I 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘340B Affording Care for Communities and Ensuring a 

6 Strong Safety-net Act’’ or the ‘‘340B ACCESS Act’’. 

7 (b) TABLE OF CONTENTS.—The table of contents for 

8 this Act is as follows: 


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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. 

1 SEC. 2. DEFINITIONS. 

2 (a) DEFINITION OF PATIENT.—Section 340B(b) of 

3 the Public Health Service Act (42 U.S.C. 256b(b)) is 

4 amended by adding at the end the following: 

5 ‘‘(3) PATIENT.— 

6 ‘‘(A) IN GENERAL.—In this section, the 

7 term ‘patient’ means, with respect to a covered 

8 entity described in subsection (a)(4), an indi9 vidual who, on a prescription-by-prescription or 

10 order-by-order basis— 

11 ‘‘(i) is dispensed or administered a 

12 covered outpatient drug that is— 

13 ‘‘(I) directly related to the service 

14 described in clause (iii); 


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1 ‘‘(II) ordered or prescribed by a 

2 covered entity provider described in 

3 clause (ii) as a result of the service 

4 described in clause (iii); and 

5 ‘‘(III) dispensed or administered 

6 on site at a covered entity location, a 

7 child site (as defined in subsection 

8 (a)(5)(E)), or an entity pharmacy (as 

9 defined in subsection (a)(5)(F)) listed 

10 in the identification system described 

11 in subsection (d)(2)(B)(iv), or on site 

12 at a contract pharmacy in accordance 

13 with subsection (a)(5)(F) or dispensed 

14 through a mail order pharmacy in ac15 cordance with subsection (a)(5)(F); 

16 ‘‘(ii) receives the health care service 

17 described in clause (iii) from a ‘covered en18 tity provider’, meaning a health care pro19 fessional who either— 

20 ‘‘(I) is an employee or inde21 pendent contractor of the covered en22 tity, such that the covered entity bills 

23 for services furnished by the health 

24 care professional and is responsible 


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1 for the care furnished by such profes2 sional; or 

3 ‘‘(II) furnishes health care serv4 ices under an ongoing contractual ob5 ligation to the covered entity such 

6 that responsibility for the care pro7 vided remains with the covered entity 

8 and meets the other requirements in 

9 this paragraph, in the event State law 

10 prohibits or otherwise substantially 

11 limits the ability of the covered entity 

12 to bill for services of the health care 

13 professional; 

14 ‘‘(iii) receives a covered outpatient 

15 drug in connection with a health care serv16 ice furnished at the covered entity (includ17 ing a child site) and such drug and service 

18 are paid by the insurer or third-party 

19 payor as outpatient items and services (or 

20 where third-party reimbursement is not 

21 made, such items and services are deemed 

22 outpatient if less than 24 hours have 

23 elapsed between such individual’s hospital 

24 registration and discharge); 


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1 ‘‘(iv) is described in a category of in2 dividuals within the scope of, and receives 

3 a health care service at the covered entity 

4 (including a child site) that is within the 

5 scope of— 

6 ‘‘(I) the Federal grant, project, 

7 or Federal grant-authorizing statute, 

8 as applicable, that qualifies such enti9 ty for participation in the program 

10 under this section, if the covered enti11 ty is described in one of subpara12 graphs (A) through (K) of subsection 

13 (a)(4); or 

14 ‘‘(II) the contract as required in 

15 paragraphs (4)(L)(i) and (11) of sub16 section (a), if the covered entity is a 

17 private nonprofit hospital which has, 

18 as the basis for participating in the 

19 program under this section, a contract 

20 with a State or local government to 

21 provide health care services to speci22 fied individuals, provided that clause 

23 (iv) shall not apply with respect to a 

24 covered entity described in subsection 

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1 pital described in subsection 

2 (a)(4)(O); and 

3 ‘‘(v) has an ongoing relationship with 

4 the covered entity such that the covered 

5 entity creates and maintains auditable 

6 health care records which demonstrate 

7 compliance with this paragraph and that 

8 the covered entity— 

9 ‘‘(I) has a provider-to-patient re10 lationship with the individual; 

11 ‘‘(II) is responsible for the indi12 vidual’s health care service that re13 sulted in the prescription or order for 

14 the drug; and 

15 ‘‘(III)(aa) has provided a health 

16 care service to the individual through 

17 an in-person visit within the past 12 

18 months, if the covered entity is a hos19 pital described in subparagraph (L) or 

20 subparagraph (M) of subsection (a)(4) 

21 or is a rural referral center described 

22 in subparagraph (O) of such sub23 section; or 

24 ‘‘(bb) has provided a health care 

25 service to the individual through an 


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1 in-person visit within the past 24 

2 months, if the covered entity is de3 scribed in one of subparagraphs (A) 

4 through (K) of subsection (a)(4), sub5 paragraph (N) of such subsection, or 

6 is a sole community hospital described 

7 in subparagraph (O) of such sub8 section. 

9 ‘‘(B) TELEHEALTH AND TELEMEDICINE.— 

10 ‘‘(i) IN GENERAL.—A prescription for 

11 a covered outpatient drug resulting from a 

12 health care service furnished to an indi13 vidual through telehealth, telemedicine, or 

14 other remote health care service arrange15 ments shall not qualify for pricing de16 scribed in subsection (a)(1) unless— 

17 ‘‘(I) the covered entity (including 

18 child site, as applicable) at which such 

19 service is furnished is a covered entity 

20 (or a child site of a covered entity, as 

21 applicable) described in one of sub22 paragraphs (A) through (K) of sub23 section (a)(4), subparagraph (N) of 

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1 nity hospital described in subpara2 graph (O) of such subsection; and 

3 ‘‘(II) subject to the exception in 

4 clause (ii), a covered entity provider 

5 has conducted an in-person examina6 tion of the individual within the 6- 

7 month time period immediately pre8 ceding the health care service result9 ing in the prescription or order for the 

10 drug. 

11 ‘‘(ii) EXCEPTION.—The requirement 

12 in clause (i)(II) shall not apply with re13 spect to an individual for whom the cov14 ered entity maintains auditable records 

15 sufficient to demonstrate that such entity 

16 verified such individual is determined eligi17 ble for benefits under either title II of the 

18 Social Security Act or title XVI of such 

19 Act in accordance with the provisions of 

20 such applicable title. 

21 ‘‘(C) PRESCRIPTIONS FROM NON-COVERED

22 ENTITY PROVIDERS INELIGIBLE.— 

23 ‘‘(i) IN GENERAL.—Subject to the ex24 ception for a qualifying referral described 

25 in clause (ii), a covered outpatient drug 


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1 prescribed or ordered for an individual by 

2 a health care professional who is not a cov3 ered entity provider shall not qualify for 

4 pricing described in subsection (a)(1). 

5 ‘‘(ii) EXCEPTION FOR QUALIFYING

6 REFERRALS.—In the case of a ‘qualifying 

7 referral’, all requirements in subparagraph 

8 (A) shall apply, except for clauses (i)(I), 

9 (i)(II), (ii), (iii), and (v)(II) of such sub10 paragraph. For purposes of this para11 graph, a ‘qualifying referral’ shall refer to 

12 the sequence of occurrences described in 

13 this clause for which a covered entity 

14 maintains documentation sufficient to dem15 onstrate that— 

16 ‘‘(I) a covered entity provider 

17 evaluates and recommends to the indi18 vidual, during an encounter at the 

19 covered entity (including child site, as 

20 applicable), that such individual re21 ceive a specified type of specialty 

22 health care not available at the cov23 ered entity and such recommendation 

24 is contemporaneously documented, at 

25 the time of such encounter, in the 


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1 medical record the covered entity cre2 ates and maintains for such indi3 vidual; 

4 ‘‘(II) within one year of the date 

5 of the encounter and recommendation 

6 described in subclause (I), the indi7 vidual receives a health care service 

8 from a medical specialist of the type 

9 described in such recommendation; 

10 ‘‘(III) within the time period 

11 specified in subclause (II), the covered 

12 entity provider making the rec13 ommendation receives, directly from 

14 the medical specialist that furnishes 

15 the health care service described in 

16 subclause (II), written documentation 

17 specifying the service or services fur18 nished to such individual and the di19 agnoses made in connection with such 

20 service or services; and 

21 ‘‘(IV) the covered entity retains 

22 overall responsibility for the care of 

23 the individual. 

24 ‘‘(iii) COVERED ENTITY ELIGIBILITY

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1 standing any other provision in this sec2 tion, a covered entity shall not qualify for 

3 pricing described in subsection (a)(1) with 

4 respect to a prescription or order for a cov5 ered outpatient drug resulting from a 

6 qualifying referral unless such covered en7 tity— 

8 ‘‘(I) is described in subparagraph 

9 (N) of subsection (a)(4); 

10 ‘‘(II) is a sole community hos11 pital described in subparagraph (O) of 

12 such subsection; or 

13 ‘‘(III) is described in one of sub14 paragraphs (A) through (K) of such 

15 subsection, is not a specified nonhos16 pital covered entity (as defined in sub17 section (b)(4)), and has a Federal 

18 grant that requires such entity to con19 tract or refer for the health care serv20 ice or services furnished to the indi21 vidual by the medical specialist de22 scribed in clause (ii). 

23 ‘‘(D) HEALTH CARE SERVICE RE24 QUIRED.—For purposes of this section, an indi25 vidual shall not be considered a patient of the 


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1 covered entity described in subsection (a)(4) if 

2 the individual receives from the covered entity 

3 only the administration or infusion of a drug or 

4 drugs, or the dispensing of a drug or drugs for 

5 subsequent self-administration or administra6 tion in the home setting, without a covered enti7 ty provider-to-patient encounter involving the 

8 provision of a health care service.’’. 

9 (b) DEFINITION OF SPECIFIED NONHOSPITAL COV10 ERED ENTITY.—Section 340B(b) of the Public Health 

11 Service Act (42 U.S.C. 256b(b)) is further amended by 

12 adding at the end the following: 

13 ‘‘(4) SPECIFIED NONHOSPITAL COVERED ENTI14 TY.—In this section, the term ‘specified nonhospital 

15 covered entity’ means a covered entity that— 

16 ‘‘(A) is described in one of subparagraphs 

17 (B) through (K) of subsection (a)(4), other 

18 than a covered entity described in subparagraph 

19 (G) of such subsection, and— 

20 ‘‘(i) has average annual operating rev21 enues exceeding $1,000,000,000 calculated 

22 over the most recent three-year period for 

23 which data are available, which revenue 

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1 sumer Price Index for All Urban Con2 sumers published by the Bureau of Labor 

3 Statistics; or 

4 ‘‘(ii) is an affiliate of a hospital; or 

5 ‘‘(B) is described in subsection (a)(4)(A) 

6 and becomes affiliated with a hospital on or 

7 after December 1, 2023. 

8 For purposes of this definition, the term ‘affiliate’ 

9 shall mean an entity that, directly or indirectly, con10 trols, is controlled by, or is under common control 

11 with the referenced entity, including the referenced 

12 entity’s parent, and the term ‘control’ shall mean 

13 the power to direct the management and policies of 

14 an entity, directly or indirectly, whether through the 

15 ownership of voting securities, by contract, or other16 wise.’’. 

17 SEC. 3. PREVENTION OF MEDICAID DUPLICATE DIS18 COUNTS; OVERSIGHT OF COVERED ENTITIES. 

19 Section 340B(a)(5) of the Public Health Service Act 

20 (42 U.S.C. 256b(a)(5)) is amended— 

21 (1) in subparagraph (A)— 

22 (A) in clause (ii), by striking ‘‘The Sec23 retary’’ and inserting ‘‘Subject to subsection 

24 (d)(2)(C), the Secretary’’; and 

25 (B) by adding at the end the following: 


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1 ‘‘(iii) REGULATIONS.—Not later than 

2 1 year after the date of enactment of this 

3 clause, the Secretary shall promulgate final 

4 regulations through notice-and-comment 

5 rulemaking describing— 

6 ‘‘(I) methodologies State Med7 icaid programs and all covered entities 

8 under subsection (a)(4), and their 

9 contract pharmacies, shall use to iden10 tify and bill drugs purchased under 

11 the 340B program in a manner that 

12 ensures compliance with applicable 

13 prohibitions regarding duplicate dis14 counts or rebates, including the dupli15 cate discount prohibition under this 

16 subparagraph and the prohibitions 

17 under sections 1927(j)(1) and 

18 1903(m)(2)(A)(xiii) of the Social Se19 curity Act, to include the application 

20 of such prohibitions to 340B drugs 

21 used by Medicaid managed care en22 rollees; and 

23 ‘‘(II) procedures State Medicaid 

24 programs shall use to exclude requests 

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1 patient drugs purchased under the 

2 340B program that are dispensed, ad3 ministered, or otherwise furnished to 

4 a Medicaid managed care enrollee and 

5 requirements for State Medicaid pro6 grams to promulgate rules to provide 

7 affected manufacturers a prompt rem8 edy with respect to any incorrectly 

9 billed rebates for such drugs.’’; 

10 (2) in subparagraph (C)— 

11 (A) by striking ‘‘A covered entity shall per12 mit’’ and inserting: 

13 ‘‘(i) DUPLICATE DISCOUNTS AND

14 DRUG RESALE.—A covered entity shall per15 mit’’; 

16 (B) by striking ‘‘(A) or (B)’’ and inserting 

17 ‘‘(A), (B), (J), or (K)’’; and 

18 (C) by adding at the end the following: 

19 ‘‘(ii) USE OF MARGIN.—A covered en20 tity shall permit the Secretary to audit, at 

21 the Secretary’s expense, the records of the 

22 entity to determine— 

23 ‘‘(I) how the margin (as defined 

24 in subparagraph (L)(iv)) generated on 

25 covered outpatient drugs subject to an 


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1 agreement under this section dis2 pensed or furnished by such entity (or 

3 a contract pharmacy described in sub4 section (a)(5)(F)) is used by such en5 tity; and 

6 ‘‘(II) such entity’s compliance 

7 with subparagraph (L). 

8 ‘‘(iii) RECORDS RETENTION.—Covered 

9 entities shall retain such records and pro10 vide such records and reports as deter11 mined necessary by the Secretary for car12 rying out this subparagraph.’’; and 

13 (3) in subparagraph (D), by striking ‘‘(A) or 

14 (B)’’ and inserting ‘‘(A), (B), (J), or (K)’’. 

15 SEC. 4. HOSPITAL CHILD SITE REQUIREMENTS. 

16 (a) HOSPITAL CHILD SITE REQUIREMENTS.—Sec17 tion 340B(a)(5) of the Public Health Service Act (42 

18 U.S.C. 256b(a)(5)) is amended by adding at the end the 

19 following: 

20 ‘‘(E) HOSPITAL CHILD SITE REQUIRE21 MENTS.— 

22 ‘‘(i) IN GENERAL.—A covered entity 

23 described in one of subparagraphs (L) 

24 through (O) of paragraph (4) may register 

25 an off-campus outpatient facility associated 


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1 with such covered entity for inclusion in 

2 the identification system described in sub3 section (d)(2)(B)(iv) to participate in the 

4 program under this section as an integral 

5 part of such covered entity if such covered 

6 entity demonstrates to the Secretary, in a 

7 manner specified by the Secretary, that 

8 such facility satisfies each of the require9 ments in this subparagraph. For purposes 

10 of this section, each facility registered to 

11 participate in the program under this sec12 tion and satisfying the requirements in this 

13 subparagraph shall be referred to as a 

14 ‘child site’). 

15 ‘‘(I) The facility is listed on the 

16 covered entity’s most recently filed 

17 Medicare cost report on a line that is 

18 reimbursable under the Medicare pro19 gram (or, if the covered entity is a 

20 children’s hospital that does not file a 

21 Medicare cost report, the covered enti22 ty submits to the Secretary a signed 

23 statement certifying that the facility 

24 would be correctly included on a reim25 bursable line of a Medicare cost report 


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1 if the covered entity filed a cost re2 port). 

3 ‘‘(II) Such cost report dem4 onstrates that the services provided at 

5 the facility have associated costs and 

6 charges for hospital outpatient depart7 ment services under title XVIII of the 

8 Social Security Act (or, if the covered 

9 entity is a children’s hospital that 

10 does not file a Medicare cost report, 

11 the covered entity submits to the Sec12 retary a signed statement certifying 

13 that the services provided at the facil14 ity include outpatient services). 

15 ‘‘(III) The facility is wholly 

16 owned by the covered entity. 

17 ‘‘(IV) The Secretary has made a 

18 determination, under the process de19 scribed in section 413.65(b) of title 

20 42, Code of Federal Regulations (or 

21 any successor regulations), that the 

22 facility meets the Medicare provider23 based standards under section 413.65 

24 of title 42, Code of Federal Regula25 tions (or any successor regulations) 


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1 for an off-campus outpatient depart2 ment of the covered entity. 

3 ‘‘(V) The facility provides out4 patient health care services that are 

5 not limited to only dispensing, admin6 istering, or otherwise furnishing cov7 ered outpatient drugs. 

8 ‘‘(VI) The facility is subject to 

9 and adheres to all charity care and 

10 sliding fee scale policies of the covered 

11 entity and makes such policies pub12 licly available in a manner consistent 

13 with requirements established under 

14 section 501(r) of the Internal Revenue 

15 Code of 1986 applicable to hospital fi16 nancial assistance policies. 

17 ‘‘(VII) The facility is located in 

18 an area with a shortage of personal 

19 health services that is— 

20 ‘‘(aa) initially designated by 

21 the Secretary pursuant to section 

22 254b(b)(3) of title 42, United 

23 States Code, on or before Decem24 ber 1, 2023; or 


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1 ‘‘(bb) designated by the Sec2 retary pursuant to subpara3 graphs (A) through (C) of section 

4 254b(b)(3) of title 42, United 

5 States Code, after December 1, 

6 2023, using the scoring method7 ology and criteria specified by the 

8 Secretary as of December 1, 

9 2023. 

