SECURE 340B Act
- Sponsor
- Rep. Peters, Scott H. [D-CA-50]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jul 6, 2026
Bottom line
The SECURE 340B Act significantly overhauls the 340B drug discount program by tightening eligibility, increasing oversight, and introducing new patient protections and data exchange mechanisms, while also addressing manufacturer and PBM practices.
What it actually does
This bill comprehensively reforms the 340B drug discount program by establishing a clear patient definition, regulating contract pharmacies and child sites, mandating patient affordability protections, and creating a data clearinghouse to prevent duplicate discounts and diversion. It also prohibits discriminatory practices by PBMs and health plans, and provides additional resources and enforcement authority to HRSA for program oversight. The bill aims to enhance program integrity and ensure that 340B discounts benefit eligible patients and communities.
Proponents argue
Supporters argue that the bill strengthens the 340B program by ensuring its integrity, preventing drug diversion and duplicate discounts, and directing savings to the intended purpose of supporting care for vulnerable patients. They contend that clearer definitions, robust oversight of contract pharmacies and child sites, and transparency measures will make the program more efficient and accountable, while anti-discrimination clauses protect covered entities from unfair practices by PBMs and health plans, ultimately benefiting patient access and affordability.
Opponents contend
Critics may argue that some provisions, particularly the stricter patient and child site definitions, could reduce the number of eligible patients and sites, thereby limiting access to discounted drugs for underserved communities. They might also contend that the new administrative burdens, such as user fees and extensive data reporting requirements, could disproportionately affect smaller covered entities, diverting resources from patient care. Concerns could also be raised about the clearinghouse's implementation and potential for data misuse.
The bill is lengthy and highly technical, requiring significant time for a thorough review to understand its numerous interconnected provisions and their potential impacts.
Sec. 2
Establishing a Clear Patient Definition
This section defines a 'patient' for the 340B program as an individual who has received an outpatient health care service from a prescribing provider at a covered entity within the preceding 24 months. The service must be Medicare-reimbursable (or would be if eligible) and within the scope of the covered entity's grant or designation. The covered entity must maintain auditable health care records demonstrating a provider-to-patient relationship and clinical responsibility for the prescription. It also defines 'prescribing provider' and 'physician organization affiliate' with specific criteria.
Supporters argue
Supporters argue that a clear and consistent patient definition is crucial for program integrity, preventing drug diversion, and ensuring that 340B discounts are used for their intended purpose. They contend that the current ambiguity leads to abuse and that these rules will ensure only legitimate patients benefit.
Critics contend
Critics contend that overly strict patient definitions could create administrative hurdles and inadvertently exclude vulnerable patients who rely on 340B discounts, especially those with chronic conditions or who receive care through complex referral networks. They argue it could limit access to care and increase costs for patients.
Tradeoffs
The provision balances the need for program integrity and preventing diversion against concerns about limiting patient access and increasing administrative burden for covered entities. It seeks to standardize eligibility but risks narrowing the scope of beneficiaries.
Sec. 2(c)
Referral Requirements for Certain Covered Entities
This subsection allows certain covered entities (federally qualified health centers, critical access hospitals, sole community hospitals) to provide 340B drugs to patients referred to outside providers, provided specific conditions are met. These conditions include the patient being a true patient of the covered entity, direct care received within 24 months, documentation of referral and consultation, and ongoing responsibility for care. Exclusions apply to orphan drugs and certain infused drugs. The Secretary is mandated to conduct audits for high-volume referral prescriptions and can impose penalties for non-compliance.
Sec. 3
Allowable Use and Robust Oversight of Contract Pharmacies
This section mandates that manufacturers must offer 340B drugs to covered entities regardless of whether they use contract pharmacies, and cannot place conditions on these arrangements. Covered entities must register all contract pharmacy agreements with HRSA, attest to compliance, and submit agreements for review. The Secretary must establish standard contract provisions, including requirements for covered entities to maintain title to drugs, contract pharmacies to provide data, and both parties to prevent diversion and duplicate discounts. Transparency requirements include public disclosure of contract pharmacy details and dispensing volumes.
Sec. 4
Eligibility for Child Sites and Community Need Standard
This section establishes strict eligibility criteria for 'child sites' of certain hospital covered entities (DSH, children's, cancer, rural referral, sole community hospitals). Child sites must be wholly owned, clinically and financially integrated, apply the same financial assistance policies, and comply with Medicare provider-based rules or equivalent standards. A new 'community need standard' requires child sites to be located in a 'qualifying ZIP Code' (based on social vulnerability scores) or meet a 'payor-mix exception' (40% Medicaid/uninsured/low-income patients). Temporary 'safety-net exceptions' are also possible. HRSA can deem sites compliant if they meet Medicare provider-based rules.
