 
                of a covered entity or contract pharmacy to use the 
                discounts provided under section 340B in accordance 
                with applicable requirements under such section.
            ``(3) Interfering with an individual's choice to receive a 
        340B drug from a covered entity or contract pharmacy, whether 
        in person or via direct delivery, mail, or other form of 
        shipment, as permitted under section 340B.
            ``(4) Interfering with, limiting, or prohibiting actions by 
        a covered entity or contract pharmacy to identify, either 
        directly or through a third party, claims for 340B drugs, 
        including by submission of claims data or use of claims 
        modifiers or indicators.
            ``(5) Refusing to contract with a covered entity or 
        contract pharmacy for reasons other than those that apply 
        equally to entities or pharmacies that are not covered entities 
        or contract pharmacies, or on the basis that--
                    ``(A) the entity or pharmacy is a covered entity or 
                a contract pharmacy; or
                    ``(B) the entity or pharmacy is described in any of 
                subparagraphs (A) through (O) of section 340B(a)(4).
            ``(6) With respect to a group health plan or health 
        insurance issuer for health insurance coverage, denying 
        coverage of a drug on the basis that such drug is a 340B drug.
    ``(c) Prohibited Actions in Derogation of Section 340B 
Affordability Assistance Provisions.--A group health plan, a health 
insurance issuer offering group or individual health insurance 
coverage, or a pharmacy benefit manager acting on behalf of such plan 
or issuer shall not prohibit or restrict, in contracts with pharmacies 
in their network that are contract pharmacies or entity pharmacies, or 
in any other manner, any reduction in or subsidy for the out-of-pocket 
amount for a 340B drug charged to an individual (including a 
participant, beneficiary, or enrollee of such plan or coverage) that is 
required or authorized by subparagraphs (G) or (H) of section 
340B(a)(5). Any general prohibition or restriction on reducing or 
subsidizing the out-of-pocket amount for a drug charged to an 
individual that lacks an express exemption for any reductions in or 
subsidies for the out-of-pocket amount for a 340B drug that are 
required or authorized by subparagraphs (G) or (H) of section 
340B(a)(5) is a violation of this subsection. Any contractual provision 
that violates this subsection in any manner shall be void and 
unenforceable.
    ``(d) Enforcement Mechanism for Pharmacy Benefit Managers.--The 
Secretary shall impose a civil monetary penalty on any pharmacy benefit 
manager that violates the requirements of this section. Such penalty 
shall not exceed $5,000 per violation per day. The Secretary shall 
issue proposed regulations to implement this subsection not later than 
60 days after the date of the enactment of this subsection and shall 
finalize such regulations not later than 180 days after such date of 
enactment.
    ``(e) Definitions.--For purposes of this section:
            ``(1) 340b drug.--The term `340B drug' means a drug that 
        is--
                    ``(A) a covered outpatient drug (as defined for 
                purposes of section 340B); and
                    ``(B) purchased under an agreement in effect under 
                such section.
            ``(2) Contract pharmacy.--The term `contract pharmacy' has 
        the meaning given such term in section 340B(a)(5)(F).
            ``(3) Covered entity.--The term `covered entity' has the 
        meaning given such term in section 340B(a)(4).
            ``(4) Entity pharmacy.--The term `entity pharmacy' has the 
        meaning given such term in section 340B(a)(5)(F).''.
    (b) Application of Requirements to Medicare.--
            (1) Part d.--Section 1860D-12(b) of the Social Security Act 
        (42 U.S.C. 1395w-112(b)) is amended by adding at the end the 
        following:
            ``(10) Application of requirements relating to the 340b 
        drug discount program.--Each contract entered into under this 
        subsection with a PDP sponsor shall provide that the 
        requirements of section 2730 of the Public Health Service Act 
        apply to such sponsor, and to any pharmacy benefit manager that 
        contracts with such sponsor, in the same manner as such 
        requirements apply with respect to a group health plan, a 
        health insurance issuer, or a pharmacy benefit manager 
        described in such section.''.
            (2) Part c.--Section 1857(f)(3) of the Social Security Act 
        (42 U.S.C. 1395w-27(f)(3)) is amended by adding at the end the 
        following:
                    ``(F) 340B drug discount program.--Section 1860D-
                12(b)(10).''.

SEC. 20. EFFECTIVE DATE.

    Except as otherwise specified, the provisions in this Act shall 
become effective on the date that is one year following the date of 
enactment of this Act.
                                 <all>
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