10 ‘‘(VIII) In the case of a covered 

11 entity described in one of subpara12 graphs (L) through (O) of paragraph 

13 (4) that is a private nonprofit hospital 

14 that has, as the basis for its participa15 tion in the program under this sec16 tion, a contract with a State or local 

17 government to provide health care 

18 services to low-income individuals who 

19 are uninsured, as described in para20 graphs (4)(L)(i) and (11), the facility 

21 independently complies with all re22 quirements applicable to such covered 

23 entity with respect to such contract. 

24 ‘‘(IX) For the most recent year, 

25 the facility’s total cost incurred for 


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1 charity care (as such term is defined 

2 in line 23 of worksheet S–10 to the 

3 Medicare cost report, or in any suc4 cessor form) furnished at such facility 

5 during such year, as a share of the fa6 cility’s total patient service revenue, is 

7 greater than or equal to the amount 

8 described in item (aa) or item (bb), 

9 whichever is greater— 

10 ‘‘(aa) for such year, the 

11 total cost incurred for charity 

12 care, as a share of total patient 

13 service revenue, furnished at the 

14 covered entity’s on-campus loca15 tions (as ‘campus’ is defined in 

16 section 413.65(a)(2) of title 42, 

17 Code of Federal Regulations (or 

18 any successor regulations)); or 

19 ‘‘(bb) the average cost in20 curred for charity care, as a 

21 share of total patient service rev22 enue, calculated for the year 

23 prior to the most recent year for 

24 which data is available, across all 

25 hospitals in the State where the 


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1 facility is located that receive 

2 payments for inpatient hospital 

3 services under the prospective 

4 payment system established 

5 under section 1886(d) of the So6 cial Security Act. 

7 ‘‘(X) For the most recent year, 

8 the facility’s share of total outpatient 

9 services revenue derived from base re10 imbursement to such entity (excluding 

11 supplemental and indirect reimburse12 ment) under title XIX of the Social 

13 Security Act (including with respect 

14 to individuals also entitled to benefits 

15 under part A of title XVIII of such 

16 Act or enrolled in part B of title 

17 XVIII of such Act) and payments 

18 under title XXI of such Act for items 

19 and services furnished on an out20 patient basis at the facility (including 

21 any cost sharing for such items and 

22 services) is greater than or equal to 

23 the amount described in item (aa) or 

24 item (bb), whichever is greater— 


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1 ‘‘(aa) for such year, the 

2 share of total outpatient services 

3 revenue derived from base reim4 bursement to such entity (exclud5 ing supplemental and indirect re6 imbursement) under title XIX of 

7 the Social Security Act (including 

8 with respect to individuals also 

9 entitled to benefits under part A 

10 of title XVIII of such Act or en11 rolled in part B of title XVIII of 

12 such Act) and payments under 

13 title XXI of such Act for items 

14 and services furnished on an out15 patient basis at the on-campus 

16 locations of the covered entity 

17 with which the facility is associ18 ated (including any cost sharing 

19 for such items and services) 

20 (‘campus’ shall have the meaning 

21 given such term in section 

22 413.65(a)(2) of title 42, Code of 

23 Federal Regulations (or any suc24 cessor regulations)); or 


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1 ‘‘(bb) the average share of 

2 total outpatient services revenue 

3 derived from base reimbursement 

4 (excluding supplemental and indi5 rect reimbursement) under title 

6 XIX of the Social Security Act 

7 (including with respect to individ8 uals also entitled to benefits 

9 under part A of title XVIII of 

10 such Act or enrolled in part B of 

11 title XVIII of such Act) and pay12 ments under title XXI of such 

13 Act for items and services fur14 nished on an outpatient basis (in15 cluding any cost sharing for such 

16 items and services), calculated 

17 for the year prior to the most re18 cent year for which data is avail19 able, across all hospitals in the 

20 state where the facility is located 

21 that receive payments for out22 patient hospital services under 

23 the prospective payment system 

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1 ment services established under 

2 section 1833(t) of such Act. 

3 ‘‘(XI) The covered entity cer4 tifies, at the time such facility is ini5 tially registered for inclusion in the 

6 identification system described in sub7 section (d)(2)(B)(iv) to participate in 

8 the drug pricing program under this 

9 section and annually thereafter as 

10 part of the recertification process, 

11 that the facility satisfies all applicable 

12 requirements under this subpara13 graph. 

14 ‘‘(ii) LIMITATION.—Only an off-cam15 pus outpatient facility that meets each of 

16 the requirements under this subparagraph 

17 may purchase covered outpatient drugs 

18 under the 340B program or use covered 

19 outpatient drugs purchased under the 

20 340B program by another part of the cov21 ered entity that is authorized to participate 

22 in such program. Any transfer of 340B 

23 drugs to another facility or another part of 

24 a covered entity that is not authorized to 


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1 participate in the 340B program shall be 

2 deemed a violation of subparagraph (B). 

3 ‘‘(iii) DEREGISTRATION.—If at any 

4 time following registration a requirement 

5 described in clause (i) is no longer fully 

6 satisfied with respect to a facility, the cov7 ered entity described in such clause shall 

8 immediately notify the Secretary that such 

9 facility no longer fully satisfies the relevant 

10 requirement, deregister the facility from 

11 the program under this section, remove the 

12 facility from the identification system de13 scribed in subsection (d)(2)(B)(iv), and 

14 take all necessary actions to prohibit such 

15 facility from making any purchases under 

16 the program under this section or rep17 resenting to third parties that such facility 

18 may purchase covered outpatient drugs 

19 under such program. 

20 ‘‘(iv) OBLIGATION TO SELF-DIS21 CLOSE.—A covered entity described in 

22 clause (i) shall immediately disclose to the 

23 Secretary and the manufacturer of the af24 fected covered outpatient drug any pur25 chase made under the program under this 


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1 section by or on behalf of the covered enti2 ty with respect to a facility that, at the 

3 time of the purchase of such drug, did not 

4 fully satisfy the requirements in such 

5 clause. Any such purchase shall require the 

6 covered entity to promptly conduct an 

7 audit supervised by the Secretary to iden8 tify the full scope of noncompliance with 

9 such requirements and to provide the writ10 ten results of such audit to the Secretary 

11 and the manufacturer of the affected cov12 ered outpatient drug. The covered entity 

13 shall be liable to the manufacturer of the 

14 covered outpatient drug that is the subject 

15 of the noncompliance in an amount equal 

16 to the reduction in the price of the drugs 

17 provided under paragraph (1), plus inter18 est on such amount, which shall be com19 pounded monthly and equal to the current 

20 short-term interest rate as determined by 

21 the Federal Reserve for the time period for 

22 which the covered entity is liable. 

23 ‘‘(v) CIVIL MONETARY PENALTY.— 

24 Where a covered entity knowingly and in25 tentionally violates clause (ii) or otherwise 


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1 fails to satisfy a requirement in clause (iii) 

2 or clause (iv), the covered entity shall be 

3 required to pay a civil monetary penalty 

4 equal to $2,500 for each such violation, 

5 which amount shall be adjusted for infla6 tion annually to reflect the rate of change 

7 in the Consumer Price Index for All Urban 

8 Consumers published by the Bureau of 

9 Labor Statistics. The provisions of section 

10 1128A of the Social Security Act (other 

11 than subsections (a) and (b)) shall apply to 

12 a civil monetary penalty under this clause 

13 in the same manner as such provisions 

14 apply to a penalty or proceeding under sec15 tion 1128A(a). The Office of Inspector 

16 General of the Department of Health and 

17 Human Services shall carry out the provi18 sions related to the imposition of civil mon19 etary penalties under this clause. 

20 ‘‘(vi) SECRETARIAL PUBLICATION OF

21 REPORTS.—On an annual basis, the Sec22 retary shall prepare and make available to 

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1 ties that satisfy the requirements in each 

2 of subclauses (IX) and (X) of clause (i).’’. 

3 (b) EFFECTIVE DATE.—The provisions in section 

4 340B(a)(5)(E) of the Public Health Service Act, as added 

5 by this Act, shall become effective 120 days after the date 

6 of enactment of this Act. 

7 (c) IMPLEMENTATION OF HOSPITAL CHILD SITE

8 STANDARDS.—Not later than 60 days prior to the effec9 tive date of section 340B(a)(5)(E) of the Public Health 

10 Service Act, as added by this Act, the Secretary shall issue 

11 program instructions directing each covered entity de12 scribed in section 340B(a)(5)(E)(i) of the Public Health 

13 Service Act, as amended by this Act, to, before the effec14 tive date of section 340B(a)(5)(E) of the Public Health 

15 Service Act, as added by this Act, register in the identi16 fication system described in section 340B(d)(2)(B)(iv) of 

17 the Public Health Service Act, or update existing registra18 tions in such system for, off-campus outpatient facilities 

19 associated with such covered entity that satisfy the re20 quirements in such section. Such instructions shall direct 

21 each such covered entity to, on or before the effective date 

22 of section 340B(a)(5)(E) of the Public Health Service Act, 

23 as added by this Act, remove from such system the exist24 ing registration of any off-campus outpatient facility asso25 ciated with such covered entity that does not satisfy the 


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1 requirements in section 340B(a)(5)(E)(i) of the Public 

2 Health Service Act. Clauses (iii) through (v) of section 

3 340B(a)(5)(E) of the Public Health Service Act shall 

4 apply with respect to any covered entity described in one 

5 of subparagraphs (L) through (O) of section 340B(a)(4) 

6 of the Public Health Service Act that fails to remove a 

7 facility described in the immediately preceding sentence on 

8 or before the effective date of section 340B(a)(5)(E) of 

9 the Public Health Service Act, as added by this Act. 

10 SEC. 5. CONTRACT PHARMACIES. 

11 Section 340B(a)(5) of the Public Health Service Act 

12 (42 U.S.C. 256b(a)(5)) is further amended by adding at 

13 the end the following: 

14 ‘‘(F) CONTRACT PHARMACIES.— 

15 ‘‘(i) IN GENERAL.—Subject to the 

16 conditions set forth in this subparagraph, 

17 a covered entity may enter into written 

18 agreements with contract pharmacies to 

19 dispense to patients of such entity covered 

20 outpatient drugs purchased by such entity 

21 under the 340B program. Subject to such 

22 conditions, a manufacturer of covered out23 patient drugs shall ship or facilitate ship24 ment of such drugs to contract pharmacies 

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1 cept with respect to covered outpatient 

2 drugs shipped to and dispensed by a con3 tract pharmacy as provided in this sub4 paragraph, and notwithstanding any other 

5 provision in this section, a manufacturer of 

6 covered outpatient drugs shall have no ob7 ligation to pay a discount or rebate under 

8 this section with respect to covered out9 patient drugs delivered or otherwise trans10 ferred to any location other than a reg11 istered address of the covered entity (in12 cluding an entity pharmacy or child site, as 

13 applicable) listed in the identification sys14 tem described in subsection (d)(2)(B)(iv). 

15 ‘‘(ii) CONDITIONS FOR COVERED EN16 TITY USE OF CONTRACT PHARMACIES.—In 

17 order for a covered entity to enter into a 

18 written agreement with a contract phar19 macy to dispense to patients of such entity 

20 covered outpatient drugs purchased by 

21 such entity under the program under this 

22 section, the entity shall— 

23 ‘‘(I)(aa) be described in one of 

24 subparagraphs (A) through (K) of 

25 paragraph (4) and purchase covered 


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1 outpatient drugs for its patients with2 in the scope of the Federal grant, 

3 project, or Federal grant-authorizing 

4 statute, as applicable, that qualifies 

5 such entity for participation in the 

6 program under this section; or 

7 ‘‘(bb) be described in one of sub8 paragraphs (L) through (O) of para9 graph (4); 

10 ‘‘(II) establish and implement 

11 compliance procedures to satisfy the 

12 requirements described in subpara13 graphs (A), (B), (G) (as applicable), 

14 (H) (as applicable), (J), and (K) of 

15 paragraph (5) and section 1193(d) of 

16 the Social Security Act with respect to 

17 covered outpatient drugs purchased by 

18 the covered entity under this section, 

19 including with respect to such drugs 

20 dispensed by a contract pharmacy, 

21 which compliance procedures shall be 

22 considered records of the covered enti23 ty subject to audit under subpara24 graph (C); 


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1 ‘‘(III) prior to purchasing cov2 ered outpatient drugs subject to an 

3 agreement under this section to be 

4 shipped to or dispensed by such phar5 macy, register such pharmacy in the 

6 identification system described in sub7 section (d)(2)(B)(iv) as a contract 

8 pharmacy, to include such pharmacy’s 

9 national provider identifier, and cer10 tify to the Secretary upon initial reg11 istration of such pharmacy in such 

12 system and annually thereafter that 

13 such pharmacy complies with all re14 quirements under this subparagraph, 

15 including the covered entity compli16 ance procedures described in sub17 clause (II); and 

18 ‘‘(IV) as applicable, comply with 

19 the requirements and limitations set 

20 forth in clauses (iii) through (vii) of 

21 this subparagraph. 

22 ‘‘(iii) LIMITATION ON CONTRACT

23 PHARMACIES FOR CERTAIN HOSPITAL COV24 ERED ENTITIES.—Notwithstanding clause 

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1 graph (4)(L), a free-standing cancer hos2 pital described in paragraph (4)(M), and a 

3 rural referral center described in para4 graph (4)(O) may not enter into written 

5 agreements with more than 5 contract 

6 pharmacies to dispense covered outpatient 

7 drugs purchased by the covered entity 

8 under this section to patients of such enti9 ty under this subparagraph. For purposes 

10 of this clause, a contract pharmacy shall 

11 not include a mail order pharmacy. 

12 ‘‘(iv) SERVICE AREA REQUIREMENT

13 FOR ELIGIBLE CONTRACT PHARMACIES.— 

14 A contract pharmacy with which a covered 

15 entity enters into a written agreement to 

16 dispense covered outpatient drugs to pa17 tients of such entity subject to the condi18 tions in this subparagraph shall be located 

19 in the service area of the covered entity (as 

20 defined in clause (x)(IV)). Notwithstanding 

21 any other provision in this subparagraph, 

22 this clause (iv) shall not apply with respect 

23 to a covered entity described in paragraph 

24 (4)(G) or a contract pharmacy that is a 

25 mail order pharmacy. 


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1 ‘‘(v) REQUIREMENTS FOR USE OF

2 MAIL ORDER PHARMACIES.— 

3 ‘‘(I) IN GENERAL.—Notwith4 standing any other provision in this 

5 section, a covered outpatient drug 

6 subject to an agreement under this 

7 section may be dispensed to a patient 

8 of a covered entity through a mail 

9 order pharmacy only if— 

10 ‘‘(aa) the covered entity dis11 pensing such drug (or on whose 

12 behalf such drug is dispensed) 

13 through a mail order pharmacy 

14 to such a patient is described in 

15 one of subparagraphs (A) 

16 through (K) of paragraph (4), 

17 such entity is not a specified non18 hospital covered entity (as de19 fined in subsection (b)(4)), and, 

20 except for a covered entity de21 scribed in subparagraph (G) of 

22 such subsection, the patient dis23 pensed such drug resides within 

24 the service area of the covered 


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1 entity (as defined in clause 

2 (x)(IV)); or 

3 ‘‘(bb) the covered entity dis4 pensing such drug (or on whose 

5 behalf such drug is dispensed) 

6 through a mail order pharmacy 

7 to such a patient is described in 

8 subparagraph (N) of paragraph 

9 (4) or is a sole community hos10 pital described in subparagraph 

11 (O) of such paragraph, and the 

12 patient dispensed such drug re13 sides in a county that is not part 

14 of a Metropolitan Statistical 

15 Area, as defined by the Office of 

16 Management and Budget. 

17 ‘‘(II) REQUIREMENTS FOR USE

18 OF MAIL ORDER CONTRACT PHAR19 MACIES.—Subject to the conditions 

20 set forth in this subparagraph, a cov21 ered entity described in item (aa) or 

22 (bb) of subclause (I) may enter into 

23 written agreements with contract 

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1 scribed in such relevant clause covered 

2 outpatient drugs purchased by such 

3 entity under the 340B program. 

4 ‘‘(vi) REQUIREMENTS FOR COVERED

5 ENTITY COMPLIANCE PROCEDURES AND

6 WRITTEN AGREEMENTS.—Not later than 

7 180 days following the date of enactment 

8 of the 340B ACCESS Act, the Secretary 

9 shall issue guidance to covered entities 

10 specifying requirements for— 

11 ‘‘(I) covered entity compliance 

12 procedures described in clause (ii)(II) 

13 that the Secretary determines are suf14 ficient to ensure that covered out15 patient drugs are not subject to dupli16 cate discounts in violation of sub17 section (a)(5)(A) (including with re18 spect to such drugs used by Medicaid 

19 managed care enrollees), that such 

20 drugs cannot be resold or otherwise 

21 transferred to persons who do not 

22 meet the definition of a patient of the 

23 covered entity in violation of subpara24 graph (B), that the patient afford25 ability requirements specified in subVerDate Sep 11 2014 22:45 Jul 07, 2024 Jkt 049200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 E:\BILLS\H8574.IH H8574

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1 paragraphs (G) and (H), as applica2 ble, are appropriately applied at the 

3 point of drug dispense or administra4 tion, that data and other information 

5 is submitted in accordance with sub6 paragraphs (J) and (K), and that the 

7 nonduplication requirement in section 

8 1193(d) of the Social Security Act is 

9 satisfied; and 

10 ‘‘(II) written agreements between 

11 covered entities and contract phar12 macies described in clause (vii). 

