I 
108TH CONGRESS 
2D SESSION 
H. R. 4161 
To amend the Public Health Service Act to revise and expand the section 
340B program to improve the provision of discounts on drug purchases 
for certain safety net providers. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 2, 2004 
Mr. RUSH introduced the following bill; which was referred to the Committee 
on Energy and Commerce 
A BILL 
To amend the Public Health Service Act to revise and ex-
pand the section 340B program to improve the provision 
of discounts on drug purchases for certain safety net 
providers. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘340B Program Revi-
sion and Expansion Act of 2004’’. 
SEC. 2. IMPROVEMENTS TO SECTION 340B PROGRAM. 
(a) EXPANSION OF COVERED ENTITIES RECEIVING 
DISCOUNTED PRICES.—Subsection (a)(4) of section 340B
of the Public Health Service Act (42 U.S.C. 256b) is 
amended by adding at the end the following subpara-
graphs: 
‘‘(M) An entity receiving funds under title 
V of the Social Security Act (relating to mater-
nal and child health) for the provision of health 
services. 
‘‘(N) An entity receiving funds under sub-
part I of part B of title XIX of this Act (relat-
ing to comprehensive mental health services) for 
the provision of community mental health serv-
ices. 
‘‘(O) An entity receiving funds under sub-
part II of such part B (relating to the preven-
tion and treatment of substance abuse) for the 
provision of treatment services for substance 
abuse.’’. 
(b) EXTENSION
OF
DISCOUNTS
TO
INPATIENT 
DRUGS.—Subsection (b) of such section is amended by in-
serting before the period at the end the following: ‘‘, except 
that the terms ‘covered outpatient drug’ and ‘covered 
drug’ include a drug provided in an inpatient setting’’. 
(c) ELIMINATION OF GROUP PURCHASING PROHIBI-
TION FOR CERTAIN HOSPITALS.—Subsection (a)(4)(L) of 
such section is amended—
(1) by adding ‘‘and’’ at the end of clause (i); 
(2) by striking ‘‘; and’’ at the end of clause (ii) 
and inserting a period; and 
(3) by striking clause (iii). 
(d) PERMITTING USE
OF MULTIPLE CONTRACT 
PHARMACIES.—Such section is amended by adding at the 
end the following new subsection: 
‘‘(e) PERMITTING USE
OF MULTIPLE CONTRACT 
PHARMACIES.—Nothing in this section shall be construed 
as prohibiting a covered entity from entering into con-
tracts with more than one pharmacy for the provision of 
covered drugs, including such a contract that supplements 
the use of an in-house pharmacy arrangement or as re-
quiring the approval of the Secretary for entering into 
such a contract.’’. 
(e) IMPROVEMENTS
IN
PROGRAM
ADMINISTRA-
TION.—Such section is further amended by adding at the 
end the following new subsection: 
‘‘(f) IMPROVEMENTS
IN
PROGRAM
ADMINISTRA-
TION.— 
‘‘(1) IN GENERAL.—The Secretary shall pro-
vide, from funds appropriated under paragraph (2), 
for improvements in the integrity and administration 
of the program under this section in order to pre-
vent abuse and misuse of discounted prices made
available under this section. Such improvements 
shall include the following: 
‘‘(A) The development of a system to verify 
the accuracy of information regarding covered 
entities that is listed on the website of the De-
partment of Health and Human Services relat-
ing to this section. 
‘‘(B) The establishment of a third-party 
auditing system by which covered entities and 
manufacturers are regularly audited to ensure 
compliance with the requirements of this sec-
tion. 
‘‘(C) The conduct of such audits under 
subsection (a)(5)(C) that supplement the audits 
conducted under subparagraph (B) as the Sec-
retary finds appropriate and the implementa-
tion of dispute resolution guidelines and other 
compliance programs. 
‘‘(D) The development of more detailed 
guidance regarding the definition of section 
340B patients and describing options for billing 
under the medicaid program under title XIX of 
the Social Security Act in order to avoid dupli-
cative discounts.