Skip to main content Back to Top

ASHP's Model 340B Nondiscrimination Legislation

State Legislative Policy

September 8, 2022

An Act prohibiting PBMs from discriminating against hospitals and patients participating in the 340B drug discount program.

(a) In this section “340B covered entity” means an entity participating in the federal 340B drug discount program, as described in 42 U.S.C. § 256b, including its pharmacy or pharmacies, or any pharmacy or pharmacies, contracted with the participating entity to dispense drugs purchased through such program.

(b) A pharmacy benefit manager or other third party that reimburses a 340B covered entity for drugs shall not:

(1) reimburse the 340B covered entity for a drug at a rate lower than that paid for the same drug to entities that are not 340B covered entities;
(2) assess any fee, charge-back, or other adjustment on the 340B covered entity on the basis that the covered entity participates in the 340B program; 
(3) restrict participation in a pharmacy or provider network based on an entity’s status as a 340B covered entity;
(4) require the 340B covered entity to enter into a contract with a specific pharmacy to participate in the pharmacy benefit manager or third party’s pharmacy or provider network; 
(5) require a claim for a drug to include a modifier, supplemental transmission,  to indicate that the drug is a 340B drug, or any other method of identifying the claim for a 340B drug, unless the claim is for payment, directly or indirectly, by Medicaid; or
(6) impose coverage or benefits limitations, or require an enrollee to pay an additional fee, higher copay, higher coinsurance, second copay, second coinsurance, or other penalty when obtaining a drug from a 340 covered entity;
(7) interfere with the patient's right to choose to obtain a drug from a 340B covered entity, including inducement, steering, or offering financial or other incentives.


Key Elements:

  • Define 340B covered entity to include all of a covered entity’s contract pharmacies;
  • Prohibit PBMs and plans from requiring modifiers for 340B drugs unless those drugs are purchased specifically for Medicaid and could result in a duplicate discount;
  • Prohibit PBMs and plans from excluding 340B covered entities (including their contract pharmacies) from networks;
  • Prohibit differential payment for drugs solely on the basis of 340B status;
  • Prohibit PBMs/plans from conditioning payment for 340B drugs on the use of a specific data system or claims platform. 
  • Ensure that patients can utilize the pharmacy of their choice and cannot be penalized or steered away from 340B covered entities; and 
  • Create meaningful enforcement penalties for PBMs or plans that violate nondiscrimination prohibitions.