Key Considerations for the SUSTAIN 340B Act


On February 2, six senators known as the “Gang of Six” – John Thune, Debbie Stabenow, Shelley Moore Capito, Tammy Baldwin, Jerry Moran and Ben Cardin – unveiled a discussion draft bill intended to preserve the 340B program and codify in statute many of its operational provisions. The draft bill, titled Supporting Underserved and Strengthening Transparency, Accountability, and Integrity Now and for the Future of 340B Act (SUSTAIN 340B Act or SUSTAIN Act), was accompanied by an explanatory statement and request for information (RFI), with many questions for Covered Entities (CEs) to review and provide further responses to the Gang of Six.

Stakeholders were asked to review the RFI and provide additional responses, with comments due by April 1. As we approach the deadline for comments, it’s crucial to delve into the most critical elements of the bill and discuss next steps for 340B stakeholders.

340B’s Purpose (Section 2)

While previously only expressed in Congressional report language, the senators are now providing clarity in statute about Congress’s intent for the 340B program.  As the senators explain: the bill “codifies that the intent of the 340B program is to help safety net providers maintain, improve, and expand patient access to health care services by requiring drug manufacturers, as a condition of participation in Medicaid and Medicare Part B, to provide discounts and rebates to CEs that serve a disproportionate share of low-income and underserved patients.”  The senators’ goal of codifying 340B’s intent is a welcome step and puts to rest any lingering doubts about 340B’s purpose.

Contract Pharmacies (Section 3)

One of the most notable areas addressed in the SUSTAIN 340B Act is the utilization of contract pharmacies. This section tackles the ongoing legal debates surrounding the use of contract pharmacies to distribute 340B drugs by formally establishing in statute the concept of contract pharmacy dispensing within the 340B program. The legislation sets statutory criteria for contract pharmacies and would establish new requirements related to ensuring that low-income patients are able to access affordable medications at the contract pharmacy counter. The bill sponsors are seeking additional feedback on the criteria, including the potential implementation of hard caps on the number of contract pharmacy arrangements permitted. These caps raise important considerations about their potential impact on patients, particularly those residing in certain geographies, such as rural regions, and how caps could impact access to medications dispensed by specialty pharmacies. 

Other key areas to weigh in on include:

  • Registration and recertification processes
  • Requirements for reporting changes to contract pharmacy arrangements
  • Patient freedom of choice without interference from CEs
  • Evaluating different methods and models of contract pharmacy operations (e.g., replenishment or virtual inventory models)
  • 10-year record retention period

Definition of Patient (Section 4)

Section 4 is reserved for the definition of “patient.” The senators are proposing the establishment of a statutory definition of patient under the 340B program. CEs should carefully consider the components of the patient definition and align them with the overarching intent of the 340B Program. One resource to reference is:

Child Sites (Section 5)

Section 5 establishes several requirements for designating a hospital Covered Entity location as a “child site”. The draft proposes enhanced registration and oversight of these “child” sites, which are linked to the parent CE, and would require that all child sites be wholly owned. It also extends patient financial assistance policies to these child sites and contract pharmacies, along with introducing new requirements to make these policies more accessible to the public.

When providing comments on this section, CEs should consider the following:

  • Whether a consistent definition of “child site” should apply across all CE types, and if not, how the definition should vary based on entity type.
  • If it is necessary to individually codify specific elements of the Medicare provider-based rules within the “child site” definition or whether the same end goal could be accomplished with a cross-reference to the Medicare provider-based rules (42 CFR 413.65) and reliance on other federal and state laws governing the provision of healthcare services (g., state scope of practice laws, state licensure laws, Medicare Conditions of Participation/Coverage, Medicare enrollment rules, federal grants rules, requirements of the specific federal grants and contracts conveying 340B eligibility on grantee and contractor entities).
  • Consider whether it is necessary to establish in statute a specific date on which a child site becomes eligible to purchase, prescribe, administer, and dispense 340B drugs as part of the related CE.  Under HRSA’s current rules, newly enrolled hospital clinics have to wait up to two years before they have access to 340B-discounts due to the lag time in filing Medicare cost reports.  We encourage you to emphasize how problematic this policy is and recommend that the bill clearly remedy this matter.
  • Whether it is appropriate to introduce registration-specific requirements in statute (e.g., whether it’s appropriate to require that each specialty service provided at a particular CE location be registered as a separate child site).

