Drugmakers tighten 340B oversight as providers fume

Drugmakers tighten 340B oversight as providers fume

Crain’s Chicago Business

By Bridget Early

March 9, 2026

Drugmakers are upping their demands for transparency in the 340B Drug Pricing Program by imposing new requirements that have sparked ire among safety-net providers locally and nationally.

The decades-old program that provides deeply discounted drugs to a wide array of providers that serve low income patients is facing changes because the pharmaceutical industry says the program has seen out of control growth. However, safety nets say restricting the discounts could devastate the health care system.

In Illinois, a coalition of federally qualified health centers, safety-net hospitals and pharmacies are pushing to advance HB 2371 in the General Assembly to prevent drug makers from making changes to the program.

The bill would prevent manufacturers from denying, restricting, or interfering with covered entities’ ability to obtain and deliver 340B drugs, including through contract pharmacies.

HB 2371 has been passed out of committee and has strong bipartisan support, sponsor state Rep. Rep. Anna Moeller, D-Elgin, said at a recent rally, but faces a remaining hurdle of state house concurrence and heavy lobbying from the pharmaceutical industry.

Moeller said the bill, called the Patient Access to Pharmacy Protection Act, is needed because manufacturer restrictions undermine how 340B is delivered.

She argued that the recent wave of pharmaceutical manufacturer limits and barriers doesn’t just create paperwork problems; it directly interferes with patient access and strains safety-net operations.

One such restriction came last week when Novo Nordisk issued a notice to hospitals and other 340B participants saying providers will be required to submit comprehensive claims-level data in order to receive discounts on medications starting April 1. A similar Eli Lilly policy took effect last month.

Drugmakers’ actions come shortly after a federal court put a stop to a Health Resources and Services Administration pilot program to test replacing 340B discounts with rebates. The agency is developing a new rebates plan.

Drug companies say their goal is to ensure that the right discounts go to the right providers and are not duplicated. To providers that participate in 340B, this is merely another effort to limit access to lower-priced medicines.

“It is hard to read this development as anything but the latest step in pharma’s effort to undermine this program that funds safety-net healthcare,” Stephanie Krenrich, senior vice president of policy and government affairs for the community health center association Advocates for Community Health, wrote in an email.

In addition, these policies will significantly increase administrative costs for providers, said Maureen Testoni, president and CEO of 340B Health, which represents hospitals.

Qualifying safety-net providers get 25%-50% discounts on prescription medications under 340B, and participants stress that these price cuts are vital to their finances.

But the number of providers utilizing 340B and the value of the drug discounts has ballooned over time. Drugmakers contend that too many providers are allowed in the program and that they often get price cuts on medicines already discounted under Medicaid or other programs.

Notably, Novo Nordisk and Eli Lilly are applying the new reporting requirements to contract pharmacies and in-house pharmacies, which previously were exempt.

Novo Nordisk will limit access to discounts until claims data are submitted, the company wrote in its memo. The policy does not change what entities qualify for 340B pricing, nor does it restrict the quantity of drugs purchased at those rates, a company spokesperson said.

Eli Lilly has observed “illegal duplicate discounts between 340B and Medicaid and other inappropriate duplicate discounts with contract pharmacies,” a spokesperson wrote in an email. The new policy will help the company capture a fuller picture of those duplicate discounts, the spokesperson wrote.

The pharmaceutical company Exelixis has enforced a similar rule since October.

The 340B Drug Pricing Program isn’t adequately overseen and rule violations aren’t penalized, a Pharmaceutical Research and Manufacturers of America spokesperson wrote in an email.

“Big hospitals are opposing efforts to increase program transparency so they can maximize profits when they buy deeply discounted medicines and mark them up, sometimes by thousands of dollars,” the spokesperson wrote. “If hospitals refuse to share even basic data, it raises a simple question: What are they trying to hide?”

Program oversight is HRSA’s responsibility, not the drug industry’s, the American Hospital Association and Advocates for Community Health maintain. Moreover, providers contend, these drugmakers’ new reporting requirements are unlawful.

HRSA needs to step in, AHA General Counsel and Secretary Chad Golder wrote in a letter to Administrator Thomas Engels on Tuesday.

“HRSA’s silence at this critical moment is troubling. We hope that HRSA will take immediate enforcement action, including the use of civil monetary penalties, against both Lilly and Novo to halt their new policies,” Golder wrote. “But if HRSA is not going to take such action, it must let 340B hospitals and other stakeholders know that and explain why these new policies are lawful under the 340B statute.”

HRSA might face lawsuits from either side depending upon its response, Testoni said. Providers could sue the agency if it allows the drugmaker requirements to move forward, while the pharmaceutical companies may sue if it doesn’t, she said.

If enough pharmaceutical companies adopt the same approach, it could lead to fewer drug discounts, said Greg Fliszar, a shareholder at the law and lobbying firm Baker Donelson. Combining this with a rebates program could further reduce safety-net providers’ access to lower-cost medications, he said.

“It almost seems to be giving the drug manufacturers a lot of oversight as to how these discounts are going to work,” Fliszar said. “Some could argue that’s the fox guarding the henhouse.”

HRSA did not respond to a request for comment.