The Growing Inevitability of New 340B Reporting Requirements

By Ted Slafsky

Just before the end of most state legislative sessions for 2023, two states enacted the first ever 340B-specific reporting requirements for covered entities. As my colleague Will Newton reported in 340B Report, Minnesota was the first to enact a reporting law. It is a broad in scope and impacts all covered entities in the state. The new law, which was introduced and passed by a narrow margin on the last day of the state’s legislative session in late May, contains eight new reporting requirements, including the total acquisition cost for 340B drugs, the total payment received for these drugs, and the total payment made to contract pharmacies to dispense 340B drugs. These annual requirements, which must be submitted to the state’s health commissioner each April, apply to all 340B covered entities. Hospitals must additionally report acquisition costs and payments at the national drug code level for their most frequently used drugs.

The 340B provisions were just one page of a 909-page health care bill and there was no debate or discussion about the 340B elements according to our reporting. 340B stakeholders in the state were blindsided by the legislation and are now convening a working group to better understand the new law and figure out how to comply with rules. One community health center representative told 340B Report that the law contains around 10 provisions, including the 340B requirements, that will have a “profound impact” on Minnesota’s health centers. Hospitals, which have complex health care arrangements consisting of a vast array of clinics, health care services, and departments, will need to invest significant time and resources into complying with the new rules.

Meanwhile, the Maine legislature in late June passed new reporting requirements for the state’s 340B hospitals. Maine’s law, which only apply to hospitals, requires hospitals to submit information based on the American Hospital Association’s 340B Good Stewardship Principles.

As we reported in 340B Report, the new law requires 340B hospitals beginning Jan. 1, 2024, to submit an annual report to the state:

• describing how the hospital uses 340B program savings to “benefit its community through programs and services funded in whole or in part by savings from the 340B program”
• estimating annual savings from the 340B program by comparing acquisition price of 340B drugs to group purchasing organization pricing
• comparing the hospital’s 340B program savings to its total drug expenditure
• describing the hospital’s “internal review and oversight of the 340B program.

The Maine reporting requirements apply to hospitals and their subsidiaries and affiliates. They define hospital affiliates as entities that “provide medical services or medically related diagnostic and laboratory services or engage in ancillary activities supporting those services.”

The new reporting requirements in the original Senate bill introduced in March were much more burdensome. It required detailed reporting for each drug dispensed through the 340B program—including acquisition cost, date of prescription and administration, payer source, and compensation for the drug including ingredient cost and dispensing fee. It also mandated “contracting and vendor data separated by the hospital and each off-site clinic facility associated with the hospital,” including the names of all third-party vendors and a list of “self-negotiated contracts for individual entities and integrated delivery networks.”

The final bill was a compromise that Maine hospitals appear to be satisfied with. Twenty of the state’s hospitals had already pledged to commit to AHA’s voluntary principles demonstrating that they are using 340B savings to better the community and meet 340B’s purpose as spelled out by Congress “to stretch scare federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”

Three other states—Virginia, Indiana, and Connecticut—introduced legislation in this legislative session that would have required covered entities to report on their 340B savings and how they use the savings. Those bills did not become law but two of them came close, with the legislation in Connecticut dying during the final days of the session when lawmakers stripped the bill of a measure that would have prohibited drug companies from limiting use of contract pharmacies and imposing other conditions on 340B drug sales.

Meanwhile, the U.S. House of Representatives may pass legislation, largely on a party line vote, that would impose stringent reporting requirements on 340B hospitals and give the HHS Secretary the authority to require other covered entities to comply with the new requirements. The legislation, which was introduced by Rep. Larry Bucshon (R-Ind.), received only one Democratic vote in committee, meaning that it will have a tough time making it through the Senate which has a Democratic majority. That means the bill may never become law.

Nonetheless, there is growing momentum for 340B providers to be more transparent in how they are using their savings and ensuring that vulnerable patient populations are able to access affordable medications. More bills will be introduced at both the state and federal level.

More importantly, any eventual compromise that restores access to 340B discounts in the contract pharmacy setting will almost certainly include new reporting requirements for 340B providers. Now would be a good time for 340B covered entities to be working closely with their federal and state lawmakers to push hard for the enactment of legislation that restores access to contract pharmacies while also determining what type of transparency/good stewardship standards they can live with.

Ted Slafsky is the Publisher and CEO of 340B Report, the only news and intelligence service exclusively covering the 340B program.  Slafsky, who has over 25 years of leadership experience with the 340B program, is also Founder and Principal of Wexford Solutions.  Ted can be reached at ted.slafsky@340Breport.com.

Disclaimer: The views and opinions expressed in this blog are those of the authors. They do not necessarily reflect the official policy or position of any other agency, organization, employer, or company.