Transparency (Section 6)

Concerns about limited or uneven transparency regarding how CEs use savings from the 340B program have been a consistent theme in calls for updates to the program. Evaluating the proposed requirements, CEs should consider the following points:

  • Assess the potential additional burdens that data reporting may impose on CEs, as well as the feasibility and practicality of complying with the requirements.
  • Evaluate whether the proposed metrics are directly relevant to the 340B Program’s intent.
  • Determine whether the requested information overlaps with data already being reported, thus potentially leading to duplicate reporting requirements and/or redundancy.
  • Consider whether the requested data can be provided. For example, is the “Gang of Six’s” understanding that certain data is available at the child site level correct, particularly given the potential misunderstanding as to the nature of child sites generally being separate address locations of the CE and not independently operated entities?

Program Integrity (Section 7)

Section 7 seeks to establish specific requirements for audits of CEs and manufacturers, along with introducing additional penalties and timeframes for implementing corrective actions based on audit findings. It emphasizes that if an entity does not meet the criteria for a CE, the entity will incur “consequences” as well as additional audits and record retention requirements in anticipation of such audits.

CEs should consider:

  • Are there additional audit requirements.
  • Whether the rules associated with the audit process should be codified in statute or if they are more suitable for notice and comment rulemaking, including whether guidance provided to audit contractors should be made publicly available and subject to comments from CEs.

Preventing Duplicate Discounts (Section 8)

To prevent CEs from receiving duplicate discounts, lawmakers propose the creation of a national clearinghouse, tasked with obtaining claims-level rebate and other relevant data to identify potential violations. CEs would be required to submit this data to a third-party clearinghouse to reduce instances of duplicate discounts. The proposed scope to be identified by the new clearinghouse is broader than the current scope of the 340B duplicate discount prohibition and would include Medicare, commercial payor contractual discounts and discounts associated with the Medicaid Drug Rebate Program.

CEs should evaluate the proposed language as it relates to:

  • Transparency into the operations of the clearinghouse.
  • The scope of “duplicate discounts”, including whether it’s appropriate to include non-Medicaid duplicate discounts.

Equitable Treatment of CEs and Pharmacies (Section 9)

This section aims to prohibit insurers or pharmacy benefit managers (PBMs) from implementing policies on CEs, contract pharmacies or beneficiaries that differ from policies on nonparticipating entities or enrollees. It also introduces additional audit requirements and record retention requirements in anticipation of such audits. This provision aligns with state-level efforts to prevent discrimination against 340B CEs and contract pharmacies by health plans and pharmacy benefit managers and seeks to establish similar protections at the federal level.

CEs should carefully consider the following points:

  • Whether the proposed protections appropriately address current and potential future restrictions imposed by payors, as well as what additional protections or measures should be included.
  • Whether the penalties imposed on pharmacy benefit managers should be imposed on other payors subject to the anti-discrimination provisions

User Fees (Section 10)

The draft includes a proposed user fee of .01% of a Covered Entity’s savings by participating in the program. New user fees are intended to help finance additional audits, reports, and enforcement actions by HRSA. As proposed, the user fee funds would supplement and not supplant funds otherwise appropriated for operating the 340B program.

CEs should consider the following points in their response to the RFI:

  • Assess the 340B “savings” metric used for calculating the user fee and whether it provides a reasonable estimate of the financial benefit to CEs participating in the program.
  • The appropriate amount for a user fee (currently proposed to be .01% of “savings” under the 340B Program, as calculated in the same manner proposed in Section 6, which may overstate actual 340B savings)
  • The enumerated uses for the user fees and whether any specific uses should be added or removed.

MACPAC Report & HHS Study (Section 11)

The legislation directs the Medicaid and CHIP Payment and Access Commission (MACPAC) to conduct a review of state Medicaid program efforts to prevent duplicate discounts and requires the secretary of HHS to conduct a study on dispensing fees within the 340B program. Completing an addendum to their Medicare Cost Report that includes the number of patients who were dispensed 340B drugs (by type of insurance coverage), the cost incurred for charity care, patient demographics, a list of all contract pharmacies utilized, any contracts with state or local governments, and a description of how the provider utilized its 340B savings. Providers would have to post this information on a public website in a searchable format.

  • CEs should consider if there are other studies and reports that may be appropriate.

In conclusion, this article aims to provide an overview of key sections of the SUSTAIN Act, but it’s essential for stakeholders to review the entire act to fully comprehend its provisions and potential impact. We strongly encourage readers to submit detailed responses to the Request for Information as collaboration with policymakers is essential to ensure that the final version of the bill reflects the best interests of the 340B program and the communities it serves.  Comments should be sent to: by April 1.

If you have any further questions, or would like to discuss in greater depth, please don’t hesitate to reach out to Rhodie Smith and the RxStrategies team at the email provided below.

Rhodie Smith, VP of Contract Pharmacy Sales at RxStrategies, can be reached at

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