13 ‘‘(vii) WRITTEN AGREEMENT RE14 QUIRED.—The written agreement between 

15 a covered entity and a contract pharmacy 

16 described in this subparagraph shall in17 clude binding and enforceable obligations 

18 on the contract pharmacy to comply with 

19 the covered entity’s compliance procedures 

20 described in clause (ii)(II) with respect to 

21 covered outpatient drugs dispensed to pa22 tients of such entity in accordance with 

23 this subparagraph. Within 30 days of the 

24 applicable effective date of such written 

25 agreement, including any amendment or 


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1 addendum thereto, the covered entity shall 

2 submit a copy of the agreement, together 

3 with any amendments or addenda, to the 

4 Secretary in a form and manner specified 

5 by the Secretary. The Secretary shall re6 view all such agreements, including amend7 ments and addenda, for compliance with 

8 the requirements set forth in this subpara9 graph and may require a covered entity 

10 and contract pharmacy to modify an agree11 ment to conform to the requirements of 

12 this subparagraph. Such agreements, in13 cluding amendments and addenda, shall be 

14 considered records of the covered entity 

15 subject to audit under subparagraph (C). 

16 ‘‘(viii) CLARIFICATION FOR COVERED

17 OUTPATIENT DRUGS SUBJECT TO RE18 STRICTED DISTRIBUTION.—Notwith19 standing any other provision in this sec20 tion, a manufacturer of a covered out21 patient drug requiring exclusive use of a 

22 specialty pharmacy or a restricted distribu23 tion network shall be deemed to have satis24 fied its obligations under this subpara25 graph with respect to a contract pharmacy 


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1 if such manufacturer offers each covered 

2 entity such drug for purchase at or below 

3 the applicable ceiling price described in 

4 paragraph (1) through a wholesaler, dis5 tributor, or pharmacy included in the re6 stricted distribution network for such drug. 

7 ‘‘(ix) PENALTIES FOR CONTRACT

8 PHARMACY COMPLIANCE VIOLATIONS.— 

9 ‘‘(I) IN GENERAL.—A contract 

10 pharmacy that is found to have vio11 lated the covered entity compliance 

12 procedures described in clause (ii)(II), 

13 violated subparagraph (A), or violated 

14 subparagraph (B) shall— 

15 ‘‘(aa) in the first instance of 

16 such violation, be liable to a man17 ufacturer of a covered outpatient 

18 drug that is the subject of such 

19 violation in an amount equal to 

20 the reduction in the price of such 

21 drug (as described in subsection 

22 (a)(1)), plus interest on such 

23 amount, which shall be com24 pounded monthly and equal to 

25 the current short-term interest 


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1 rate as determined by the Fed2 eral Reserve for the time period 

3 for which the covered entity is 

4 liable; 

5 ‘‘(bb) in the second instance 

6 of such violation— 

7 ‘‘(AA) be liable to a 

8 manufacturer of a covered 

9 outpatient drug that is the 

10 subject of such violation in 

11 an amount equal to the re12 duction in the price of the 

13 drug (as described in para14 graph (1)), plus interest on 

15 such amount, which shall be 

16 calculated in the manner 

17 specified in item (aa); and 

18 ‘‘(BB) be required to 

19 pay a civil monetary penalty 

20 equal to $13,946 for each 

21 claim for a covered out22 patient drug that is subject 

23 to the violation, which 

24 amount shall be adjusted for 

25 inflation annually to reflect 


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1 the rate of change in the 

2 Consumer Price Index for 

3 All Urban Consumers pub4 lished by the Bureau of 

5 Labor Statistics; and 

6 ‘‘(cc) in the third instance of 

7 such violation— 

8 ‘‘(AA) be liable to a 

9 manufacturer of a covered 

10 outpatient drug that is the 

11 subject of such violation in 

12 an amount equal to the re13 duction in the price of the 

14 drug (as described in para15 graph (1)), plus interest on 

16 such amount, which shall be 

17 calculated in the manner 

18 specified in item (aa); 

19 ‘‘(BB) be required to 

20 pay a civil monetary penalty 

21 equal to $13,946 for each 

22 claim for a covered out23 patient drug that is subject 

24 to the violation, which 

25 amount shall be adjusted for 


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1 inflation annually to reflect 

2 the rate of change in the 

3 Consumer Price Index for 

4 All Urban Consumers pub5 lished by the Bureau of 

6 Labor Statistics; and 

7 ‘‘(CC) be removed from 

8 the program under this sec9 tion and disqualified from 

10 reentry into such program 

11 for a period of not less than 

12 two years, or such longer pe13 riod as the Secretary may 

14 determine based on the se15 verity of the violation (or 

16 violations) and the risk such 

17 pharmacy presents to the in18 tegrity of the program, with 

19 no ability to reenter the pro20 gram unless and until the 

21 Secretary determines such 

22 pharmacy has resolved the 

23 violation (or violations) and 

24 taken reasonable steps to 


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1 prevent similar future viola2 tions. 

3 ‘‘(II) CORRECTIVE ACTION

4 PLAN.—In the first instance of a vio5 lation described in subclause (I)(aa), 

6 in the second instance of a violation 

7 described in subclause (I)(bb), and 

8 prior to reentry into the program fol9 lowing a violation described in sub10 clause (I)(cc)— 

11 ‘‘(aa) the pharmacy shall 

12 conduct an internal review to 

13 identify the cause of the violation 

14 (or violations) that is inclusive of 

15 all calendar quarters within the 

16 period in which such violation (or 

17 violations) occurred and all cov18 ered outpatient drugs subject to 

19 an agreement under this section 

20 dispensed during such period; 

21 ‘‘(bb) the pharmacy shall 

22 prepare a written corrective ac23 tion plan, in a form specified by 

24 the Secretary, which shall in25 clude, at a minimum, the results 


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1 of such internal review, the phar2 macy’s methodology for identi3 fying the full scope of such viola4 tion (or violations), and the phar5 macy’s proposed corrective ac6 tions, and submit such plan to 

7 the Secretary in a form and man8 ner specified by the Secretary; 

9 and 

10 ‘‘(cc) the Secretary shall re11 view such plan, notify the phar12 macy of any revisions to such 

13 plan, including additional correc14 tive actions, necessary for the 

15 Secretary to approve such plan, 

16 and publish the approved plan on 

17 a public website of the Depart18 ment of Health and Human 

19 Services (with redactions of any 

20 confidential or proprietary infor21 mation). 

22 ‘‘(III) CIVIL MONETARY PENALTY

23 FOR VIOLATIONS BY REMOVED PHAR24 MACY.—A contract pharmacy removed 

25 from the program under this section 


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1 pursuant to subclause (I)(cc) that dis2 penses a covered outpatient drug sub3 ject to an agreement under this sec4 tion during a time period that such 

5 pharmacy is removed from the pro6 gram and is not approved for reentry 

7 shall be required to pay a civil mone8 tary penalty equal to $13,946 for each 

9 claim for each such drug dispensed 

10 during such period, which amount 

11 shall be adjusted for inflation annu12 ally to reflect the rate of change in 

13 the Consumer Price Index for All 

14 Urban Consumers published by the 

15 Bureau of Labor Statistics. 

16 ‘‘(IV) PROCEDURES AND DELE17 GATION.—The provisions of section 

18 1128A of the Social Security Act 

19 (other than subsections (a) and (b)) 

20 shall apply for purposes of any pay21 ment, civil monetary penalty, or re22 moval described in this clause in the 

23 same manner as such provisions apply 

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1 tor General of the Department of 

2 Health and Human Services shall 

3 carry out the provisions of this clause. 

4 ‘‘(x) DEFINITIONS.—In this subpara5 graph: 

6 ‘‘(I) CONTRACT PHARMACY.— 

7 The term ‘contract pharmacy’ means, 

8 with respect to a covered entity de9 scribed in clause (ii), any individual 

10 pharmacy (as determined by a na11 tional provider identifier unique to the 

12 pharmacy address) that is— 

13 ‘‘(aa) licensed as a phar14 macy by the relevant State (or 

15 States); 

16 ‘‘(bb) authorized to dispense 

17 covered outpatient drugs subject 

18 to an agreement under this sec19 tion to patients of such entity (as 

20 defined in subsection (b)(3)) pur21 suant to a valid written agree22 ment with such entity (as de23 scribed in this subparagraph); 

24 and 


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1 ‘‘(cc) not an entity phar2 macy. 

3 ‘‘(II) ENTITY PHARMACY.—The 

4 term ‘entity pharmacy’ means any in5 dividual pharmacy (as determined by 

6 a national provider identifier unique 

7 to the pharmacy address) that is— 

8 ‘‘(aa)(AA) licensed as a 

9 pharmacy by the relevant State 

10 (or States); and 

11 ‘‘(BB) the same legal entity 

12 as the covered entity and located 

13 within the covered entity’s service 

14 area, if the covered entity is de15 scribed in one of subparagraphs 

16 (A) through (K) of paragraph (4) 

17 and is not a specified nonhospital 

18 covered entity (as defined in sub19 section (b)(4)); or 

20 ‘‘(bb) the same legal entity 

21 as the covered entity and located 

22 within the covered entity’s four 

23 walls, if the covered entity is de24 scribed in one of subparagraphs 

25 (L) through (O) of paragraph (4) 


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1 or is a specified nonhospital cov2 ered entity (as defined in sub3 section (b)(4)). 

4 ‘‘(III) MAIL ORDER PHAR5 MACY.—The term ‘mail order phar6 macy’ is a pharmacy that is licensed 

7 as a pharmacy by the State (or 

8 States) and that dispenses prescrip9 tion medications to individuals pri10 marily through the mail, as deter11 mined in accordance with guidance 

12 issued by the Secretary in connection 

13 with part 447, subpart I of title 42 of 

14 the Code of Federal Regulations (or 

15 any successor regulations). 

16 ‘‘(IV) SERVICE AREA.—The term 

17 ‘service area’ means, with respect to a 

18 covered entity described in paragraph 

19 (4), other than a covered entity de20 scribed in subparagraph (G) of such 

21 paragraph, the Public Use Microdata 

22 Area (as defined by the United States 

23 Census Bureau) in which such entity 

24 is located and up to three additional 

25 Public Use Microdata Areas that are 


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1 contiguous with the Public Use 

2 Microdata Area in which such entity 

3 is located, which shall be listed in the 

4 identification system described in sub5 section (d)(2)(B)(iv). 

6 ‘‘(xi) RULES OF CONSTRUCTION.— 

7 ‘‘(I) LOCATION.—For purposes 

8 of this subparagraph, the location of a 

9 covered entity shall be determined 

10 based on the physical address of the 

11 entity listed in the identification sys12 tem described in subsection 

13 (d)(2)(B)(iv) without regard to any 

14 off-campus outpatient facilities. 

15 ‘‘(II) SAME LEGAL ENTITY.—For 

16 purposes of this subparagraph, a 

17 pharmacy is the same legal entity as 

18 the covered entity if the name, owner19 ship, and employer identification num20 ber of the pharmacy is identical to the 

21 name, ownership, and employer identi22 fication number of the covered enti23 ty.’’. 


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1 SEC. 6. ENSURING PATIENT AFFORDABILITY OF DRUGS 

2 PURCHASED UNDER SECTION 340B. 

3 (a) IN GENERAL.—Section 340B(a)(5) of the Public 

4 Health Service Act (42 U.S.C. 256b(a)(5)) is further 

5 amended by adding at the end the following: 

6 ‘‘(G) PATIENT AFFORDABILITY REQUIRE7 MENTS FOR HOSPITAL COVERED ENTITIES.— 

8 ‘‘(i) IN GENERAL.—Notwithstanding 

9 any other provision of law, a covered entity 

10 described in one of subparagraphs (L) 

11 through (O) of paragraph (4) shall estab12 lish a sliding fee scale that results in the 

13 covered entity providing, on behalf of an 

14 eligible patient (as defined in clause (iv)), 

15 a discount that results in such patient pay16 ing no more than the maximum out-of17 pocket obligation (as defined in clause (ii)), 

18 with respect to each covered outpatient 

19 drug subject to an agreement under this 

20 section dispensed, furnished, or adminis21 tered to such patient at such covered enti22 ty, any child site, or any entity pharmacy. 

23 The sliding fee scale and related policies 

24 shall be written and posted prominently at 

25 each such covered entity location, including 

26 any child site and entity pharmacy, and 


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1 shall be included in any billing-related 

2 communications sent by such covered enti3 ty to any patient dispensed, furnished, or 

4 administered a covered outpatient drug at 

5 such covered entity location, including any 

6 child site or entity pharmacy. Eligibility 

7 for a reduced out-of-pocket obligation pur8 suant to this clause shall be based on in9 surance and income information provided 

10 by the eligible patient. With respect to cov11 ered outpatient drugs that are self-admin12 istered by an eligible patient, the out-of13 pocket reductions described in this clause 

14 shall apply at the point of sale. 

15 ‘‘(ii) MAXIMUM OUT-OF-POCKET OBLI16 GATION.—For each dispense or adminis17 tration of a covered outpatient drug, the 

18 maximum out-of-pocket obligation for an 

19 eligible patient with family income— 

20 ‘‘(I) below the Federal poverty 

21 guidelines is $0; 

22 ‘‘(II) at or above the Federal 

23 poverty guidelines but below 200 per24 cent of the Federal poverty guidelines 

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1 erwise applicable out-of-pocket obliga2 tion or $35, which shall be adjusted 

3 for inflation annually to reflect rate of 

4 the change in the Consumer Price 

5 Index for All Urban Consumers pub6 lished by the Bureau of Labor Statis7 tics; and 

8 ‘‘(III) at or above 200 percent of 

9 the Federal poverty guidelines is the 

10 lesser of 30 percent of the otherwise 

11 applicable out-of-pocket obligation or 

12 $50, which shall be adjusted for infla13 tion annually to reflect rate of the 

14 change in the Consumer Price Index 

15 for All Urban Consumers published by 

16 the Bureau of Labor Statistics. 

17 ‘‘(iii) APPLICABILITY TO CONTRACT

18 PHARMACIES.—With respect to an eligible 

19 patient of a covered entity described in 

20 clause (i) dispensed a covered outpatient 

21 drug subject to an agreement under this 

22 section on behalf of such covered entity at 

23 a contract pharmacy pursuant to subpara24 graph (F), such covered entity shall re25 quire such contract pharmacy to provide 


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1 discounts to eligible patients on behalf of 

2 such covered entity and comply with all 

3 other requirements described in clauses (i) 

4 and (ii) as if such contract pharmacy were 

5 a covered entity described in clause (i). 

6 ‘‘(iv) DEFINITIONS.—In this subpara7 graph: 

8 ‘‘(I) CHILD SITE.—The term 

9 ‘child site’ shall have the meaning 

10 given such term in subparagraph (E). 

11 ‘‘(II) CONTRACT PHARMACY.— 

12 The term ‘contract pharmacy’ shall 

13 have the meaning given such term in 

14 subparagraph (F). 

15 ‘‘(III) ELIGIBLE PATIENT.—The 

16 term ‘eligible patient’ means a pa17 tient, as defined in subsection (b)(3), 

18 who is not covered under minimum es19 sential coverage as defined under sec20 tion 5000A(f) of the Internal Revenue 

21 Code of 1986 or has family income 

22 below 200 percent of the Federal pov23 erty guidelines and is covered under a 

24 group health plan, health insurance 

25 coverage in the individual market or 


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1 group market (as such terms are de2 fined in section 2791 of the Public 

3 Health Service Act) or coverage de4 scribed in section 156.602(a), title 45, 

5 Code of Federal Regulations or suc6 cessor regulation. 

7 ‘‘(IV) ENTITY PHARMACY.—The 

8 term ‘entity pharmacy’ shall have the 

9 meaning given such term in subpara10 graph (F). 

11 ‘‘(V) FEDERAL POVERTY GUIDE12 LINES.—The term ‘Federal poverty 

13 guidelines’ means the poverty guide14 lines updated periodically in the Fed15 eral Register by the Department of 

16 Health and Human Services pursuant 

17 to section 9902(2) of title 42, United 

18 States Code. 

19 ‘‘(VI) OUT-OF-POCKET OBLIGA20 TION.—The term ‘out-of-pocket obli21 gation’ means any copayment, coin22 surance, deductible, or other cost 

23 sharing amount or payment required 

24 from an eligible patient in connection 

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1 cific health care item or service, in2 cluding a covered outpatient drug. 

3 ‘‘(v) CIVIL MONETARY PENALTY.—A 

4 covered entity or contract pharmacy that 

5 violates a requirement of this subpara6 graph shall be subject to a civil monetary 

7 penalty of $2,500 for each such violation, 

8 which amount shall be adjusted for infla9 tion annually to reflect the rate of change 

10 in the Consumer Price Index for All Urban 

11 Consumers published by the Bureau of 

12 Labor Statistics. The provisions of section 

13 1128A of the Social Security Act (other 

14 than subsections (a) and (b)) shall apply to 

15 a civil monetary penalty under this clause 

16 in the same manner as such provisions 

17 apply to a penalty or proceeding under sec18 tion 1128A(a). The Office of Inspector 

19 General of the Department of Health and 

20 Human Services shall carry out the provi21 sions of this clause. 

22 ‘‘(vi) REGULATIONS.—The Secretary 

23 shall promulgate regulations through no24 tice and comment rulemaking to implement 

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1 graph and shall issue final regulations not 

2 later than 90 days after the date of enact3 ment of this subparagraph. The authority 

4 to promulgate regulations under this clause 

5 is limited to specifying the obligations of 

6 covered entities and contract pharmacies 

7 under this subparagraph and other details 

8 necessary to carry out the requirements of 

9 this subparagraph efficiently, effectively, 

10 and in conformity with this subparagraph. 