Sec. 5
Improving Patient Affordability and Protections (Patient Assistance Programs and Medical Debt)
This section mandates that covered entities maintain and extend patient financial assistance policies to child sites and contract pharmacies, with specific income thresholds (e.g., up to 400% FPL for hospitals, 200% for others) and nominal copayment requirements for sliding fee scales. It also prohibits certain debt collection practices for hospital covered entities (L, M, N, O), such as selling patient debt, reporting adverse credit information, or denying care for non-payment. These hospitals can only collect debt from patients with clear ability to pay (e.g., income >600% FPL or assets >400% of debt). HRSA is tasked with monitoring compliance and imposing civil monetary penalties for violations.
Sec. 6
Data Reporting for Transparency
This section requires covered entities to annually report detailed information to the Secretary, including the number of individuals served, prescriptions filled by insurance type, charity care costs, use of 340B savings, patient financial demographics (e.g., percentage of Medicaid/uninsured/low-income patients), policies to promote medication access, contracts with state/local governments (for non-governmental hospitals), third-party administrators used, Medicare/Medicaid funding shortfalls, outpatient service utilization rates, and operation costs related to 340B. This data will be publicly available on a HRSA website in a searchable format.
Sec. 7
Enhancing Program Integrity (Audits, Sanctions, and Eligibility Verification)
This section grants HRSA expanded authority to audit covered entities, contract pharmacies, child sites, and manufacturers for compliance, including identifying violations like improper eligibility claims, diversion, and duplicate discounts. Audits must follow generally accepted standards and cannot close until corrective action plans are fully implemented. Covered entities must contract with vendors who agree to submit necessary audit data. It also requires biennial independent audits of covered entities and their contract pharmacies/child sites, with repayment obligations for non-compliance. Sanctions for violations are strengthened, including increased audit frequency, civil monetary penalties for non-compliant TPA/contract pharmacy contracts, and disenrollment for repeat offenders. Additionally, it mandates rigorous verification of state/local government contracts for private non-profit hospitals and verification of non-profit status.
Sec. 8
Facilitating Data Exchange to Improve Program Integrity (340B Drug Discount Program Data Clearinghouse)
This section establishes a third-party data clearinghouse to facilitate robust and verifiable data exchange for 340B program integrity. For four years, manufacturers must offer upfront 340B discounts, contingent on the clearinghouse meeting performance benchmarks (e.g., 90% unique transactions, 90% adjudication within timeframes, 95% complete data). The clearinghouse will collect detailed claims-level data from covered entities, contract pharmacies, health plans, and state Medicaid agencies to prevent duplicate discounts and diversion. It also includes special rules for 'selected drugs' under Medicare Part D, requiring direct data transmission to manufacturers. The clearinghouse entity must be independent and free of conflicts of interest, with strict rules on data use and confidentiality. Covered entities must participate in data transmission, and manufacturers/PBMs are restricted in how they use the data.
Sec. 9
Prohibition on Discriminatory Practices and Contracting (Anti-Discrimination and Permitted TPA Arrangements)
This section prohibits group health plans, health insurance issuers, and pharmacy benefit managers (PBMs) from discriminating against 340B covered entities or contract pharmacies. Prohibited actions include reimbursing at lower rates, imposing different fees or network restrictions, interfering with patient choice, requiring identification of 340B drugs outside the clearinghouse, or refusing to contract without equal justification. It also prohibits these entities from demanding a share of 340B discounts from covered entities. Separately, covered entities may only contract with third-party administrators (TPAs) if compensation is based on bona fide service fees, not a percentage of 340B revenue or drug volume. HRSA can levy civil monetary penalties for non-compliance.
Sec. 10
Ensuring HRSA has Adequate Resources to Oversee the Program (User Fee Program, Appropriations, and Direct Hire Authority)
This section establishes a user fee program, starting in FY 2027, where covered entities pay an annual fee of 0.1% of their previous year's 340B drug purchases. These fees are dedicated to HRSA for administering the 340B program, enhancing program integrity, and funding oversight activities, including the new data clearinghouse, system improvements, and audits. The bill also authorizes appropriations of $3 million annually for FY 2027-2031 for audits and investigations, and $9 million annually for FY 2028-2031 for general implementation. Additionally, it grants HRSA direct-hire authority for at least 20 qualified candidates to bolster management and oversight staff.
Sec. 11
Studies and Reports on 340B Program
This section mandates several studies and reports to Congress. The Secretary must conduct biennial studies on dispensing fees and reimbursements paid by health plans and PBMs, separated by payer type and 340B status. The Comptroller General (GAO) must study the distribution of the 340B discount among contract pharmacies, health plans, PBMs, third-party vendors, patients, and covered entities, with a report due in two years. GAO will also report on hospital debt collection practices (including 340B hospitals) and analyze state/local government contracts for private non-profit hospitals, charity care levels, the difference between aggregate reimbursement and acquisition costs for 340B drugs, and violations affecting Federally Qualified Health Centers.
