Senate Unveils Sweeping Bill to Reform 340B Drug Program

Comprehensive legislation introduced this month would codify the 340B Drug Pricing Program's rules for the first time in the statute's history, aiming to resolve years of litigation and disputes over contract pharmacies, patient eligibility, and rebate models, according to a bipartisan group of senators who unveiled the new bill.

Bill Overview

The Supporting Underserved and Strengthening Transparency, Accountability and Integrity Now and for the Future of 340B Act (SUSTAIN 340B Act) was introduced August 5 by Senators Jerry Moran (R, Kansas), John Boozman (R, Arkansas), Tammy Baldwin (D, Wisconsin), Shelley Moore Capito (R, West Virginia), Tim Kaine (D, Virginia), and John Hickenlooper (D, Colorado)—members of the Senate 340B Bipartisan Working Group, which has existed for more than a decade.¹

"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 senators said in a joint statement.

Key Provisions

The bill reiterates Congress's original intent for the 340B program and clarifies that it provides point-of-purchase discounts rather than rebates. It codifies covered entities' authority to use contract pharmacies while placing reasonable limitations, including registration requirements and audits for covered entities with a large number of contract pharmacy arrangements; notably, the bill does not impose numeric or geographic limits on contract pharmacy use.

The legislation also establishes, for the first time, a statutory definition of an eligible "patient" under the 340B program, along with oversight requirements for patients dispensed 340B drugs through referrals to noncovered entities.

On rebates, the bill would end any 340B Rebate Model Pilot Program within one year of enactment and require HHS to transition to a new data clearinghouse, operated by an independent third party, designed to prevent drug diversion and duplicate discounts. The legislation additionally requires covered entities to establish a standard, transparent financial assistance policy for patients at or below 200% of the federal poverty level, and it bars insurers from discriminating against 340B covered entities or their contract pharmacies.

New annual reporting requirements would apply to covered entities' program utilization, and HHS would gain expanded authority to audit compliance and remove noncompliant entities that fail to implement corrective action plans. The bill also creates a new user-fee program to fund administration of the program, including the clearinghouse, and authorizes $3 million annually for 5 years for oversight and enforcement, plus $9 million annually for 4 years for implementation.

An Equity Backdrop

The legislation lands against a backdrop of ongoing scrutiny over whether 340B savings reach the safety-net patients the program was designed to serve. Hospitals excluded from CMS's remedy repayments for prior, court-invalidated 340B payment cuts were disproportionately rural, publicly owned, and nonacademic—raising questions about which institutions bear the greatest risk when 340B policy shifts.²

That tension may resurface under SUSTAIN 340B's new reporting, audit, and financial-assistance mandates. While the bill's stated purpose is to protect the program's long-term viability for eligible providers, the added compliance infrastructure could weigh most heavily on the same smaller, resource-constrained hospitals and clinics that prior research found least equipped to absorb administrative burden.

A Parallel Regulatory Track

The Senate's legislative push comes as CMS pursues its own 340B changes through rulemaking.³ In its CY 2027 Hospital Outpatient Prospective Payment System proposed rule, CMS proposed paying for 340B-acquired drugs at average sales price (ASP) minus 33.4%, replacing the current ASP plus 6% methodology, based on results from a hospital drug acquisition cost survey conducted from January through April 2026.

CMS estimates the change would reduce Original Medicare drug payments by $4.55 billion and beneficiary drug payments by $1.15 billion in the first year alone; because the underlying statute requires budget neutrality, Outpatient Prospective Payment System payments for nondrug services would rise by an equivalent amount. Children's hospitals, Prospective Payment System–exempt cancer hospitals, and rural sole community hospitals would be exempt from the cut.⁴

Unlike SUSTAIN 340B, which seeks to stabilize the program's discount structure, the CMS proposal targets Medicare reimbursement levels directly—underscoring that legislative and regulatory reform efforts are now advancing on parallel, and potentially compounding, tracks for covered entities.

“By continuing to work together in bipartisan fashion, we are committed to strengthening the 340B program and helping make certain it remains accessible to serve patients and communities for years to come,” the senators said in their statement.

References

1. Senate 340B Bipartisan Working Group introduces comprehensive 340B reform legislation. News release. Office of Senator John Boozman; August 5, 2026. Accessed August 10, 2026. https://www.boozman.senate.gov/public/index.cfm/2026/8/senate-340b-bipartisan-working-group-introduces-comprehensive-340b-reform-legislation
2. McNulty R. CMS' 340B repayment proposal may harm vulnerable hospitals, reward those with higher revenues. AJMC. April 26, 2024. Accessed August 10, 2026. https://www.ajmc.com/view/cms-340b-repayment-proposal-may-harm-vulnerable-hospitals-reward-those-with-higher-revenues
3. Calendar year 2027 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) proposed rule (CMS-1850-P). Fact sheet. Centers for Medicare & Medicaid Services; July 2, 2026. Accessed August 10, 2026. https://www.cms.gov/newsroom/fact-sheets/calendar-year-2027-hospital-outpatient-prospective-payment-system-opps-ambulatory-surgical-center
4. CMS proposes major CY 2027 OPPS/ASC changes targeting 340B payments, site-neutral policy, IPO list phase-out, and ASC expansion. Applied Policy. July 4, 2026. Accessed August 10, 2026. https://www.appliedpolicy.com/cms-proposes-major-cy-2027-opps-asc-changes-targeting-340b-payments-site-neutral-policy-ipo-list-phase-out-and-asc-expansion/