11 ‘‘(vii) OIG STUDIES.—The Office of 

12 Inspector General of the Department of 

13 Health and Human Services shall conduct 

14 and publish annual studies of covered enti15 ty (including child site and entity phar16 macy) and contract pharmacy practices 

17 with respect to the requirements under this 

18 subparagraph and evaluate whether eligible 

19 patients are receiving assistance to reduce 

20 their out-of-pocket obligations in accord21 ance with this subparagraph. 

22 ‘‘(H) PATIENT AFFORDABILITY REQUIRE23 MENTS FOR CERTAIN NONHOSPITAL COVERED

24 ENTITIES.— 


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1 ‘‘(i) IN GENERAL.—Notwithstanding 

2 any other provision of law, a covered entity 

3 described in one of subparagraphs (A) 

4 through (K) of paragraph (4) that is re5 quired by the Federal statute authorizing 

6 the grant, project, or contract that is the 

7 basis for such entity’s participation in the 

8 program under this section to provide af9 fordability assistance to eligible individuals 

10 receiving health care items or services from 

11 such entity shall, with respect to an eligible 

12 patient (as defined in clause (iii)) dis13 pensed or administered a covered out14 patient drug subject to an agreement 

15 under this section at a covered entity site, 

16 including an entity pharmacy, establish a 

17 policy that provides a discount to reduce 

18 the out-of-pocket obligation of an eligible 

19 patient with respect to such drug to an 

20 amount sufficient to ensure such patient is 

21 not denied access to such drug based on 

22 such patient’s ability to pay for such drug. 

23 ‘‘(ii) APPLICABILITY TO CONTRACT

24 PHARMACIES.—With respect to an eligible 

25 patient of a covered entity described in 


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1 clause (i) dispensed a covered outpatient 

2 drug subject to an agreement under this 

3 section on behalf of such covered entity at 

4 a contract pharmacy pursuant to subpara5 graph (F), such covered entity shall re6 quire such contract pharmacy to provide 

7 discounts to eligible patients on behalf of 

8 such covered entity in accordance with the 

9 covered entity’s policy described in clause 

10 (i). 

11 ‘‘(iii) DEFINITIONS.—In this subpara12 graph: 

13 ‘‘(I) CONTRACT PHARMACY.— 

14 The term ‘contract pharmacy’ shall 

15 have the meaning given such term in 

16 subparagraph (F). 

17 ‘‘(II) ELIGIBLE PATIENT.—The 

18 term ‘eligible patient’ means a pa19 tient, as defined in subsection (b)(3), 

20 who is not covered under minimum es21 sential coverage as defined under sec22 tion 5000A(f) of the Internal Revenue 

23 Code of 1986 or has family income 

24 below 200 percent of the Federal pov25 erty guidelines and is covered under a 


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1 group health plan, health insurance 

2 coverage in the individual market or 

3 group market (as such terms are de4 fined in section 2791 of the Public 

5 Health Service Act) or coverage de6 scribed in section 156.602(a), title 45, 

7 Code of Federal Regulations or suc8 cessor regulation. 

9 ‘‘(III) ENTITY PHARMACY.—The 

10 term ‘entity pharmacy’ shall have the 

11 meaning given such term in subpara12 graph (F). 

13 ‘‘(IV) FEDERAL POVERTY GUIDE14 LINES.—The term ‘Federal poverty 

15 guidelines’ means the poverty guide16 lines updated periodically in the Fed17 eral Register by the Department of 

18 Health and Human Services pursuant 

19 to section 9902(2) of title 42, United 

20 States Code. 

21 ‘‘(V) OUT-OF-POCKET OBLIGA22 TION.—The term ‘out-of-pocket obli23 gation’ means any copayment, coin24 surance, deductible, or other cost 

25 sharing amount or payment required 


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1 from an eligible patient in connection 

2 with such patient’s receipt of a spe3 cific health care item or service, in4 cluding a covered outpatient drug.’’. 

5 SEC. 7. REQUIREMENTS FOR NONHOSPITAL COVERED EN6 TITIES AND SUBGRANTEES. 

7 Section 340B(a)(5) of the Public Health Service Act 

8 (42 U.S.C. 256b(a)(5)) is further amended by adding at 

9 the end the following: 

10 ‘‘(I) ADDITIONAL REQUIREMENTS FOR

11 NONHOSPITAL COVERED ENTITIES; REQUIRE12 MENTS FOR SUBGRANTEES.— 

13 ‘‘(i) ADDITIONAL REQUIREMENTS FOR

14 NONHOSPITAL COVERED ENTITIES.—A 

15 covered entity described in one of subpara16 graphs (A) through (K) of paragraph (4) 

17 shall, as a condition of participation in the 

18 program under this section— 

19 ‘‘(I) be a nonprofit or public enti20 ty (as determined by the Secretary); 

21 ‘‘(II) be eligible to purchase a 

22 covered outpatient drug subject to an 

23 agreement under this section only 

24 with respect to a patient receiving a 

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1 ered entity site, and such service and 

2 such drug are within the scope and 

3 time period of the Federal grant, 

4 project, or Federal grant-authorizing 

5 statute, as applicable, that qualifies 

6 such covered entity for participation 

7 in the program under this section; 

8 ‘‘(III) oversee the participation in 

9 the program under this section of any 

10 subgrantee with which such covered 

11 entity enters into an enforceable writ12 ten agreement in accordance with sub13 clause (IV) and be directly liable for 

14 noncompliance by any such sub15 grantee with any requirement under 

16 this section; 

17 ‘‘(IV) have an enforceable written 

18 agreement with any subgrantee, which 

19 shall apply to all registered sites of 

20 such subgrantee, and require such 

21 subgrantee to comply with all require22 ments under this section otherwise ap23 plicable to the covered entity and to 

24 maintain written records, which shall 

25 be made available to the Secretary 


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1 upon request, sufficient to dem2 onstrate such subgrantee’s receipt of 

3 eligible Federal funds or an in-kind 

4 contribution purchased with such 

5 funds, as described in clause (iii), and 

6 the grant under which such sub7 grantee receives such funds or con8 tribution; and 

9 ‘‘(V) maintain written records 

10 sufficient to demonstrate such entity 

11 authorized such subgrantee to, prior 

12 to purchasing covered outpatient 

13 drugs subject to an agreement under 

14 this section, register each subgrantee 

15 site in the covered entity identification 

16 system established under subsection 

17 (d)(2)(B)(iv) to participate in the pro18 gram under this section as a sub19 grantee of such entity and provide the 

20 Secretary with such registration infor21 mation as requested to demonstrate 

22 such subgrantee’s receipt of eligible 

23 Federal funds or an in-kind contribu24 tion purchased with such funds, as de25 scribed in clause (iii), and the grant 


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1 under which the subgrantee receives 

2 such funds or contribution. 

3 ‘‘(ii) REQUIREMENTS FOR SUB4 GRANTEES.—Notwithstanding any other 

5 provision in this section, a subrecipient of 

6 a Federal grant shall be eligible to partici7 pate in the program under this section 

8 only if such subrecipient is a subgrantee 

9 (as defined in clause (iii)) and such sub10 grantee— 

11 ‘‘(I) is a nonprofit or public enti12 ty (as determined by the Secretary); 

13 ‘‘(II) prior to purchasing covered 

14 outpatient drugs subject to an agree15 ment under this section— 

16 ‘‘(aa) enters into an enforce17 able written agreement with the 

18 covered entity providing eligible 

19 Federal funds or an in-kind con20 tribution, pursuant to clause 

21 (i)(IV); 

22 ‘‘(bb) maintains written 

23 records, which shall be made 

24 available to the Secretary upon 

25 request, sufficient to demonstrate 


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1 such subgrantee’s receipt of eligi2 ble Federal funds or an in-kind 

3 contribution purchased with such 

4 funds, as described in clause (iii), 

5 and the grant under which such 

6 subgrantee receives such funds or 

7 contribution; and 

8 ‘‘(cc) registers each sub9 grantee site to participate in the 

10 program under this section in the 

11 covered entity identification sys12 tem established under subsection 

13 (d)(2)(B)(iv); 

14 ‘‘(III) purchases covered out15 patient drugs subject to an agreement 

16 under this section only with respect to 

17 a patient receiving a health care serv18 ice at a registered subgrantee site, 

19 and such service and such drug are 

20 within the scope and time period of 

21 the Federal grant, project, or grant22 authorizing statute, as applicable, that 

23 qualifies such subgrantee for partici24 pation in the program under this sec25 tion; 


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1 ‘‘(IV) in the case of a subgrantee 

2 that receives an in-kind contribution 

3 from a covered entity described in 

4 paragraph (4)(K), demonstrates to 

5 such covered entity and to the Sec6 retary, upon initial registration to 

7 participate in the program under this 

8 section and on an annual basis there9 after, that the number of individuals 

10 aged 19 to 64 years receiving a health 

11 care service at the registered sub12 grantee site during the most recent 

13 calendar year who are enrolled under 

14 a State plan under title XIX of the 

15 Social Security Act (or a waiver of 

16 such plan), as a share of all individ17 uals aged 19 to 64 years receiving a 

18 health care service at the registered 

19 subgrantee site during such calendar 

20 year, exceeds the number of individ21 uals aged 19 to 64 years who reside 

22 in the State where such subgrantee 

23 site is located and are enrolled under 

24 a State plan under title XIX of such 

25 Act (or a waiver of such plan), as a 


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1 share of all individuals aged 19 to 64 

2 who reside in such State, each as 

3 measured by data available from the 

4 American Community Survey of the 

5 Bureau of the Census for the calendar 

6 year preceding the most recent cal7 endar year; 

8 ‘‘(V) in the case of a subgrantee 

9 that receives an in-kind contribution 

10 from a covered entity described in 

11 paragraph (4)(K), submits to such 

12 covered entity and to the Secretary, 

13 upon receipt of each in-kind contribu14 tion described in clause (iii)— 

15 ‘‘(aa) a written plan in a 

16 form specified by the Secretary 

17 describing how such contribution 

18 will be used to further the goals 

19 of the relevant Federal grant, 

20 how such subgrantee will ensure 

21 that purchases of covered out22 patient drugs under the program 

23 under this section are consistent 

24 with the goals of such grant, and 

25 how such subgrantee will ensure 


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1 compliance with the requirements 

2 under subparagraph (A) and (B); 

3 and 

4 ‘‘(bb) a written plan in a 

5 form specified by the Secretary 

6 and using criteria established by 

7 the Secretary to determine the 

8 date upon which its eligibility to 

9 participate in the program under 

10 this section, as a result of such 

11 contribution, shall terminate (ab12 sent such subgrantee’s receipt of 

13 additional funds or contributions 

14 described in clause (iii)); 

15 ‘‘(VI) subject to subclause (VII), 

16 immediately notifies the Secretary, 

17 disenrolls from the program under 

18 this section, and discontinues making 

19 purchases under such program and 

20 representing to third parties that it 

21 may purchase under such program as 

22 of the date described in subclause 

23 (V)(bb) or if, at any time during its 

24 participation in the program under 

25 this section, it no longer meets one or 


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1 more applicable requirements under 

2 this section; and 

3 ‘‘(VII) not later than 30 days fol4 lowing the date on which the covered 

5 entity with which such subgrantee has 

6 an agreement pursuant to clause (i) 

7 ceases participation in the program 

8 under this section, such subgrantee ei9 ther— 

10 ‘‘(aa) disenrolls from the 

11 program under this section and 

12 discontinues making purchases 

13 under such program and rep14 resenting to third parties that 

15 such subgrantee may purchase 

16 under such program; or 

17 ‘‘(bb) enters into an enforce18 able written agreement with a 

19 different covered entity described 

20 in one of subparagraphs (A) 

21 through (K) of paragraph (4) 

22 that is participating in the pro23 gram under this section, and sat24 isfies all applicable requirements 


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1 under this section with respect to 

2 such different covered entity. 

3 ‘‘(iii) SUBGRANTEE DEFINED.— 

4 ‘‘(I) IN GENERAL.—In this sub5 paragraph, the term ‘subgrantee’ 

6 means a subrecipient of a Federal 

7 grant that— 

8 ‘‘(aa) receives eligible Fed9 eral funds from a covered entity 

10 described in one of subpara11 graphs (A) through (K) of para12 graph (4) in the form of non13 nominal and ongoing payments 

14 by such covered entity directly to 

15 such subrecipient to directly sup16 port the provision of health care 

17 services by such subrecipient to 

18 individuals within the scope and 

19 time period of the Federal grant, 

20 project, or Federal grant-author21 izing statute, as applicable, that 

22 qualifies such covered entity for 

23 participation in the program 

24 under this section; or 


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1 ‘‘(bb) receives in-kind con2 tributions from a covered entity 

3 described in paragraph (4)(K) 

4 and such contributions— 

5 ‘‘(AA) are ongoing and 

6 are in the form of real prop7 erty, equipment, supplies, or 

8 services; 

9 ‘‘(BB) subject to sub10 clause (II), have a value ex11 ceeding $25,000 per year, 

12 which shall be adjusted for 

13 inflation annually to reflect 

14 the rate of change in the 

15 Consumer Price Index for 

16 All Urban Consumers pub17 lished by the Bureau of 

18 Labor Statistics and deter19 mined by the subrecipient 

20 and approved by the covered 

21 entity providing such con22 tribution in a manner speci23 fied by the Secretary; 

24 ‘‘(CC) are specifically 

25 identifiable and provided by 


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1 such covered entity directly 

2 to such subrecipient; and 

3 ‘‘(DD) directly support 

4 the provision of health care 

5 items and services by such 

6 subrecipient solely to indi7 viduals within the scope and 

8 time period of the Federal 

9 grant that qualifies such 

10 covered entity for participa11 tion in the program under 

12 this section. 

13 ‘‘(II) EXCLUSION.—The require14 ment specified in subclause 

15 (I)(bb)(BB) shall not apply with re16 spect to a subrecipient of a Federal 

17 grant that receives in-kind contribu18 tions from a covered entity described 

19 in paragraph (4)(K) if— 

20 ‘‘(aa) as of January 1, 

21 2024, such subrecipient is par22 ticipating in the program under 

23 this section as such a sub24 recipient and is in compliance 

25 with all requirements under this 


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1 section otherwise applicable to 

2 such subrecipient; and 

3 ‘‘(bb) with respect to any in4 kind contribution such sub5 recipient receives after January 

6 1, 2024, such subrecipient has 

7 continuously participated in the 

8 program under this section as 

9 such a subrecipient in compliance 

10 with all requirements under this 

11 section for the period beginning 

12 on January 1, 2024 and con13 tinuing through the date on 

14 which program participation ends 

15 as determined in the plan sub16 mitted to the Secretary pursuant 

17 to clause (ii)(V)(bb) or any such 

18 earlier date on which program 

19 participation ends. 

20 ‘‘(iv) RULE OF CONSTRUCTION.—For 

21 purposes of this section, any subgrantee 

22 that is not itself a covered entity described 

23 in one of subparagraphs (A) through (K) 

24 of paragraph (4) shall be subject to the ob25 ligations under this section applicable to 


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1 the covered entity with which such sub2 grantee has an enforceable written agree3 ment pursuant to clause (i). Further, for 

4 purposes of this section, each registered 

5 site of such subgrantee shall be subject to 

6 the requirements set forth in subparagraph 

7 (F) as if such site were the covered entity 

8 with which such subgrantee has an en9 forceable written agreement pursuant to 

10 clause (i).’’. 

11 SEC. 8. CLAIMS MODIFIERS; COVERED ENTITY DATA SUB12 MISSION. 

13 Section 340B(a)(5) of the Public Health Service Act 

14 (42 U.S.C. 256b(a)(5)) is further amended by adding at 

15 the end the following: 

16 ‘‘(J) CLAIMS MODIFIER AND COVERED EN17 TITY DATA SUBMISSION.— 

18 ‘‘(i) CLAIMS MODIFIER.—All claims 

19 submitted to a payor, including, without 

20 limitation, Medicare and Medicaid, by a 

21 covered entity or a contract pharmacy 

22 under a contract with a covered entity in 

23 compliance with subparagraph (F) for re24 imbursement of a unit of a covered out25 patient drug purchased under the program 


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1 under this section shall include the rel2 evant 340B modifier established by the 

3 Secretary under Medicare Part B (that is 

4 ‘JG’, ‘TB’, or any successor modifier) or 

5 the Submission Clarification Code of ‘20’ 

6 or any successor modifier developed by the 

7 National Council for Prescription Drug 

8 Programs (NCPDP) to identify claims for 

9 covered outpatient drugs purchased under 

10 such program. All claims submitted by a 

11 covered entity or a contract pharmacy de12 scribed in this clause to a payor, including, 

13 without limitation, Medicare and Medicaid, 

14 for reimbursement of a unit of a covered 

15 outpatient drug not purchased under such 

16 program shall also include a relevant non17 340B modifier, which shall be established 

18 by the Secretary, or a non-340B modifier 

19 developed by the NCPCP to identify such 

20 claims. 

