Six senators have introduced legislation that would impose new annual reporting requirements on the hospitals and clinics that receive discounted drugs through the federal 340B program, the result of a years-long bipartisan effort to settle a fight between drugmakers and safety-net providers.
The SUSTAIN 340B Act was introduced by Sens. Jerry Moran of Kansas, Tammy Baldwin of Wisconsin, Shelley Moore Capito of West Virginia, Tim Kaine of Virginia, John Boozman of Arkansas and John Hickenlooper of Colorado, members of the Senate 340B Bipartisan Working Group.
"The SUSTAIN 340B Act makes comprehensive reforms to the program while preserving its critical benefits that support eligible health care providers and the patients they serve throughout the country," the six said in a joint statement, adding that the bill reflects stakeholder input and aims to provide greater stability, clarity and transparency. The disclosure requirements are the part that would change what the public can see about a program whose scale has grown substantially and whose benefits have become contested.
The Care the Program Currently Supports
Congress created 340B in 1992. It requires drug manufacturers participating in Medicaid to sell outpatient drugs at a discount to designated covered entities, which include nonprofit hospitals serving high proportions of low-income patients, community health centers, Ryan White HIV clinics, children's hospitals and several other categories.
The mechanism is indirect. A covered entity buys a drug at the discounted price, is reimbursed by insurance at the ordinary rate, and keeps the difference. Congress did not specify how that margin must be spent, and that omission is the origin of most of the current dispute.
In practice, hospitals and clinics report using 340B margin to fund uncompensated care for uninsured patients, medication assistance programs, oncology and infusion services in areas that could not otherwise sustain them, community health programs, and specialty care in rural and underserved communities.
The program has grown considerably. The Health Resources and Services Administration reported that 340B purchases reached $100 billion in calendar year 2025, roughly 23% above the $81.4 billion recorded for 2024, with disproportionate share hospitals accounting for about $79.2 billion of the total.
The Disclosure Requirements in the Bill
The transparency provisions would place new annual reporting requirements on covered entities relating to their utilization of the program, according to the sponsors' summaries.
The bill would also give the Department of Health and Human Services expanded auditing authority, add new reporting, registration and recertification requirements for contract pharmacies and child sites, and establish a user fee program beginning in fiscal year 2031 to fund HRSA's oversight and program integrity work.
A second structural change would establish a statutory definition of a 340B patient, which currently has no clear legal definition and is a persistent source of litigation over whether particular prescriptions qualify.
The bill addresses child sites, requiring that they be wholly owned and integrated with the parent covered entity, and directing HHS to establish registration and oversight procedures. That provision is intended to discourage acquisitions undertaken solely to expand a hospital's 340B footprint.
Other provisions would require covered entities to establish a standard, transparent financial assistance policy for patients at or below 200% of the federal poverty level, prevent insurers from discriminating against covered entities and their contract pharmacies, and require reports to Congress on hospital debt collection practices and dispensing fees.
The Rebate Fight Running Underneath It
One provision would curtail a policy HHS has been advancing. The department's 340B Rebate Model Pilot Program would replace upfront discounts with rebates for a subset of drugs. The bill would end any such program within a year of enactment and prohibit its expansion or any substantially similar rebate model.
The difference matters for cash flow at thin-margin providers. Under upfront discounts, a covered entity pays the reduced price at purchase. Under a rebate model, it pays full price and is reimbursed later, which requires carrying the cost in the interim.
Kaine put the concern directly, noting that while larger hospital chains may have the cash flow to manage a rebate model, smaller entities serving low-income or uninsured patients are "not providers that tend to have bank accounts with money sitting around unused." He added: "If you require them to pay fully up front and then get a rebate sometime down the road, you really jeopardize their operations."
In place of the rebate pilot, the bill would establish a data clearinghouse operated by an independent third-party entity to prevent diversion and duplicate discounts, meaning 340B discounts applied to drugs furnished to ineligible patients. Supporters argue the clearinghouse would let providers keep upfront discounts while giving manufacturers the verification data they have sought.
The bill is not the only proposal in play. Sen. Bill Cassidy released a competing framework earlier this summer that would allow a rebate model, and a House counterpart, the SECURE 340B Act, is also circulating.
The Positions and the Unsettled Questions
The American Hospital Association has responded cautiously. Aimee Kuhlman, its group vice president of advocacy and grassroots, said the association appreciates the working group's leadership and looks forward to reviewing the legislation in detail with 340B hospitals to ensure the program remains strong for patients, communities and providers.
Hospital groups have previously argued that detailed data submission is burdensome for safety-net facilities. Manufacturers may object to provisions that lock in contract pharmacy access and suspend the rebate approach.
The central factual question remains genuinely unresolved. Whether 340B savings reach patients is contested, with critics arguing the program has grown well beyond its original purpose and hospital groups pointing to community benefit spending that would not otherwise be funded. The reporting requirements in this bill are designed in part to answer that question, which means the answer does not currently exist in the public record.
For patients, nothing changes immediately. No provision would take effect before enactment, and the bill has been introduced rather than passed. The practical relevance is longer term: 340B margin underwrites services at many rural and safety-net hospitals already under financial pressure, and MedicalDaily has reported on rural hospitals closing despite federal support programs and on other federal efforts to reshape drug pricing.
Key Questions Answered
What is the 340B program? A 1992 federal program requiring drug manufacturers in Medicaid to sell outpatient drugs at a discount to designated covered entities, including nonprofit hospitals serving low-income populations, community health centers and Ryan White HIV clinics.
How do providers use the savings? Entities buy at a discount, are reimbursed at ordinary rates, and keep the difference. They report using that margin for uncompensated care, medication assistance, oncology and infusion services, and specialty care in underserved areas. Congress never specified how it must be spent.
What would the bill require them to disclose? New annual reporting on how covered entities use the program, plus expanded HHS auditing authority and new reporting, registration and recertification requirements for contract pharmacies and child sites.
What else would change? A statutory definition of a 340B patient, requirements that child sites be wholly owned and integrated with the parent entity, a standard financial assistance policy for patients at or below 200% of the federal poverty level, and an independent third-party data clearinghouse.
What is the rebate dispute? HHS has been advancing a rebate model pilot replacing upfront discounts with later reimbursement for some drugs. The bill would end it within a year of enactment. Upfront discounts help thin-margin providers with cash flow.
How large is the program now? HRSA reported 340B purchases of $100 billion in calendar year 2025, about 23% above the $81.4 billion recorded the year before.
Does this affect patients now? No. The bill has been introduced, not passed. The longer-term relevance is for patients who rely on hospital medication assistance programs or community health center pharmacies funded partly by 340B margin.
