Navigating State-Level Regulations to Safeguard Your 340B Program


While federal laws and regulations set the foundation for 340B compliance, state-level laws introduce an additional layer of complexity. Covered entities (CEs) must be vigilant in understanding how these state laws can impact their operations to avoid potential compliance pitfalls. We have outlined a few common nuances our team has run into with CEs across the nation: 

  1. Medicaid Participation: State Medicaid programs play a crucial role in 340B operations, regardless of the state you’re in.
    • States vary in their approach to Medicaid, including differences between fee-for-service and managed Medicaid models.
    • Certain states may have specific carve-in or carve-out arrangements. For instance, in the state of New York, carve-in arrangements are no longer permitted, significantly impacting 340B programs across the state. Meanwhile, North Carolina allows a carve in option for specific plans but require a code 20 to flag the claim as 340B eligible and to avoid duplicate discounts from the manufacturer.
  2. Operations Processes: The operational intricacies of 340B programs can significantly vary across states. Examples include:
    • Utilization of Code 20 for Managed Medicaid: Pharmacies must submit a clarification Code 20 at adjudication to identify claims eligible as 340B pricing.
    • Code 20 and Code 8 Fee for Service: In some cases, both Code 20 and basis of cost Code 8 are necessary for detailed pricing information.
    • Retrospective Files: Certain states, like Oregon, require additional steps in the retrospective file processes, such as quarterly submission of 340B claims files to avoid duplicate discounts.
  3. State Legislative Updates: With an increasing number of state-level bills regarding restrictions imposed on drug manufactures, CEs must stay informed about developments on their home turf. Recently, West Virginia and Mississippi followed the lead of Louisiana and Arkansas to enact laws protecting CEs from manufacturer restrictions on contract pharmacies, while other states like Minnesota, Maine, and Washington have passed bills addressing discriminatory payor policies and 340B reporting requirements.
  4. Miscellaneous State Laws: Apart from Medicaid and manufacturer-related laws, several miscellaneous state program laws can influence 340B program operations. One notable example is the AIDS Drug Assistance Program (ADAP) laws. While this is a federal program, states can also administer their own programs for qualified patients.  Certain stipulations within the ADAP program provide services and drug assistance. Participating in the 340B program may not be eligible under certain circumstances, as it could duplicate cost savings for drugs.

As the 340B landscape continues to evolve, especially with all the recent legislative action, CEs must stay informed about their specific state-level laws and regulations. Proactive engagement and ongoing monitoring of legislative changes are essential strategies for ensuring compliance, navigating 340B complexities, and driving program performance.

We recommend reviewing your local state health websites, visiting, subscribing to 340B Report for the latest legislative and regulatory news alerts, and reaching out to a trusted resource in your state for assistance. Additionally, the RxStrategies team works closely with CEs nationwide and is available to address any questions.

Paul Melland is senior director of client success at RxStrategies. He can be reached at

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