21 ‘‘(ii) COVERED ENTITY DATA SUBMIS22 SION.—A covered entity described in para23 graph (4) shall (and shall cause any entity 

24 acting on its behalf to) furnish to the 

25 clearinghouse described in subsection 


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1 (d)(2)(C) the data described in clause (iii), 

2 in a machine-readable format, with respect 

3 to each covered outpatient drug dispensed, 

4 furnished, or administered by the covered 

5 entity (including such drugs dispensed by a 

6 contract pharmacy under contract with 

7 such covered entity in compliance with sub8 paragraph (F)), for which such covered en9 tity seeks or has received discounted pric10 ing under this section. Such covered entity 

11 shall provide, or cause to be provided, such 

12 data to the clearinghouse within 45 days 

13 after the date on which the covered out14 patient drug was dispensed, furnished, or 

15 administered (or such shorter time period 

16 as may be specified by the Secretary 

17 through notice-and-comment rulemaking) 

18 in an electronic format specified by the 

19 Secretary. The covered entity shall require 

20 (and shall cause any entity acting on its 

21 behalf to require) that data on pharmacy22 dispensed drugs described in this subpara23 graph be submitted to the clearinghouse 

24 directly by the pharmacy dispensing such 

25 drug. 


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1 ‘‘(iii) CLAIM LEVEL DATA ELE2 MENTS.—The data described in this clause 

3 shall include the following, as applicable: 

4 ‘‘(I) SELF-ADMINISTERED

5 DRUGS.—With respect to a self-ad6 ministered drug dispensed at a phar7 macy, by a mail order service, or by 

8 another dispenser— 

9 ‘‘(aa) prescription number; 

10 ‘‘(bb) prescribed date; 

11 ‘‘(cc) prescription fill date; 

12 ‘‘(dd) national drug code 

13 (NDC) of the drug; 

14 ‘‘(ee) quantity dispensed; 

15 ‘‘(ff) bank identification 

16 number, processor control num17 ber, and group number of the 

18 plan receiving the claim (as ap19 plicable); 

20 ‘‘(gg) national provider iden21 tifier (NPI) of the prescriber; 

22 ‘‘(hh) NPI of the dispensing 

23 pharmacy; 

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1 pensing the drug, or on whose 

2 behalf the drug is dispensed; 

3 ‘‘(jj) 340B/non-340B claim 

4 modifier; 

5 ‘‘(kk) wholesaler invoice 

6 number; and 

7 ‘‘(ll) an indicator, which 

8 shall be specified by the clearing9 house or the Secretary, denoting 

10 that the drug was or was not dis11 pensed as a result of a qualifying 

12 referral described in subsection 

13 (b)(3). 

14 ‘‘(II) PROVIDER-ADMINISTERED

15 DRUGS.—With respect to a drug fur16 nished or administered by a physician 

17 or other provider of services or a sup18 plier— 

19 ‘‘(aa) drug billing and pay20 ment code/HCPCS code; 

21 ‘‘(bb) NDC of the drug; 

22 ‘‘(cc) claim number; 

23 ‘‘(dd) Medicare provider 

24 number of prescriber (as applica25 ble); 


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1 ‘‘(ee) NPI of the prescriber; 

2 ‘‘(ff) name and 340B identi3 fier of the covered entity fur4 nishing or administering the 

5 drug; 

6 ‘‘(gg) date drug furnished or 

7 administered; 

8 ‘‘(hh) claim adjudication 

9 date; 

10 ‘‘(ii) quantity furnished or 

11 administered; 

12 ‘‘(jj) 340B/non-340B claim 

13 modifier; and 

14 ‘‘(kk) an indicator, which 

15 shall be specified by the clearing16 house or the Secretary, denoting 

17 that the drug was or was not fur18 nished or administered as a re19 sult of a qualifying referral de20 scribed in subsection (b)(3). 

21 ‘‘(iv) INFORMATION PRIVACY AND SE22 CURITY.—A covered entity described in 

23 paragraph (4) shall provide the data speci24 fied in clause (iii) to the clearinghouse in 

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1 ty’s obligations under the Security Stand2 ards for the Protection of Electronic Pro3 tected Health Information described in 

4 part 164 of subpart C of title 45, Code of 

5 Federal Regulations (or any successor reg6 ulations). A covered entity shall not be re7 quired to obtain an individual authoriza8 tion under part 164 of subpart E of title 

9 45, Code of Federal Regulations (or any 

10 successor regulations) for its reporting of 

11 such data to the clearinghouse. 

12 ‘‘(v) STANDARDIZATION OF REPORTED

13 DATA ELEMENTS; PROHIBITION ON MODI14 FICATIONS.—A covered entity described in 

15 paragraph (4) shall take reasonable steps 

16 to ensure the data specified in clause (iii) 

17 submitted to the clearinghouse fully com18 plies with the data submission standards 

19 (including field descriptors and definitions) 

20 specified by the clearinghouse or the Sec21 retary following consultation with relevant 

22 stakeholders, including manufacturers of 

23 covered outpatient drugs. A covered entity 

24 described in paragraph (4) is prohibited, 

25 and shall prohibit any entity acting on its 


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1 behalf (including any affiliate of such enti2 ty), from taking or refraining from taking 

3 any action that would cause such informa4 tion to no longer comply with the stand5 ards described in this clause. In specifying 

6 the data submission standards described in 

7 this clause, the clearinghouse and the Sec8 retary, as applicable, shall seek to mini9 mize administrative burden on covered en10 tities while ensuring such data satisfies the 

11 intent of this subparagraph. 

12 ‘‘(vi) COVERED ENTITIES THAT FAIL

13 TO REPORT.—A covered entity that fails to 

14 furnish the information as required under 

15 this subparagraph shall be subject to a 

16 civil monetary penalty in the amount of 

17 $2,500 for each day of such violation, 

18 which amount shall be adjusted for infla19 tion annually to reflect the rate of change 

20 in the Consumer Price Index for All Urban 

21 Consumers published by the Bureau of 

22 Labor Statistics. The provisions of section 

23 1128A of the Social Security Act (other 

24 than subsections (a) and (b)) shall apply to 

25 a civil monetary penalty under this clause 


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1 in the same manner as such provisions 

2 apply to a penalty or proceeding under sec3 tion 1128A(a). The Office of Inspector 

4 General of the Department of Health and 

5 Human Services shall carry out the provi6 sions of this clause.’’. 

7 SEC. 9. COVERED ENTITY REPORTING ON SCOPE OF 

8 GRANT, CONTRACT, AND PROJECT. 

9 Section 340B(a)(5) of the Public Health Service Act 

10 (42 U.S.C. 256b(a)(5)) is further amended by adding at 

11 the end the following: 

12 ‘‘(K) REPORTING ON SCOPE OF GRANT, 

13 CONTRACT, AND PROJECT.—A covered entity 

14 described in one of subparagraphs (A) through 

15 (K) of paragraph (4) shall submit information 

16 specified by the Secretary to the identification 

17 system described in subsection (d)(2)(B)(iv) at 

18 least annually, in a form and manner specified 

19 by the Secretary, describing the scope of its 

20 Federal grant or project, or the Federal grant21 authorizing statute, as applicable, that is the 

22 basis for such entity’s eligibility for the pro23 gram under this section. Such information shall 

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1 graph (I). Access to information described in 

2 this subparagraph shall be made available to a 

3 manufacturer of a covered outpatient drug, 

4 upon request, in a manner specified by the Sec5 retary.’’. 

6 SEC. 10. ENSURING COVERED ENTITY TRANSPARENCY. 

7 (a) IN GENERAL.—Section 340B(a)(5) of the Public 

8 Health Service Act (42 U.S.C. 256b(a)(5)) is further 

9 amended by adding at the end the following: 

10 ‘‘(L) REPORTING.— 

11 ‘‘(i) IN GENERAL.—During the first 

12 year beginning on or after the date that is 

13 14 months after the date of enactment of 

14 this subparagraph and during each subse15 quent year, each covered entity described 

16 in subparagraph (L) of paragraph (4) (and 

17 any other covered entity specified by the 

18 Secretary) shall report to the Secretary (at 

19 a time and in a form and manner specified 

20 by the Secretary) the following information 

21 with respect to the preceding year: 

22 ‘‘(I) With respect to such covered 

23 entity and each child site, as applica24 ble, of such entity— 


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1 ‘‘(aa) the total number of 

2 individuals who were dispensed or 

3 administered covered outpatient 

4 drugs during such preceding year 

5 that were subject to an agree6 ment under this section; and 

7 ‘‘(bb) the number of such in8 dividuals described in a category 

9 specified in clause (iii), broken 

10 down by each such category. 

11 ‘‘(II) With respect to such cov12 ered entity and each child site, as ap13 plicable, of such entity— 

14 ‘‘(aa) the percentage of the 

15 total number of individuals fur16 nished items and services during 

17 such preceding year who were 

18 dispensed or administered cov19 ered outpatient drugs during 

20 such preceding year that were 

21 subject to an agreement under 

22 this section; and 

23 ‘‘(bb) for each category 

24 specified in clause (iii), the per25 centage of the total number of 


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1 individuals described in such cat2 egory furnished items and serv3 ices during such preceding year 

4 who were dispensed or adminis5 tered covered outpatient drugs 

6 during such preceding year that 

7 were subject to an agreement 

8 under this section. 

9 ‘‘(III) With respect to such cov10 ered entity and each child site, as ap11 plicable, of such entity, the total costs 

12 incurred during the year at each such 

13 site and the cost incurred at each 

14 such site for charity care (as defined 

15 in line 23 of worksheet S–10 to the 

16 Medicare cost report, or in any suc17 cessor form). 

18 ‘‘(IV) With respect to such cov19 ered entity and each child site, as ap20 plicable, of such entity, the costs in21 curred during the year of furnishing 

22 items and services at each such entity 

23 or site to patients of such entity who 

24 were entitled to benefits under part A 

25 of title XVIII of the Social Security 


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1 Act or enrolled under part B of such 

2 title, enrolled in a State plan under 

3 title XIX of such Act (or a waiver of 

4 such plan), or who were uninsured for 

5 services, minus the sum of— 

6 ‘‘(aa) payments under title 

7 XVIII of such Act for such items 

8 and services (including any cost 

9 sharing for such items and serv10 ices); 

11 ‘‘(bb) payments under title 

12 XIX of such Act for such items 

13 and services (including any cost 

14 sharing for such items and serv15 ices); and 

16 ‘‘(cc) payments by uninsured 

17 patients for such items and serv18 ices. 

19 ‘‘(V) With respect to such cov20 ered entity and each child site, as ap21 plicable, of such entity, the margin (as 

22 defined in clause (iv)) generated on 

23 covered outpatient drugs subject to an 

24 agreement under this section dis25 pensed or furnished by such entity or 


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1 site (and any entity pharmacy or con2 tract pharmacy dispensing such drugs 

3 on behalf of such entity in accordance 

4 with subparagraph (F)), with each 

5 component of the margin calculation 

6 described in item (aa) through (cc) of 

7 such clause listed as a separate line 

8 item. 

9 ‘‘(VI) To the extent the Sec10 retary requires covered entities de11 scribed in one of subparagraphs (A) 

12 through (K) of paragraph (4) to re13 port information pursuant to this sub14 paragraph, with respect to each such 

15 covered entity, use of margin (as de16 fined in clause (iv)) generated on cov17 ered outpatient drugs subject to an 

18 agreement under this section in the 

19 following categories of expenditures, if 

20 applicable, which the Secretary shall 

21 define in interim final regulations in a 

22 manner consistent with reporting 

23 under the Health Resources and Serv24 ices Administration Uniform Data 

25 System (UDS)— 


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1 ‘‘(aa) medical care; 

2 ‘‘(bb) dental care; 

3 ‘‘(cc) mental health; 

4 ‘‘(dd) pharmaceuticals, 

5 which shall include margin used 

6 to provide free and discounted 

7 covered outpatient drugs subject 

8 to an agreement under this sec9 tion dispensed or furnished to eli10 gible patients (as defined in sub11 paragraph (H)), notwithstanding 

12 any UDS reporting requirement 

13 that may limit or interfere with 

14 the inclusion of margin used for 

15 such purpose; 

16 ‘‘(ee) sliding fee discounts; 

17 ‘‘(ff) case management; 

18 ‘‘(gg) transportation; 

19 ‘‘(hh) patient and commu20 nity education; 

21 ‘‘(ii) community health 

22 workers; 

23 ‘‘(jj) outreach; 

24 ‘‘(kk) eligibility assistance; 

25 and 


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1 ‘‘(ll) nutritional assessment 

2 and referral. 

3 ‘‘(ii) PUBLICATION.—The Secretary 

4 shall publish data reported under clause (i) 

5 with respect to a year annually on the pub6 lic website of the Department of Health 

7 and Human Services in an electronic and 

8 searchable format, which may include the 

9 340B Office of Pharmacy Affairs Informa10 tion System (or a successor to such sys11 tem), in a manner that shows each cat12 egory of data reported in the aggregate 

13 and identified by the specific covered entity 

14 submitting such data. The Secretary shall 

15 include in such publication the dispropor16 tionate patient percentage (as defined in 

17 section 1886(d)(5)(F)(vi) of the Social Se18 curity Act) of each such covered entity (if 

19 applicable) for each cost reporting period 

20 occurring during such year. 

21 ‘‘(iii) CATEGORIES SPECIFIED.—For 

22 purposes of clause (i), the categories speci23 fied in this clause are the following: 

24 ‘‘(I) Individuals covered under a 

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1 vidual health insurance coverage (as 

2 such terms are defined in section 

3 2791). 

4 ‘‘(II) Individuals entitled to bene5 fits under part A or enrolled under 

6 part B of title XVIII of the Social Se7 curity Act. 

8 ‘‘(III) Individuals enrolled under 

9 a State plan under title XIX of such 

10 Act (or a waiver of such plan). 

11 ‘‘(IV) Individuals enrolled under 

12 a State child health plan under title 

13 XXI of such Act (or a waiver of such 

14 plan). 

15 ‘‘(V) Individuals not described in 

16 any preceding subclause and not cov17 ered under any Federal health care 

18 program (as defined in section 1128B 

19 of such Act but including the program 

20 established under chapter 89 of title 

21 5, United States Code). 

22 ‘‘(iv) DEFINITIONS.—In this subpara23 graph: 


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1 ‘‘(I) CHILD SITE.—The term 

2 ‘child site’ shall have the meaning 

3 given such term in subparagraph (E). 

4 ‘‘(II) ENTITY PHARMACY.—The 

5 term ‘entity pharmacy’ shall have the 

6 meaning given such term in subpara7 graph (F). 

8 ‘‘(III) MARGIN.—The term ‘mar9 gin’ means, with respect to covered 

10 outpatient drugs purchased by a cov11 ered entity under an agreement under 

12 this section, the following amount for 

13 such drugs dispensed, furnished, or 

14 administered to an individual by such 

15 entity or a child site of such entity 

16 (and any entity pharmacy or contract 

17 pharmacy dispensing such drugs on 

18 behalf of such entity in accordance 

19 with subparagraph (F))— 

20 ‘‘(aa) aggregate payments 

21 received by the covered entity for 

22 such drugs from individuals (in23 cluding cost-sharing amounts) 

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1 ernment and private payors; 

2 minus 

3 ‘‘(bb) aggregate costs to ac4 quire such drugs at either the 

5 ceiling price described in para6 graph (1) or any voluntary sub7 ceiling price at which the covered 

8 entity purchased such drug or 

9 drugs, as applicable; minus 

10 ‘‘(cc) aggregate costs in11 curred by the covered entity that 

12 are necessary for such entity to 

13 participate in the program under 

14 this section and to comply with 

15 such program’s requirements, in16 cluding program-related compli17 ance, legal, educational, and ad18 ministrative costs (such costs 

19 shall be determined in accordance 

20 with Generally Accepted Account21 ing Principles), and compensa22 tion paid to third-party adminis23 trators or contract pharmacies to 

24 carry out program-related func25 tions.’’. 


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1 (b) RULEMAKING.—Not later than 180 days after the 

2 date of enactment of this Act, the Secretary of Health and 

3 Human Services shall issue an interim final rule to carry 

4 out section 340B(a)(5)(L) of the Public Health Service 

5 Act, as added by subsection (a). 

6 SEC. 11. REVISIONS TO EXISTING 340B HOSPITAL ELIGI7 BILITY REQUIREMENTS. 

8 Section 340B(a)(4) of the Public Health Service Act 

9 (42 U.S.C. 256b(a)(4)) is amended— 

10 (1) in subparagraph (L)(i)— 

11 (A) by inserting ‘‘and that was registered 

12 with the 340B program in the covered entity 

13 identification system established under sub14 section (d)(2)(B)(iv) as such a hospital on or 

15 before December 1, 2023’’ after ‘‘formally 

16 granted governmental powers by a unit of state 

17 or local government’’; and 

18 (B) by striking ‘‘not entitled to benefits 

19 under title XVIII of the Social Security Act’’ 

20 and all that follows up to the semicolon at the 

21 end and inserting ‘‘uninsured, as such terms 

22 are defined in subsection (a)(11)’’; 

23 (2) by amending subparagraph (N) to read as 

24 follows: 


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1 ‘‘(N) An entity that is a critical access hos2 pital (as determined under section 1820(c)(2) 

3 of the Social Security Act (42 U.S.C. 1395i– 

4 4(c)(2))) or a rural emergency hospital (as de5 termined under the requirements in section 

6 1861(kkk) of the Social Security Act (42 

7 U.S.C. 1395x(kkk) and in implementing regula8 tions set forth in parts 419, 424, 485, 488, and 

9 489 of title 42 of the Code of Federal Regula10 tions in effect as of January 1, 2023)), and 

11 that meets the requirements of subparagraph 

12 (L)(i).’’; and 

13 (3) in subparagraph (O) by inserting ‘‘that 

14 demonstrates to the Secretary that at least 60 per15 cent of annual inpatient discharges for cost report16 ing periods beginning after December 1, 2023 are 

17 for inpatients who reside in a county that is not part 

18 of a Metropolitan Statistical Area, as defined by the 

19 Director of the Office of Management and Budget’’ 

20 before ‘‘, or a sole community hospital’’. 

