Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

HHS Issues Opinion Regarding Illegal Attempts by Drug Manufacturers to Deny 340B Discounts under Contract Pharmacy Arrangements

Client Alert

The federal 340B discount drug program is a safety net for many federally qualified health centers, disproportionate share hospitals, and other covered entities. This program allows these providers to obtain discount pricing on drugs which in turn allows the providers to better serve their patient populations and provide their patients with access to vital health care services. Over the years, the 340B program has faced intense scrutiny, particularly by drug manufacturers who are required by federal law to provide the discounted pricing.

Ongoing struggles between covered entities and drug manufacturers continued in 2020 when six manufacturers unilaterally decided to deny 340B discount drug pricing to covered entities utilizing contract pharmacy arrangements. This led to lawsuits filed by the American Hospital Association and a national network of HIV/AIDS clinics in the Fall of 2020. The battle between the covered entities and drug manufacturers took a unique twist on December 30, 2020 when the U.S. Department of Health and Human Services issued Advisory Opinion 20-06, which instructed that drug manufacturers were not legally permitted to deny the discounted 340B pricing to contract pharmacy arrangements. 

The HHS Advisory Opinion made three key conclusions:

  1. The plain language of the 340B Statute requires manufacturers to provide the 340B discounted pricing to covered entities independent of whether the covered entity chooses to utilize a third-party contract pharmacy to dispense the drugs.
  1. The purpose and history of the 340B program indicate that contract pharmacies have always been an integral part of the 340B program and HHS’s longstanding interpretation of the 340B statute and regulations has recognized the legitimate use of contract pharmacies.
  1. Manufacturers are inappropriately attempting to circumvent the 340B program’s standing procedures for resolving disputes between manufacturers and covered entities by unilaterally excluding contract pharmacy arrangements from their 340B discount drug pricing.

While the HHS Advisory Opinion does not have the binding effect of law, it should be noted that HHS, through its Health Resources and Services Administration (“HRSA”), oversees the 340B program. Only time will tell if the Advisory Opinion will persuade drug manufacturers to resume 340B pricing to covered entities utilizing contract pharmacy relationships. Stay tuned for future developments.

If you are interested in learning more about the 340B discount drug program or collaborative strategies to enhance patient care opportunities for 340B covered entities, please contact BMD Healthcare and Hospital Law Member Jeana M. Singleton at jmsingleton@bmdllc.com or 330-253-2001, or any member of the BMD Healthcare and Hospital Law group

For an update on actions the state of Ohio is taking to reduce predatory practices of PBMs, see BMD Healthcare and Hospital Law Member Daphne Kackloudis' article, SB 263 Protects 340B Covered Entities from Predatory Practices in Ohio.


Ohio Board of Pharmacy | Administrative Code Rule Changes

The Ohio Board of Pharmacy (“BOP”) recently posted notices of Ohio Administrative Code rule changes related to record keeping and the sale and distribution of certain ephedrine-containing products.

A Shift in Coverage: HHS Reinterprets “Federal Public Benefit” Under PRWORA

The U.S. Department of Health and Human Services rescinded a 1998 interpretation of “federal public benefit” used in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) on July 10, 2025. This notice removes "outdating exclusions" and includes additional programs under “federal public benefit."

Supreme Court Upholds Coverage under the Affordable Care Act

The U.S. Supreme Court has upheld the authority of the U.S. Preventive Services Task Force under the ACA, ensuring continued no-cost coverage for over 100 preventive health services. The decision impacts millions of Americans and preserves provider reimbursement through insurance.

Health Care Providers Take Note: Federal Budget Brings Medicaid and Staffing Rule Changes

The 2025 federal budget introduces significant changes for health care providers and Medicaid recipients, including new cost-sharing requirements, work eligibility mandates, rural health grants, and a pause on minimum staffing rules.

Key Healthcare Provisions in Ohio’s 2026–2027 Budget

Ohio’s newly enacted biennial budget (HB 96) for FY 2026–2027 brings sweeping changes for healthcare providers across the state. The law includes new Medicaid eligibility requirements, reporting mandates, funding directives, and social policy provisions. Several vetoes by Governor DeWine also affect healthcare-related initiatives.