Sec. 13
Requirements for Nonhospital Covered Entities and Subgrantees
This section establishes additional requirements for nonhospital covered entities (e.g., FQHCs, STD clinics) and their subgrantees. Nonhospital entities must be non-profit or public, purchase 340B drugs only for patients receiving services within the scope of their federal grant, and oversee their subgrantees. They are directly liable for subgrantee noncompliance and must have enforceable written agreements with subgrantees. Subgrantees must also be non-profit or public, have written agreements with the covered entity, maintain records of federal funds/in-kind contributions, and register their sites. Specific rules apply to subgrantees receiving in-kind contributions from certain covered entities, including a 'payor-mix' threshold and a plan for eligibility termination.
The definition of 'patient' requires the outpatient health care service to be 'reimbursable under title XVIII of the Social Security Act' (Medicare) or of a type eligible for such reimbursement. This ties 340B patient eligibility to Medicare's scope of services.
Sec. 2(a)(11)(A)(i)(I)
Why it matters:This is standard legislative practice for defining eligibility criteria by referencing existing federal programs, but its implications for 340B program scope are significant and easily overlooked.
Case for: Proponents argue that linking 340B patient eligibility to Medicare-reimbursable services provides a clear, established standard for what constitutes a legitimate health care service, helping to prevent abuse and ensure consistency across federal programs.
Case against: Critics might argue that tying 340B eligibility to Medicare's scope of services could be overly restrictive, potentially excluding services that are medically necessary or commonly provided by safety-net providers but are not covered by Medicare, thereby limiting patient access to discounted drugs.
Estimated impact: Potentially narrows the scope of services that qualify a patient for 340B, impacting an unknown number of prescriptions and patients.
The 'Community Need Standard' for child sites requires a child site to be physically located in a 'qualifying ZIP Code Tabulation Area' with a Community Vulnerability Score at or above the 50th percentile nationally or 40th percentile within its state. This uses the CDC/ATSDR Social Vulnerability Index (SVI) as a primary determinant of eligibility.
Sec. 4(a)(14)(B)(iii)(II)(aa)
Why it matters:This is a technical legislative mechanism to apply a data-driven standard, but the reliance on an external, complex index makes its real-world impact opaque to a casual reader.
Case for: Proponents argue that using an objective, publicly available index like the SVI ensures that 340B benefits are targeted to communities with the highest social vulnerability and health disparities, aligning the program with its safety-net mission and preventing expansion into areas of less need.
Case against: Critics contend that relying solely on a ZIP Code-level social vulnerability score may not accurately reflect the patient population served by a specific child site, especially if the site serves a high proportion of low-income or uninsured individuals from outside its immediate ZIP Code. They argue it could unfairly penalize sites that genuinely serve vulnerable populations but are located in areas with higher overall SVI scores.
Estimated impact: Could significantly reduce the number of eligible child sites, particularly those in suburban or urban areas that are not classified as highly vulnerable by the SVI, even if they serve a safety-net function.
For a period of four years from enactment, manufacturers must offer 340B ceiling prices as a reduction in purchase price (upfront discount) rather than through retrospective rebates. This obligation automatically concludes if the clearinghouse established in the section fails to meet specific performance benchmarks.
Sec. 8(a)
Why it matters:The temporary nature and contingency on clearinghouse performance make it a nuanced provision. It's a key concession to manufacturers but tied to a complex new system, making its ultimate impact dependent on future operational success.
Case for: Proponents (manufacturers) argue that upfront discounts, coupled with a functional clearinghouse, are essential to eliminate duplicate discounts and reduce administrative complexity. They contend it provides immediate financial relief and clarity, ensuring program integrity from the point of sale.
Case against: Critics (covered entities) might argue that shifting to upfront discounts could create cash flow challenges if the clearinghouse is not fully functional or if there are disputes over eligibility. They may also be wary of the temporary nature, fearing a return to retrospective rebates without full resolution of underlying issues.
Estimated impact: Temporarily alters the financial flow of billions of dollars in 340B discounts, shifting from post-purchase rebates to upfront price reductions, with the potential for this to become permanent if the clearinghouse performs well.
Prohibits group health plans, health insurance issuers, or PBMs from entering into contracts or arrangements with covered entities where the covered entity provides a share of any 340B discount or savings to the plan, issuer, or PBM. It also prohibits conditioning network participation or formulary placement on such agreements.
Sec. 9(c)
Why it matters:This provision directly addresses a specific business practice that has been a point of contention between 340B entities and PBMs/insurers. Its placement within a broader anti-discrimination section might make its specific impact less immediately apparent.
Case for: Proponents (covered entities) argue that 340B discounts are intended for safety-net providers to stretch scarce federal resources and should not be shared with or claimed by commercial payers. They contend this provision protects the integrity of the discount and ensures it benefits the covered entity's mission.
Case against: Critics (PBMs/insurers) might argue that they should be able to negotiate for a share of the discount, especially if they are managing the pharmacy benefit and contributing to the overall cost savings. They may view this as an interference with free-market contracting.
Estimated impact: Prevents potentially billions of dollars in 340B discounts from being shared with or claimed by commercial payers, ensuring these savings remain with covered entities.