21 SEC. 12. ADDITIONAL REQUIREMENTS FOR 340B HOS22 PITALS. 

23 Section 340B(a) of the Public Health Service Act (42 

24 U.S.C. 256b(a)) is amended by adding at the end the fol25 lowing: 


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1 ‘‘(11) CLARIFICATION OF ELIGIBILITY STAND2 ARDS FOR PRIVATE NONPROFIT HOSPITALS WITH A

3 CONTRACT WITH A STATE OR LOCAL GOVERNMENT

4 TO PROVIDE HEALTH CARE SERVICES.— 

5 ‘‘(A) CONTRACT REQUIREMENTS.—For 

6 purposes of paragraph (4)(L)(i) and cross-ref7 erences to subparagraph (L) or clause (i) of 

8 such paragraph appearing in subparagraph (M) 

9 and subparagraph (O) of such paragraph with 

10 respect to a rural referral center, a private non11 profit hospital has a contract with a State or 

12 local government to provide health care services 

13 to low-income individuals who are uninsured 

14 if— 

15 ‘‘(i) the hospital submits a copy of the 

16 contract (including any appendices or ad17 denda or subsequent amendments) to the 

18 Secretary for review; 

19 ‘‘(ii) the Secretary determines that 

20 the contract creates an enforceable obliga21 tion for the hospital to provide direct med22 ical care to low-income individuals who are 

23 uninsured in an amount that represents at 

24 least 10 percent of the hospital’s total 

25 costs of care; 


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1 ‘‘(iii) the Secretary further deter2 mines, based on a review of the contract 

3 (as described in clause (i)) that the con4 tract creates an enforceable obligation for 

5 the hospital to furnish the individuals de6 scribed in clause (ii) the full range of serv7 ices provided at the hospital (including any 

8 child sites); and 

9 ‘‘(iv) the contract (as described in 

10 clause (i)) is available to the public as part 

11 of the information describing the hospital 

12 in the covered entity identification system 

13 established under subsection (d)(2)(B)(iv). 

14 ‘‘(B) DEREGISTRATION.—If at any time a 

15 hospital not owned or operated by a unit of 

16 State or local government that has been partici17 pating in the program under this section on the 

18 basis of having a contract with a State or local 

19 government to provide health care services that 

20 is subject to subparagraph (A) no longer satis21 fies a requirement under such subparagraph, 

22 the hospital shall immediately notify the Sec23 retary that the hospital no longer satisfies the 

24 relevant requirement, deregister the hospital 

25 from the program under this section and the 


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1 identification system described in subsection 

2 (d)(2)(B)(iv), and cease making purchases 

3 under such program and representing to third 

4 parties that it may purchase under such pro5 gram. 

6 ‘‘(C) OBLIGATION TO SELF-DISCLOSE.—A 

7 covered entity described in subparagraph (B) 

8 shall immediately disclose to the Secretary and 

9 the manufacturer of the affected covered out10 patient drug any purchase made under the pro11 gram under this section by such covered entity 

12 that, at the time of the purchase of such drug, 

13 did not fully satisfy the requirements in sub14 paragraph (A). Any such purchase shall require 

15 the covered entity to promptly conduct an audit 

16 supervised by the Secretary to identify the full 

17 scope of noncompliance with such requirements 

18 and to provide the written results of such audit 

19 to the Secretary and the manufacturer of the 

20 affected covered outpatient drug. The covered 

21 entity shall be liable to the manufacturer of the 

22 covered outpatient drug that is the subject of 

23 the noncompliance in an amount equal to the 

24 reduction in the price of the drugs provided 

25 under subsection (a)(1), plus interest on such 


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1 amount, which shall be compounded monthly 

2 and equal to the current short-term interest 

3 rate as determined by the Federal Reserve for 

4 the time period for which the covered entity is 

5 liable. 

6 ‘‘(D) CIVIL MONETARY PENALTY.—Where 

7 a covered entity fails to satisfy a requirement in 

8 subparagraph (B) or (C), the covered entity 

9 shall be required to pay a civil monetary pen10 alty equal to $2,500 for each violation, which 

11 amount shall be adjusted for inflation annually 

12 to reflect the rate of change in the Consumer 

13 Price Index for All Urban Consumers published 

14 by the Bureau of Labor Statistics. The provi15 sions of section 1128A of the Social Security 

16 Act (other than subsections (a) and (b)) shall 

17 apply to a civil monetary penalty under this 

18 subparagraph in the same manner as such pro19 visions apply to a penalty or proceeding under 

20 section 1128A(a). The Office of Inspector Gen21 eral of the Department of Health and Human 

22 Services shall carry out the provisions related to 

23 the imposition of civil monetary penalties under 

24 this subparagraph. 

25 ‘‘(E) DEFINITIONS.—In this paragraph: 


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1 ‘‘(i) FEDERAL POVERTY GUIDE2 LINES.—The term ‘Federal poverty guide3 lines’ means the poverty guidelines updated 

4 periodically in the Federal Register by the 

5 Department of Health and Human Serv6 ices pursuant to section 9902(2) of title 

7 42, United States Code. 

8 ‘‘(ii) LOW-INCOME INDIVIDUAL.—The 

9 term ‘low-income individual’ means an in10 dividual with family income at or below 

11 200 percent of the Federal poverty guide12 lines. 

13 ‘‘(iii) UNINSURED.—The term ‘unin14 sured’ means lacking minimum essential 

15 coverage, as defined in subsection 

16 5000A(f) of the Internal Revenue Code (26 

17 U.S.C. 5000A(f)) and implementing regu18 lations. 

19 ‘‘(12) ADDITIONAL REQUIREMENT FOR PRIVATE

20 NONPROFIT DISPROPORTIONATE SHARE HOSPITALS

21 LOCATED IN URBAN AREAS.— 

22 ‘‘(A) IN GENERAL.—A covered entity de23 scribed in paragraph (4)(L)(i) that is either a 

24 private nonprofit hospital that has as the basis 

25 for its participation in the program under this 


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1 section a contract with a State or local govern2 ment as described in such paragraph and in 

3 paragraph (11), or that is a private nonprofit 

4 corporation which is formally granted govern5 mental powers by a unit of State or local gov6 ernment, and such entity is located in a county 

7 that is part of a Metropolitan Statistical Area, 

8 as defined by the Office of Management and 

9 Budget, must, for the preceding year, fall with10 in the top 40 percent of hospitals on each of the 

11 lists described in subparagraphs (B) and (C) 

12 prepared by the Secretary with respect to the 

13 State in which the covered entity is located. As 

14 described further in subparagraph (D), place15 ment in the top 40 percent of hospitals on both 

16 of such lists is a condition of such covered enti17 ty’s participation in the program under this sec18 tion and failure to meet this condition shall re19 quire deregistration and self-disclosure using 

20 the procedures described in subparagraphs (B) 

21 and (C) of paragraph (11). Such covered entity 

22 shall be subject to a civil monetary penalty de23 scribed in paragraph (11)(D) for failure to 

24 deregister and self-disclose in accordance with 

25 the preceding sentence. 


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1 ‘‘(B) MEDICAID AND CHIP OUTPATIENT

2 REVENUE.—Within 90 days following the con3 clusion of a year, the Secretary shall prepare 

4 and make available to the public in an elec5 tronic, machine-readable format for each State 

6 for the concluded year, a list that ranks all 

7 acute care hospitals in such State in descending 

8 order based on each hospital’s share of total 

9 outpatient services revenue derived from base 

10 reimbursement to such hospital (excluding sup11 plemental and indirect reimbursement) under 

12 title XIX of the Social Security Act (including 

13 with respect to individuals also entitled to bene14 fits under part A of title XVIII of such Act or 

15 enrolled in part B of title XVIII of such Act) 

16 and payments under title XXI of such Act for 

17 items and services furnished on an outpatient 

18 basis at the hospital (including any cost sharing 

19 for such items and services). The Secretary 

20 shall specify the threshold for the top 40 per21 cent of hospitals on the list. 

22 ‘‘(C) UNCOMPENSATED OUTPATIENT

23 CARE.—Within 90 days following the conclusion 

24 of a year, the Secretary shall prepare and make 

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1 chine-readable format for each State for the 

2 concluded year, a list that ranks all acute care 

3 hospitals in such State in descending order 

4 based on each hospital’s total cost of uncompen5 sated care for items and services furnished on 

6 an outpatient basis as a share of the hospital’s 

7 total outpatient services revenue. For purposes 

8 of this list, costs of uncompensated outpatient 

9 care shall be determined in a manner consistent 

10 with the instructions on worksheet S–10 to the 

11 Medicare cost report (or any successor form), 

12 with adjustments to limit uncompensated out13 patient care costs to those incurred in providing 

14 items and services on an outpatient basis at the 

15 hospital. The Secretary shall specify the thresh16 old for the top 40 percent of hospitals on the 

17 list. 

18 ‘‘(D) DEREGISTRATION.—Within 30 days 

19 following the Secretary’s publication of the lists 

20 described in subparagraphs (B) and (C), each 

21 covered entity subject to this paragraph that is 

22 not included in the top 40 percent of hospitals 

23 on both lists shall notify the Secretary that the 

24 covered entity does not satisfy one or more re25 quirements described in this paragraph, 


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1 deregister the entity from the program under 

2 this section and the identification system de3 scribed in subsection (d)(2)(B)(iv), and cease 

4 making purchases under such program and rep5 resenting to third parties that it may purchase 

6 under such program. Such an entity may seek 

7 to register under another covered entity cat8 egory described in paragraph (4) if such entity 

9 meets the criteria for such a category and ap10 plicable requirements under this section. 

11 ‘‘(E) OBLIGATION TO SELF-DISCLOSE.—A 

12 covered entity described in subparagraph (D) 

13 shall immediately disclose to the Secretary and 

14 the manufacturer of the affected covered out15 patient drug any purchase made under the pro16 gram under this section by such covered entity 

17 that, at the time of the purchase of such drug, 

18 did not fully satisfy the requirements in sub19 paragraphs (B) and (C). Any such purchase 

20 shall require the covered entity to promptly con21 duct an audit supervised by the Secretary to 

22 identify the full scope of noncompliance with 

23 such requirements and to provide the written 

24 results of such audit to the Secretary and the 

25 manufacturer of the affected covered outpatient 


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1 drug. The covered entity shall be liable to the 

2 manufacturer of the covered outpatient drug 

3 that is the subject of the noncompliance in an 

4 amount equal to the reduction in the price of 

5 the drugs provided under paragraph (1), plus 

6 interest on such amount, which shall be com7 pounded monthly and equal to the current 

8 short-term interest rate as determined by the 

9 Federal Reserve for the time period for which 

10 the covered entity is liable. 

11 ‘‘(F) CIVIL MONETARY PENALTY.—Where 

12 a covered entity fails to satisfy a requirement in 

13 subparagraph (D) or (E), the covered entity 

14 shall be required to pay a civil monetary pen15 alty equal to $2,500 for each violation, which 

16 amount shall be adjusted for inflation annually 

17 to reflect the rate of change in the Consumer 

18 Price Index for All Urban Consumers published 

19 by the Bureau of Labor Statistics. The provi20 sions of section 1128A of the Social Security 

21 Act (other than subsections (a) and (b)) shall 

22 apply to a civil monetary penalty under this 

23 subparagraph in the same manner as such pro24 visions apply to a penalty or proceeding under 

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1 eral of the Department of Health and Human 

2 Services shall carry out the provisions related to 

3 the imposition of civil monetary penalties under 

4 this subparagraph. 

5 ‘‘(13) PROHIBITION AGAINST EXTRAORDINARY

6 COLLECTION ACTIONS.— 

7 ‘‘(A) ECAS PROHIBITED.—A covered entity 

8 described in subparagraphs (L) through (O) of 

9 paragraph (4) is prohibited from engaging in 

10 extraordinary collection actions (ECAs), as such 

11 term is described in section 501(r)(6) of the In12 ternal Revenue Code and its implementing reg13 ulations set forth in section 1.501(r)–6 of title 

14 26 of the Code of Federal Regulations (or any 

15 successor regulations), with respect to health 

16 care items and services furnished to uninsured 

17 individuals or low-income individuals. 

18 ‘‘(B) AUDITS.—The Secretary shall audit 

19 for covered entity compliance with this para20 graph, establish a process for individuals to re21 port suspected violations of this paragraph to 

22 the Secretary, and promptly and fully inves23 tigate such reports of suspected violations. 

24 ‘‘(C) CIVIL MONETARY PENALTY.—Where 

25 a covered entity violates the prohibition in this 


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1 paragraph, the covered entity shall be required 

2 to pay a civil monetary penalty equal to $2,500 

3 for each extraordinary collection action taken 

4 with respect to an individual described in this 

5 paragraph, which amount shall be adjusted for 

6 inflation annually to reflect the rate of change 

7 in the Consumer Price Index for All Urban 

8 Consumers published by the Bureau of Labor 

9 Statistics. The provisions of section 1128A of 

10 the Social Security Act (other than subsections 

11 (a) and (b)) shall apply to a civil monetary pen12 alty under this paragraph in the same manner 

13 as such provisions apply to a penalty or pro14 ceeding under section 1128A(a). The Office of 

15 Inspector General of the Department of Health 

16 and Human Services shall carry out the provi17 sions related to the imposition of civil monetary 

18 penalties under this paragraph. 

19 ‘‘(D) DEFINITIONS.—In this paragraph, 

20 the terms ‘low-income individual’ and ‘unin21 sured’ have the meanings given such terms in 

22 paragraph (11). 

23 ‘‘(14) ADDITIONAL REQUIREMENT FOR CER24 TAIN HOSPITALS.— 


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1 ‘‘(A) IN GENERAL.—During the first cal2 endar year beginning on or after the date that 

3 is 24 months after the date of enactment of this 

4 paragraph and during each subsequent calendar 

5 year, a covered entity described in paragraph 

6 (4)(L) shall determine by October 1 of each 

7 such year, based on the most recent year of 

8 data it has reported to the Secretary under 

9 paragraph (5)(L) at that point in time, whether 

10 the annual charity care costs it incurred for the 

11 year reported were greater than or equal to the 

12 margin it realized under the program under this 

13 section for that same year. As described further 

14 in subparagraph (D), for the period specified in 

15 the preceding sentence, having annual charity 

16 care costs that equal or exceed the margin for 

17 the most recently reported year is a condition 

18 of such covered entity’s participation in the pro19 gram under this section for the upcoming cal20 endar year, and failure to meet this condition 

21 shall require deregistration and self-disclosure 

22 using the procedures described in subpara23 graphs (D) and (E). Such covered entity shall 

24 be subject to a civil monetary penalty described 

25 in subparagraph (F) for failure to deregister 


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1 and self-disclose in accordance with the pre2 ceding sentence. 

3 ‘‘(B) ANNUAL CHARITY CARE COSTS.—The 

4 term ‘annual charity care costs’ means the total 

5 costs incurred during the year by the covered 

6 entity and its child sites (as defined in para7 graph (5)(E)(i)) for charity care (as defined in 

8 line 23 of worksheet S–10 to the Medicare cost 

9 report, or in any successor form). 

10 ‘‘(C) MARGIN.—The term ‘margin’ means 

11 the margin reported by the covered entity for 

12 the year pursuant to paragraph (5)(L)(i)(V). 

13 ‘‘(D) DEREGISTRATION AND CONDITIONS

14 FOR SUBSEQUENT REGISTRATION.— 

15 ‘‘(i) DE-REGISTRATION.—On October 

16 1 of each year beginning on or after the 

17 date that is 24 months after the date of 

18 enactment of this paragraph, each covered 

19 entity subject to this paragraph that has 

20 reported at least one year of data to the 

21 Secretary under paragraph (5)(L) and that 

22 does not have, for the most recently re23 ported year, annual charity care costs 

24 greater than or equal to the margin, shall 

25 notify the Secretary that it does not meet 


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1 the condition of participation under this 

2 paragraph for the upcoming calendar year, 

3 deregister the entity from the program 

4 under this section and the identification 

5 system described in subsection 

6 (d)(2)(B)(iv) for the upcoming calendar 

7 year, cease making purchases under such 

8 program as of the start of the upcoming 

9 calendar year, cease representing to third 

10 parties that it may purchase under such 

11 program beyond the current calendar year, 

12 and refrain from purchasing covered out13 patient drugs under this section in quan14 tities exceeding such entity’s bona fide 

15 needs for the remainder of the current cal16 endar year. 

17 ‘‘(ii) REGISTRATION FOLLOWING DE18 REGISTRATION.— 

19 ‘‘(I) REGISTRATION UNDER AN20 OTHER COVERED ENTITY CAT21 EGORY.—A covered entity that must 

22 deregister under this subparagraph 

23 shall not be prohibited from reg24 istering to participate in the program 

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1 ered entity category described in para2 graph (4) if such entity meets the cri3 teria for such a category and applica4 ble requirements under this section. 

