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Attorney General William Tong


Attorney General Tong Leads Letter to Senators Urging Reforms to Strengthen 340B Drug Discount Program

(Hartford, CT) – Attorney General William Tong today led 23 attorneys general signing a letter to a bipartisan coalition of United States senators urging them to reform and strengthen the 340B Drug Pricing Program to ensure that essential “safety net” health providers can more effectively provide affordable medicines and a comprehensive range of health-related services to financially vulnerable patients. The letter responds to a Request for Information (RFI) issued by the senators last month seeking to improve the integrity and sustainability of this vital affordable drug and healthcare program.

Created by a bipartisan Congress in 1992, the 340B Program has been a lifeline to low-income patients and community-based health centers, clinics, and hospitals who serve them by ensuring access to care and medication that might otherwise be unaffordable. Overseen by the Health Resources Services Administration (HRSA) operating within the United States Health and Human Services Department (HHS), the 340B Program requires drug manufacturers participating in Medicare and Medicaid to provide discounted drugs to eligible “covered entities” serving financially vulnerable patients, including community health centers, nonprofit and public hospitals, and Ryan White HIV/AIDS clinics. These “covered entities” can either dispense discounted drugs to low-income patients through their in-house pharmacies or through outside pharmacies with which they contract.

The ability for patients of 340B covered entities to obtain expensive but medically necessary drugs at an affordable cost, including through outside “contract” pharmacies, is critical for underserved patients who may have limited access to transportation, live in remote or rural areas, or are confined to their homes. In recent years, drug makers who have voluntarily agreed to participate in the 340B Program and state Medicaid programs have undermined the integrity and operation of the program by flouting federal requirements. As of July 2023, no fewer than 24 drug makers have imposed potentially unlawful conditions on or have outright refused to offer covered drugs to clinics and other covered entities that rely on outside pharmacies as a key mechanism for the delivery of lifesaving drugs to eligible patients, including those who rely on mail-order pharmacies.

Drug manufacturers have justified unilaterally imposing restrictions on 340B covered entities’ use of contract pharmacies to dispense medications on exaggerated claims that either duplicate discounts could be applied, or that contract pharmacies are selling discounted 340B drugs to ineligible patients. The 340B statute already bans such duplicate discounting and diversion.

“Contract pharmacies enable federally qualified health centers (FQHCs), other community health centers, clinics, and public hospitals to carry out their critical role as covered entities by increasing patient access to the benefits of the 340B drug pricing program by allowing their patients to obtain medications at accessible and convenient locations. Additionally, the option to use contract pharmacies allows smaller, but critically important, covered entities such as community health centers and clinics to participate in the 340B Program even if they are unable to offer in-house pharmacy services, or if they want to supplement in-house pharmacy services to a broad set of underserved patients across a wide geographic area,” the attorneys general state.

“Simply put, the unilaterally imposed conditions by drug manufacturers have created enormous barriers to the purchase of common, yet lifesaving and life-sustaining drugs, and drug manufacturers’ purported policy reasons for imposing these restrictions—diversion and duplicate discounts—are not a credible basis for engaging in this type of “self-help” to the detriment of 340B covered entities and their patients. Instead of streamlining the operation of the 340B program, drug manufacturers have changed their requirements and conditions relating to the use of contract pharmacies with limited or no notice to covered entities, who are expected to immediately comply, regardless of the resulting administrative burdens,” the letter states.

The letter also acknowledges the current lack of program transparency regarding whether 340B program savings really are benefitting underserved patients as Congress expressly intended in creating the program. To remedy this program vulnerability, the letter recommends that Congress grant HRSA clear statutory authority to harmonize existing reporting requirements for each type of 340B covered entity, and also that Congress mandate that 340B all covered entities minimally report the aggregated acquisition costs for purchasing drugs under the 340B Program, the aggregated payment amount received for drugs obtained under the 340B Program, and the aggregated payment made to contract pharmacies to dispense drugs obtained under the 340B Program.

The letter concludes by urging Congress to reaffirm its historically strong support for the 340B Program, and to give HRSA the authority to effectively oversee the program. These statutory, regulatory and budgetary reforms will strengthen the 340B Program in critical ways, the attorneys general conclude, “by adding accountability and transparency, reducing ambiguity and confusion, and allowing covered entities to go back to what they do best – treating and caring for patients.”

The letter was led by Connecticut and joined by the attorneys general of Arizona, Colorado, Delaware, Hawaii, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Wisconsin, District of Columbia.

Assistant Attorneys General Rahul Darwar and Karla Turekian assisted the Attorney General in this matter.

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