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At the 340B Coalition winter conference last month, two major topics were impossible to ignore: the growing interest in AI and the ongoing uncertainty surrounding 340B legislative and regulatory changes. As these issues intersect, it’s more important than ever for covered entities (CEs) to understand the evolving landscape. In this article, I’ll break down the ongoing potential changes in play for 340B and explain how AI can help CEs adapt to this rapidly shifting environment.
What are all the moving pieces at play?
Inflation Reduction Act (IRA) (Effective 1/1/2026)
The Inflation Reduction Act (IRA) is set to make waves in the pharmaceutical and pharmacy sectors, especially for the 340B program. Under this law, Medicare will negotiate and establish Maximum Fair Prices (MFP) for select drugs. For CEs, that means they will be able to purchase those drugs at either the MFP price or receive a rebate from manufacturers. The rollout will be gradual, with Medicare targeting 10 drugs in 2026, 15 in 2027 and 2028, and up to 20 each year afterward. For the selected drugs, this means lower Medicare reimbursement and additional reporting requirements – as the government hopes to prevent duplicate 340B discounts and MFP rebates for manufacturers. It remains to be seen whether the government will take the advice of 340B provider groups that have raised concerns about whether CMS has the proper mechanisms to ensure CEs and their Medicare patients can continue to access affordable medications.
State-Level Laws (Ongoing)
State-level contract pharmacy access laws continue to evolve. Currently, nine states have passed laws prohibiting manufacturers from restricting contract pharmacy access. Additionally, more than 20 states have introduced or cleared contract pharmacy bills in legislative chambers.
However, these laws don’t mark the end of challenges as manufacturers are continuing litigation and a lack of enforcement are allowing some drug companies to operate in disregard of the new laws. Additionally, the contract pharmacy access pending bills are often bundled with additional provider reporting requirements, including 340B recertification data, contract pharmacy details, and payments to TPAs.
At the federal level, we are anticipating a number of 340B-related bills to be introduced in the coming months. Previous bills introduced during the last session are predicted to resurface, with new proposals emerging as well. The legislation is expected to range from bills that would simply require drug manufacturers to participate in the contract pharmacy program like they did prior to 2020 to ones that would make comprehensive changes to 340B statute. Some of the legislation will be welcomed by the 340B provider community and other bills are expected to be more friendly to the drug industry. Whether a bill with broad bipartisan support emerges remains a big question.
Proposed Rebate Models
A group of major drugmakers recently sued the Health Resources and Services Administration (HRSA) in an effort to force the agency to allow the manufacturers to convert the 340B program from an upfront discount program to a rebate model. Since the program’s inception, HRSA has prohibited the unilateral implementation of rebates. The government says the 340B statute prohibits drugmakers from imposing rebate models without the approval of the agency. The 340B provider community and many lawmakers from both parties have strongly opposed allowing manufacturers to impose rebates. Their concerns range from requiring cash strapped CEs to have to pay full price for drugs to significantly increased reporting burdens.
What do all these changes actually mean for your covered entity?
With so many moving pieces affecting 340B, it’s challenging to know where to focus your time and resources. When we boil it all down, these changes have three major implications for your CE:
- Increased Reporting Requirements – New mandates from the Inflation Reduction Act (IRA), more state 340B provider laws, and manufacturer restrictions are adding significant administrative burdens.
- Lower Revenue for Pharmacies – The IRA is driving down pharmacy reimbursements, while contract pharmacy restrictions are reducing patient capture, further straining revenue and undermining the 340B mission.
- Potential Financial Strain from a New Rebate Model – Proposed rebate models could further erode 340B savings, making it harder for CEs to sustain their programs.
In short, covered entities face a perfect storm: more work, lower margins, and insufficient resources to address these challenges. However, despite these challenges, technology—especially AI—offers a powerful way for CEs to adapt and thrive.
Can AI help solve the ever-growing challenges facing covered entities?
AI presents an opportunity to alleviate the manual burden these changes put on your teams while also maximizing your 340B opportunity. AI agents can automate repetitive, routine tasks without the risk of human error and free up your team for more important work that requires their critical thinking.
For example, AI can be used for:
- 340B Auditing: Instead of manually auditing 340B claims or selecting sample claims to review, AI agents can audit your entire system (including unstructured data like medical documents) and flag the cases that require human review from a 340B analyst.
- Opportunity Analytics: Real-time analytics allow your team to identify the areas of concern or opportunity regarding your 340B pharmacy – helping your team prioritize their efforts for maximum impact.
- Pharmacy Capture: AI-powered automation can work alongside your team to enhance patient engagement workflows, increasing in-house capture rates and improving medication adherence.
By maximizing your team’s efficiency, driving pharmacy growth, and ensuring 340B compliance, AI solutions not only help your organization navigate today’s challenges but also prepare for future 340B changes.
If you’re interested in learning more about the fundamentals of AI, don’t miss our webinar on April 17th where we break down AI beyond the buzzwords and explore its real-world applications in the 340B space. Ted Slafsky, Publisher and CEO of 340B Report, will set the stage with the latest updates shaping the program while Ali Farzad, CompassRx’s CEO, will share how AI technologies can be used to help covered entities face the growing challenges in the space.
Alice Cheng is chief operating officer of CompassRx. She can be reached at alice@compassrx.com.