5 ‘‘(II) REGISTRATION UNDER

6 PARAGRAPH (4)(L).—In order to reg7 ister under paragraph (4)(L), a hos8 pital that has been required to 

9 deregister under this subparagraph 

10 must demonstrate to the Secretary (in 

11 a form and manner specified by the 

12 Secretary, and in addition to dem13 onstrating that it satisfies the other 

14 applicable registration criteria under 

15 paragraph (4)(L)) that its annual 

16 charity care cost (as defined in sub17 paragraph (B)) for the most recent 

18 year that the hospital would have re19 ported under paragraph (4)(L) absent 

20 the deregistration exceeded by at least 

21 one percent point the annual charity 

22 care cost for the year preceding 

23 deregistration by the hospital. If the 

24 hospital is found to meet this require25 ment and approved by the Secretary 


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1 for registration under paragraph 

2 (4)(L), then the hospital will be re3 quired to resume reporting under 

4 paragraph (5)(L) and (once the entity 

5 has reported at least one year of data 

6 to the Secretary under paragraph 

7 (5)(L)) to meet the condition of par8 ticipation described in this paragraph 

9 for the most recently reported year as 

10 of October 1 of each year. 

11 ‘‘(E) OBLIGATION TO SELF-DISCLOSE.—A 

12 covered entity described in subparagraph (D) 

13 shall immediately disclose to the Secretary and 

14 the manufacturer of the affected covered out15 patient drug any purchase it made under this 

16 section during a calendar year in which it was 

17 ineligible to participate in the program under 

18 this section. Any such purchase shall require 

19 the covered entity promptly to conduct an audit 

20 supervised by the Secretary to identify the full 

21 scope of noncompliance and to provide the writ22 ten results of such audit to the Secretary and 

23 the manufacturer of the affected covered out24 patient drug. The covered entity shall be liable 

25 to the manufacturer of the covered outpatient 


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1 drug that is the subject of the noncompliance in 

2 an amount equal to the reduction in the price 

3 of the drugs provided under paragraph (1), plus 

4 interest on such amount, which shall be com5 pounded monthly and equal to the current 

6 short-term interest rate as determined by the 

7 Federal Reserve for the time period for which 

8 the covered entity is liable. 

9 ‘‘(F) CIVIL MONETARY PENALTY.—Where 

10 a covered entity fails to satisfy a requirement in 

11 subparagraph (D) or (E), the covered entity 

12 shall be required to pay a civil monetary pen13 alty equal to $2,500 for each violation, which 

14 amount shall be adjusted for inflation annually 

15 to reflect the rate of change in the Consumer 

16 Price Index for All Urban Consumers published 

17 by the Bureau of Labor Statistics. The provi18 sions of section 1128A of the Social Security 

19 Act (other than subsections (a) and (b)) shall 

20 apply to a civil monetary penalty under this 

21 subparagraph in the same manner as such pro22 visions apply to a penalty or proceeding under 

23 section 1128A(a). The Office of Inspector Gen24 eral of the Department of Health and Human 

25 Services shall carry out the provisions related to 


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1 the imposition of civil monetary penalties under 

2 this subparagraph.’’. 

3 SEC. 13. 340B PROGRAM. 

4 Section 340B(a) of the Public Health Service Act (42 

5 U.S.C. 256b(a)) is further amended by adding at the end 

6 the following: 

7 ‘‘(15) 340B PROGRAM.—The intent of this sec8 tion is to provide for manufacturer price reductions 

9 that enable covered entities, whose mission is to 

10 serve underserved or otherwise vulnerable commu11 nities, to increase access to affordable drugs and 

12 health services for these communities.’’. 

13 SEC. 14. AUDITS OF PRIVATE NONHOSPITAL CONTRACTS 

14 WITH STATE AND LOCAL GOVERNMENTS. 

15 Section 340B(d)(2)(B) of the Public Health Service 

16 Act (42 U.S.C. 256b(d)(2)(B)) is amended by adding at 

17 the end the following: 

18 ‘‘(vi) The conducting of annual audits 

19 by the Secretary of contracts between a 

20 covered entity described in subparagraph 

21 (L) or subparagraph (M) of subsection 

22 (a)(4), or subparagraph (O) of such sub23 section with respect to a rural referral cen24 ter, that is a private nonprofit hospital 

25 subject to the requirements in subsections 


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1 (a)(4)(L)(i) and (a)(11) and a State or 

2 local government for at least 10 percent of 

3 all such entities participating in the pro4 gram under this section. The Secretary 

5 shall develop and publicly disclose stand6 ards used to determine whether such con7 tracts satisfy the applicable requirements 

8 described in subsections (a)(4)(L)(i) and 

9 (a)(11) and publicly disclose the findings 

10 from such audits. The Secretary shall re11 move from the program under this section 

12 any such entity that does not have a con13 tract in effect with a State or local govern14 ment that satisfies the applicable require15 ments set forth in subsections (a)(4)(L)(i) 

16 and (a)(11), and such removal shall re17 quire such covered entity to promptly con18 duct an audit supervised by the Secretary 

19 to identify discounts on covered outpatient 

20 drugs purchased at a discount under this 

21 section to which such covered entity was 

22 not eligible and provide the written results 

23 of such audit to the Secretary and the 

24 manufacturer of the affected covered out25 patient drug. Such covered entity shall be 


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1 liable to the manufacturer of such covered 

2 outpatient drug in an amount equal to the 

3 reduction in the price of the drugs pro4 vided under subsection (a)(1), plus interest 

5 on such amount, which shall be com6 pounded monthly and equal to the current 

7 short-term interest rate as determined by 

8 the Federal Reserve for the time period for 

9 which the covered entity is liable. Where a 

10 covered entity described in this clause 

11 knowingly and intentionally violates a re12 quirement in subsection (a)(4)(L)(i) or 

13 (a)(11), the covered entity shall be re14 quired to pay a civil monetary penalty 

15 equal to $1,000 for each claim for a cov16 ered outpatient drug that is subject to the 

17 violation, which amount shall be adjusted 

18 for inflation annually to reflect the rate of 

19 change in the Consumer Price Index for 

20 All Urban Consumers published by the Bu21 reau of Labor Statistics. The provisions of 

22 section 1128A of the Social Security Act 

23 (other than subsections (a) and (b)) shall 

24 apply to a civil monetary penalty under 

25 this clause in the same manner as such 


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1 provisions apply to a penalty or proceeding 

2 under section 1128A(a). The Office of In3 spector General of the Department of 

4 Health and Human Services shall carry 

5 out the provisions related to the imposition 

6 of civil monetary penalties under this 

7 clause.’’. 

8 SEC. 15. ENSURING COVERED ENTITY COMPLIANCE WITH 

9 TRANSPARENCY REQUIREMENTS. 

10 Section 340B(d)(2)(B) of the Public Health Service 

11 Act (42 U.S.C. 256b(d)(2)(B)) is further amended by add12 ing at the end the following: 

13 ‘‘(vii) The imposition of civil monetary 

14 penalties in amounts determined appro15 priate by the Secretary in the case that the 

16 Secretary determines that a covered entity 

17 is not in compliance with subsection 

18 (a)(5)(L).’’. 

19 SEC. 16. 340B CLAIMS DATA CLEARINGHOUSE. 

20 (a) 340B CLAIMS DATA CLEARINGHOUSE.—Section 

21 340B(d)(2) of the Public Health Service Act (42 U.S.C. 

22 256b(d)(2)) is amended by adding at the end the fol23 lowing: 

24 ‘‘(C) 340B CLAIMS DATA CLEARING25 HOUSE.— 


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1 ‘‘(i) IN GENERAL.—The improvements 

2 described in subparagraph (A) shall in3 clude the establishment of a claims data 

4 clearinghouse described in this subpara5 graph. Not later than one year after the 

6 date of enactment of this subparagraph, 

7 the Secretary shall enter into a contract 

8 with a third-party entity that meets the 

9 criteria specified in clause (ii) (such entity 

10 is hereinafter referred to as the ‘clearing11 house’) for purposes of— 

12 ‘‘(I) identifying claims for cov13 ered outpatient drugs purchased 

14 under the program under this section 

15 for which reimbursement was made 

16 under a State plan (or waiver of such 

17 plan) and ensuring such claims are or 

18 were not included in any State rebate 

19 request under section 1927 of the So20 cial Security Act in violation of sec21 tions 1903(m)(2)(A)(xiii) or 

22 1927(j)(1) of such Act or section 

23 340B(a)(5)(A) of this Act; 

24 ‘‘(II) identifying claims for cov25 ered outpatient drugs purchased 


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1 under the program under this section 

2 that are selected drugs (as defined in 

3 section 1192(c) of the Social Security 

4 Act) and ensuring that, for each such 

5 claim, the nonduplication require6 ments of section 1193(d) of such Act 

7 have been met; 

8 ‘‘(III) identifying claims for cov9 ered outpatient drugs purchased 

10 under the program under this section 

11 that are either Part B rebatable drugs 

12 or Part D rebatable drugs and pro13 viding all relevant information regard14 ing such claims to the Secretary to 

15 ensure that claims that are subject to 

16 a discount under the program under 

17 this section are excluded from infla18 tion rebate calculations pursuant to 

19 section 1847A(i)(3)(B)(ii)(I) of the 

20 Social Security Act (with respect to 

21 Part B rebatable drugs) and section 

22 1860D–14B(b)(1)(B) of such Act 

23 (with respect to Part D rebatable 

24 drugs); 


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1 ‘‘(IV) identifying duplicate claims 

2 for a rebate or discount submitted by 

3 two or more covered entities (or an 

4 entity or entities acting on their be5 half) with respect to the same unit of 

6 a covered outpatient drug purchased 

7 under the program under this section 

8 and implementing a process to ensure 

9 a manufacturer of such a drug does 

10 not pay more than one rebate or dis11 count under this section with respect 

12 to such unit; and 

13 ‘‘(V) providing to manufacturers 

14 of covered outpatient drugs, in a form 

15 and manner specified by the Secretary 

16 in consultation with manufacturers, 

17 access to the data described in sub18 section (a)(5)(J) with respect to each 

19 dispense or administration of a manu20 facturer’s covered outpatient drugs for 

21 which a covered entity receives a dis22 count under this section. 

23 ‘‘(ii) CRITERIA FOR CLEARING24 HOUSE.—The criteria described in this 

25 clause include the following: 


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1 ‘‘(I) The clearinghouse shall not 

2 be owned by, overseen by, or affiliated 

3 with a covered entity described in sub4 section (a)(4) and shall not currently 

5 be a party to a contractual arrange6 ment with the Health Resources and 

7 Services Administration. 

8 ‘‘(II) The clearinghouse shall 

9 have demonstrated experience adjudi10 cating claims for health care items 

11 and services in real time for self- and 

12 provider-administered drugs and 

13 working with protected health infor14 mation and confidential pricing infor15 mation. 

16 ‘‘(III) The clearinghouse shall 

17 agree to confidentiality obligations 

18 that prohibit the clearinghouse from 

19 using information it receives under 

20 this subparagraph for any purpose 

21 other than a purpose set forth in this 

22 subparagraph, or disclosing such in23 formation to any individual or entity 

24 other than the Secretary, provided the 

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1 tion for purposes of making reim2 bursement or coverage determinations, 

3 or a manufacturer in accordance with 

4 this subparagraph (and only with re5 spect to such manufacturer’s covered 

6 outpatient drugs). 

7 ‘‘(IV) The clearinghouse shall 

8 maintain the security of the data re9 ported pursuant to this subsection 

10 (a)(5)(J) in a manner consistent with 

11 the HIPAA Security Standards set 

12 forth in sections 164.304–164.312 

13 and 164.316 of title 45, Code of Fed14 eral Regulations (or any successor 

15 regulations), as if the clearinghouse 

16 were subject to those standards as a 

17 HIPAA covered entity. 

18 ‘‘(iii) DUTIES OF CLEARINGHOUSE.— 

19 The clearinghouse shall— 

20 ‘‘(I) review claims level data for 

21 covered outpatient drugs described in 

22 subsection (a)(5)(J) submitted by cov23 ered entities in accordance with such 

24 subsection; 


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1 ‘‘(II) review claims level data, in2 cluding rebate file data, submitted to 

3 the clearinghouse by State agencies 

4 and Medicaid managed care organiza5 tions for covered outpatient drugs 

6 subject to an agreement under this 

7 section dispensed or administered to 

8 individuals enrolled under a State 

9 plan (or a waiver of such plan) and 

10 claims level data submitted by Medi11 care Administrative Contractors, 

12 Medicare Advantage organizations (in13 cluding Medicare Advantage Organi14 zations offering an MA–PD plan), and 

15 PDP sponsors for covered outpatient 

16 drugs subject to an agreement under 

17 this section dispensed or administered 

18 to individuals enrolled under Part B, 

19 Part C, or Part D of title XVIII of 

20 the Social Security Act; 

21 ‘‘(III) within 5 days of identifica22 tion, provide written notice of a dupli23 cate discount or rebate to the State 

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1 turer itemizing any violation described 

2 in clause (i)(I); 

3 ‘‘(IV) within 5 days of identifica4 tion, provide written notice to the Sec5 retary, the covered entity (or entities, 

6 as applicable), and the affected drug 

7 manufacturer itemizing any violation 

8 described in subclauses (II) or (IV) of 

9 clause (i); 

10 ‘‘(V) have access to the internet 

11 website described in paragraph 

12 (1)(B)(iii) containing applicable ceil13 ing prices for covered outpatient 

14 drugs for purposes of identifying vio15 lations described in clause (i)(II); 

16 ‘‘(VI) subject to clauses (i)(V) 

17 and (ii)(III), make the data described 

18 in subclauses (I) and (II) available to 

19 the manufacturer in electronic format 

20 not later than 10 days after such data 

21 is provided to the clearinghouse; 

22 ‘‘(VII) upon request by the Cen23 ters for Medicare & Medicaid Services, 

24 make the data described in subclauses 

25 (I) and (II) available for purposes of 


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1 excluding 340B purchased units of 

2 Part B rebatable drugs or Part D 

3 rebatable drugs from Part B or Part 

4 D inflation rebates pursuant to sec5 tion 1847A(i)(3)(B)(ii)(I) or section 

6 1860D–14B(b)(1)(B) of the Social 

7 Security Act; and 

8 ‘‘(VIII) identify claims for cov9 ered outpatient drugs subject to an 

10 agreement under this section that are 

11 submitted by pharmacies removed 

12 from the 340B program pursuant to 

13 subsection (a)(5)(F)(ix)(III) and no14 tify the Secretary of the submission of 

15 any such claims by any such phar16 macies. 

17 ‘‘(iv) RESOLUTION OF VIOLATIONS.— 

18 ‘‘(I) MEDICAID DUPLICATE DIS19 COUNTS.—The Secretary, in consulta20 tion with the State, as appropriate, 

21 shall take prompt action to fairly and 

22 adequately resolve violations described 

23 in clause (i)(I) reported by the clear24 inghouse in accordance with clause 

25 (iii)(III). 


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1 ‘‘(II) NONDUPLICATION WITH

2 MAXIMUM FAIR PRICE.—The Sec3 retary shall take prompt action to 

4 fairly and adequately resolve viola5 tions described in clause (i)(II) re6 ported by the clearinghouse in accord7 ance with clause (iii)(IV). 

8 ‘‘(III) DUPLICATE COVERED EN9 TITY DISCOUNTS.—The Secretary 

10 shall develop and implement a process 

11 to resolve duplicate claims for a re12 bate or discount under this section de13 scribed in clause (i)(IV) such that the 

14 manufacturer pays only one rebate or 

15 discount under this section with re16 spect to the same unit of a covered 

17 outpatient drug purchased under the 

18 program under this section. Covered 

19 entities (and any entities acting on 

20 their behalf) shall be subject to deter21 minations made by the Secretary to 

22 resolve such duplicate claims (and the 

23 Secretary may contract this function 

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1 minations, the Secretary shall inves2 tigate duplicate claims for rebates or 

3 discounts and require covered entities 

4 (and any entities acting on their be5 half) to take action to avoid or pay re6 funds to reverse a duplicate claim. 

7 ‘‘(IV) REFUNDS TO MANUFAC8 TURERS.—The Secretary shall be re9 sponsible for promptly refunding af10 fected manufacturers of covered out11 patient drugs for violations described 

12 in subclauses (I) and (II) of clause (i) 

13 and seeking subsequent repayment 

14 from covered entities or States (with 

15 respect to violations described in 

16 clause (i)(I)), or providers or dis17 pensers (with respect to violations de18 scribed in clause (i)(II)). Subject to 

19 the determination by the Secretary or 

20 clearinghouse under subclause (III), 

21 the covered entity (or entities) shall 

22 be liable to the manufacturer of the 

23 covered outpatient drug that is the 

24 subject of the violation described in 

25 clause (i)(IV) in an amount equal to 


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1 the reduction in the price of the drug 

2 (as described in subsection (a)(1)) 

3 and shall repay such amount to such 

4 manufacturer within 60 days of re5 ceiving a notice described in clause 

6 (iii)(IV).’’. 

7 (b) PROVISION OF DRUG CLAIMS DATA BY MED8 ICAID; REMOVAL OF DUPLICATE CLAIMS.— 

9 (1) MEDICAID.—Section 1902(a) of the Social 

10 Security Act (42 U.S.C. 1396a(a)) is amended— 

11 (A) in paragraph (86), by striking ‘‘and’’ 

12 at the end; 

13 (B) in paragraph (87)(D), by striking the 

14 period and inserting ‘‘; and’’; and 

15 (C) by inserting after paragraph (87) the 

16 following new paragraph: 

17 ‘‘(88) provide for a mechanism for the State 

18 agency to furnish, and for the State agency to re19 quire each Medicaid managed care organization (as 

20 defined in section 1903(m)(1)(A)) to furnish, to the 

21 clearinghouse, in a machine-readable format, within 

22 5 days following the date of claim payment, claims 

23 level data, including rebate file data, for covered out24 patient drugs dispensed, furnished, or administered 

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1 er of such plan) that includes, with respect to each 

2 dispense, furnishing, or administration of such a 

3 drug, the data elements described in subsection 

4 340B(a)(5)(J)(iii) of the Public Health Service Act, 

5 and for the State agency to remove from any rebate 

6 request described in section 340B(d)(2)(C)(i)(I) of 

7 such Act any claim that is the subject of a notice 

8 submitted by such entity under section 

9 340B(d)(2)(C)(iii)(III) of such Act.’’. 

10 (c) PROVISION OF DRUG CLAIMS DATA BY MEDI11 CARE.— 

12 (1) MEDICARE PART B.—Section 1842 of the 

13 Social Security Act (42 U.S.C. 1395u) is amended 

14 by adding at the end the following: 

15 ‘‘(v) PROVISION OF DRUG CLAIMS DATA; MECHA16 NISM TO REFUND DUPLICATED AMOUNTS.—Each Medi17 care administrative contractor shall furnish to the clear18 inghouse, in a machine-readable format, claims level data 

19 for covered outpatient drugs furnished or administered to 

20 individuals enrolled under this part that includes, with re21 spect to each furnishing or administration of such a drug, 

22 the data elements described in section 340B(a)(5)(J)(iii) 

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1 house within 5 days following the date the claim for such 

2 drug is paid by the Medicare administrative contractor.’’. 

3 (2) MEDICARE ADVANTAGE ORGANIZATIONS.— 

4 Section 1857(e) of the Social Security Act (42 

5 U.S.C. 1395w–27(e)) is amended by adding at the 

6 end the following: 

7 ‘‘(6) PROVISION OF DRUG CLAIMS DATA; MECH8 ANISM TO REFUND DUPLICATED AMOUNTS.—A con9 tract under this part shall require a 

10 Medicare+Choice organization to furnish to the 

11 clearinghouse, in a machine-readable format, claims 

12 level data for covered outpatient drugs furnished or 

13 administered to individuals enrolled with the organi14 zation under this part that includes, with respect to 

15 each furnishing or administration of such a drug, 

16 the data elements described in section 

17 340B(a)(5)(J)(iii) of the Public Health Service Act. 

18 Such contract shall require the Medicare+Choice or19 ganization to furnish such data to the clearinghouse 

20 within 5 days following the date the claim for such 

21 drug is paid by the Medicare+Choice organization.’’. 

22 (3) PRESCRIPTION DRUG PLANS.—Section 

23 1860D–12(b) of the Social Security Act (42 U.S.C. 

24 1395w–112(b)) is amended by adding at the end the 

25 following: 


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1 ‘‘(9) PROVISION OF DRUG CLAIMS DATA; MECH2 ANISM TO REFUND DUPLICATED AMOUNTS.—A con3 tract under this part shall require a PDP sponsor to 

4 furnish to the clearinghouse in a machine-readable 

5 format, claims level data for covered outpatient 

6 drugs dispensed to individuals enrolled in a prescrip7 tion drug plan offered by such sponsor under this 

8 part that includes, with respect to each dispense of 

9 such drug, the data elements described in section 

10 340B(a)(5)(J)(iii) of the Public Health Service Act. 

11 Such contract shall require a PDP sponsor to fur12 nish such data to the clearinghouse within 5 days 

13 following the date the claim for such drug is paid by 

14 the PDP sponsor.’’. 

15 (4) MA–PDS.—Section 1857(f)(3) of the Social 

16 Security Act (42 U.S.C. 1395w–27(f)(3)) is amend17 ed by adding at the end the following: 

18 ‘‘(E) PROVISION OF DRUG CLAIMS DATA; 

19 MECHANISM TO REFUND DUPLICATED

20 AMOUNTS.—Section 1860D–12(b)(9).’’. 

21 SEC. 17. LIMITATION ON ADMINISTRATOR SERVICE FEES 

22 AND CONTRACT PHARMACY FEES. 

23 Section 340B of the Public Health Service Act (42 

24 U.S.C. 256b) is amended by adding at the end the fol25 lowing: 


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1 ‘‘(f) REQUIREMENTS FOR TPA AND CONTRACT

2 PHARMACY REMUNERATION.— 

3 ‘‘(1) THIRD-PARTY ADMINISTRATOR FEES.—A 

4 third-party administrator furnishing 340B program5 related services on behalf of a covered entity de6 scribed in subsection (a)(4), including reviewing or 

7 processing claims or other information to identify 

8 covered outpatient drugs dispensed to individuals 

9 who are patients of the covered entity (as defined in 

10 subsection (b)(3)) may receive remuneration from 

11 such covered entity for the performance of such 

12 services only if— 

13 ‘‘(A) such remuneration is a flat dollar 

14 amount not directly or indirectly based on any 

15 price of, or discount or other remuneration pro16 vided with respect to, a covered outpatient 

17 drug, paid for each unit of service furnished to 

18 the covered entity, regardless of whether a pre19 scription was dispensed to an individual who is 

20 a patient of the covered entity; 

21 ‘‘(B) the amount of such remuneration is 

22 consistent with fair market value in an arm’s23 length transaction for the bona fide, itemized 

24 340B-related services actually performed on be25 half of the covered entity; and 


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1 ‘‘(C) such remuneration complies with ap2 plicable State and Federal law, including sec3 tion 1128B(b) of the Social Security Act. 

4 ‘‘(2) CONTRACT PHARMACY FEES.—A contract 

5 pharmacy that has entered into a written agreement 

6 with a covered entity pursuant to and satisfies the 

7 applicable requirements in subsection (a)(5)(F) may 

8 receive remuneration from such covered entity for 

9 the performance of services associated with dis10 pensing covered outpatient drugs subject to an 

11 agreement under this section to individuals who are 

12 patients of the covered entity (as defined in sub13 section (b)(3)) only if— 

14 ‘‘(A) such remuneration is a flat dollar 

15 amount not directly or indirectly based on any 

16 price of, or discount or other remuneration pro17 vided with respect to, a covered outpatient 

18 drug, paid for each dispense of such a drug to 

19 a patient of the covered entity; 

20 ‘‘(B) the amount of remuneration for each 

21 dispense does not exceed 125 percent of the av22 erage per-prescription dispensing fee paid to 

23 such pharmacy by all third-party payors, based 

24 on data from the most recent full calendar year 

25 for which such data is available; 


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1 ‘‘(C) the amount of such remuneration is 

2 consistent with fair market value in an arm’s3 length transaction for the bona fide, itemized 

4 340B-related services actually performed on be5 half of the covered entity; and 

6 ‘‘(D) such remuneration complies with ap7 plicable State and Federal law, including sec8 tion 1128B(b) of the Social Security Act. 

9 For purposes of subparagraph (B), if a covered enti10 ty has entered into an agreement for contract phar11 macy services pursuant to subsection (a)(5)(F) that 

12 permits the contract pharmacy service provider to 

13 dispense covered outpatient drugs on behalf of the 

14 covered entity at more than one pharmacy location, 

15 the average dispensing fee shall be calculated across 

16 all pharmacy locations subject to such agreement. 

17 ‘‘(3) AUDITABLE RECORDS.—A covered entity 

18 shall retain copies of written agreements with third19 party administrators or contract pharmacies de20 scribed in this subsection for a period of time speci21 fied by the Secretary and shall make copies of such 

22 agreements available to the Secretary or their des23 ignee upon request. 

24 ‘‘(4) CIVIL MONETARY PENALTY.—A third25 party administrator or contract pharmacy described 


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1 in this subsection that fails to comply with the appli2 cable requirements specified in this subsection shall 

3 be required to pay a civil monetary penalty equal to 

4 10 times the amount such third-party administrator 

5 or contract pharmacy received for the performance 

6 of relevant services described in this subsection. The 

7 provisions of section 1128A of the Social Security 

8 Act (other than subsections (a) and (b)) shall apply 

9 to a civil monetary penalty under this paragraph in 

10 the same manner as such provisions apply to a pen11 alty or proceeding under section 1128A(a). The Of12 fice of Inspector General of the Department of 

13 Health and Human Services shall carry out the pro14 visions related to the imposition of civil monetary 

15 penalties under this paragraph.’’. 

16 SEC. 18. CLARIFICATION. 

17 Section 340B of the Public Health Service Act (42 

18 U.S.C. 256b) is further amended by adding at the end 

19 the following: 

20 ‘‘(g) CLARIFICATION.—The provisions of this section 

21 supersede any provision or requirement of State or local 

22 law insofar as that State or local law may establish, imple23 ment, or continue in effect a standard or requirement that 

24 differs from or relates in any way to the provisions of this 

25 section or, except for any State regulations issued to carry 


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1 out subsection (a)(5)(A)(iii), relates in any way to the 

2 drug discount program under this section or covered out3 patient drugs subject to an agreement under this section, 

4 including the distribution of such drugs. Except for any 

5 State regulations issued to carry out subsection 

6 (a)(5)(A)(iii), no provision or requirement of State or local 

7 law shall grant additional rights or impose additional obli8 gations related to the 340B program.’’. 

9 SEC. 19. ENSURING THE EQUITABLE TREATMENT OF 340B 

10 COVERED ENTITIES AND PHARMACIES PAR11 TICIPATING IN THE 340B DRUG DISCOUNT 

12 PROGRAM. 

13 (a) GROUP HEALTH PLAN AND HEALTH INSURANCE

14 ISSUER REQUIREMENTS.—Subpart II of part A of title 

15 XXVII of the Public Health Service Act (42 U.S.C. 

16 300gg–11 et seq.) is amended by adding at the end the 

17 following: 

18 ‘‘SEC. 2730. REQUIREMENTS RELATING TO THE 340B DRUG 

19 DISCOUNT PROGRAM. 

20 ‘‘(a) IN GENERAL.—A group health plan, a health 

21 insurance issuer offering group or individual health insur22 ance coverage, or a pharmacy benefit manager acting on 

23 behalf of such plan or issuer, may not discriminate against 

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1 ticipant, beneficiary, or enrollee of such plan or coverage 

2 by imposing requirements, exclusions, reimbursement 

3 terms, or other conditions on such entity or pharmacy that 

4 differ from those applied to entities or pharmacies that 

5 are not covered entities or contract pharmacies on the 

6 basis that the entity or pharmacy is a covered entity or 

7 contract pharmacy or that the entity or pharmacy dis8 penses 340B drugs, by taking any action prohibited under 

9 subsection (b). 

10 ‘‘(b) SPECIFIED PROHIBITED ACTIONS.—A group 

11 health plan, a health insurance issuer offering group or 

12 individual health insurance coverage, or a pharmacy ben13 efit manager acting on behalf of such plan or issuer, may 

14 not discriminate against a covered entity, a contract phar15 macy, or a participant, beneficiary, or enrollee of such 

16 plan or coverage by doing any of the following: 

17 ‘‘(1) Reimbursing a covered entity or contract 

18 pharmacy for a quantity of a 340B drug (as defined 

19 in subsection (e)) in an amount less than such plan, 

20 issuer, or pharmacy benefit manager (as applicable) 

21 would pay to any other similarly situated (as speci22 fied by the Secretary) entity or pharmacy that is not 

23 a covered entity or a contract pharmacy for such 

24 quantity of such drug on the basis that the entity 

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1 macy or that the entity or pharmacy dispenses 340B 

2 drugs. 

3 ‘‘(2) Imposing any terms or conditions on cov4 ered entities or contract pharmacies with respect to 

5 any of the following that differ from such terms or 

6 conditions applied to other similarly situated entities 

7 or pharmacies that are not covered entities or con8 tract pharmacies on the basis that the entity or 

9 pharmacy is a covered entity or contract pharmacy 

10 or that the entity or pharmacy dispenses 340B 

11 drugs: 

12 ‘‘(A) Fees, chargebacks, clawbacks, adjust13 ments, or other assessments. 

14 ‘‘(B) Professional dispensing fees. 

15 ‘‘(C) Restrictions or requirements regard16 ing participation in standard or preferred phar17 macy networks. 

18 ‘‘(D) Requirements relating to the fre19 quency or scope of audits or to inventory man20 agement systems using generally accepted ac21 counting principles. 

22 ‘‘(E) Any other restrictions, conditions, 

23 practices, or policies that interfere with the 

24 ability of a covered entity or contract pharmacy 

25 to use the discounts provided under section 


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1 340B in accordance with applicable require2 ments under such section. 

3 ‘‘(3) Interfering with an individual’s choice to 

4 receive a 340B drug from a covered entity or con5 tract pharmacy, whether in person or via direct de6 livery, mail, or other form of shipment, as permitted 

7 under section 340B. 

8 ‘‘(4) Interfering with, limiting, or prohibiting 

9 actions by a covered entity or contract pharmacy to 

10 identify, either directly or through a third party, 

11 claims for 340B drugs, including by submission of 

12 claims data or use of claims modifiers or indicators. 

13 ‘‘(5) Refusing to contract with a covered entity 

14 or contract pharmacy for reasons other than those 

15 that apply equally to entities or pharmacies that are 

16 not covered entities or contract pharmacies, or on 

17 the basis that— 

18 ‘‘(A) the entity or pharmacy is a covered 

19 entity or a contract pharmacy; or 

20 ‘‘(B) the entity or pharmacy is described in 

21 any of subparagraphs (A) through (O) of sec22 tion 340B(a)(4). 

23 ‘‘(6) With respect to a group health plan or 

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1 erage, denying coverage of a drug on the basis that 

2 such drug is a 340B drug. 

3 ‘‘(c) PROHIBITED ACTIONS IN DEROGATION OF SEC4 TION 340B AFFORDABILITY ASSISTANCE PROVISIONS.— 

5 A group health plan, a health insurance issuer offering 

6 group or individual health insurance coverage, or a phar7 macy benefit manager acting on behalf of such plan or 

8 issuer shall not prohibit or restrict, in contracts with phar9 macies in their network that are contract pharmacies or 

10 entity pharmacies, or in any other manner, any reduction 

11 in or subsidy for the out-of-pocket amount for a 340B 

12 drug charged to an individual (including a participant, 

13 beneficiary, or enrollee of such plan or coverage) that is 

14 required or authorized by subparagraphs (G) or (H) of 

15 section 340B(a)(5). Any general prohibition or restriction 

16 on reducing or subsidizing the out-of-pocket amount for 

17 a drug charged to an individual that lacks an express ex18 emption for any reductions in or subsidies for the out-of19 pocket amount for a 340B drug that are required or au20 thorized by subparagraphs (G) or (H) of section 

21 340B(a)(5) is a violation of this subsection. Any contrac22 tual provision that violates this subsection in any manner 

23 shall be void and unenforceable. 

24 ‘‘(d) ENFORCEMENT MECHANISM FOR PHARMACY

25 BENEFIT MANAGERS.—The Secretary shall impose a civil 


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1 monetary penalty on any pharmacy benefit manager that 

2 violates the requirements of this section. Such penalty 

3 shall not exceed $5,000 per violation per day. The Sec4 retary shall issue proposed regulations to implement this 

5 subsection not later than 60 days after the date of the 

6 enactment of this subsection and shall finalize such regu7 lations not later than 180 days after such date of enact8 ment. 

9 ‘‘(e) DEFINITIONS.—For purposes of this section: 

10 ‘‘(1) 340B DRUG.—The term ‘340B drug’ 

11 means a drug that is— 

12 ‘‘(A) a covered outpatient drug (as defined 

13 for purposes of section 340B); and 

14 ‘‘(B) purchased under an agreement in ef15 fect under such section. 

16 ‘‘(2) CONTRACT PHARMACY.—The term ‘con17 tract pharmacy’ has the meaning given such term in 

18 section 340B(a)(5)(F). 

19 ‘‘(3) COVERED ENTITY.—The term ‘covered en20 tity’ has the meaning given such term in section 

21 340B(a)(4). 

22 ‘‘(4) ENTITY PHARMACY.—The term ‘entity 

23 pharmacy’ has the meaning given such term in sec24 tion 340B(a)(5)(F).’’. 


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1 (b) APPLICATION OF REQUIREMENTS TO MEDI2 CARE.— 

3 (1) PART D.—Section 1860D–12(b) of the So4 cial Security Act (42 U.S.C. 1395w–112(b)) is 

5 amended by adding at the end the following: 

6 ‘‘(10) APPLICATION OF REQUIREMENTS RELAT7 ING TO THE 340B DRUG DISCOUNT PROGRAM.—Each 

8 contract entered into under this subsection with a 

9 PDP sponsor shall provide that the requirements of 

10 section 2730 of the Public Health Service Act apply 

11 to such sponsor, and to any pharmacy benefit man12 ager that contracts with such sponsor, in the same 

13 manner as such requirements apply with respect to 

14 a group health plan, a health insurance issuer, or a 

15 pharmacy benefit manager described in such sec16 tion.’’. 

17 (2) PART C.—Section 1857(f)(3) of the Social 

18 Security Act (42 U.S.C. 1395w–27(f)(3)) is amend19 ed by adding at the end the following: 

20 ‘‘(F) 340B DRUG DISCOUNT PROGRAM.— 

21 Section 1860D–12(b)(10).’’. 


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1 SEC. 20. EFFECTIVE DATE. 

2 Except as otherwise specified, the provisions in this 

3 Act shall become effective on the date that is one year 

4 following the date of enactment of this Act. 

Æ 


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