​A fight over an embattled drug discount program is intensifying on Capitol Hill, as lawmakers weigh competing proposals to reshape the program amid escalating tensions between hospitals and drugmakers.

Lawmakers in both chambers have rolled out, or are planning to soon introduce, fresh proposals to alter the 340B program, which requires drug manufacturers sell deeply discounted drugs to safety net providers, including some hospitals and community health centers that serve large numbers of low-income patients.

The renewed push comes as industry and regulators move ahead with their own changes, with drugmakers imposing new conditions on access to discounts. And the Trump administration is considering a shift to a rebate model, which could require providers to pay full price for drugs and seek reimbursement after. 

The call for 340B changes stems from long-standing criticism that some providers, like large hospital systems, use the program to pad their bottom lines rather than serve their communities — a charge they deny while defending the discounts as a way to stretch limited federal resources to pay for low-income patients’ care.

“You have hospitals and pharma absolutely at it with each other,” said Amanda Pears Kelly, chief executive officer of Advocates for Community Health, a group that advocates for community health centers and supports changes to 340B.

The challenge, she said, is that Congress is at odds over whether — and how — to act.

Congressional proposals released in recent weeks would limit some of the actions taken by drugmakers but would also include changes that hospitals have traditionally opposed.

Reps. Scott Peters, D-Calif., and John Joyce, R-Pa., earlier this month introduced one of the most comprehensive 340B proposals yet, aimed at threading the needle between providers and pharmaceutical companies. The bill would block drug companies from using rebate models for four years, while establishing a definition of “patient.” 

The debate over who qualifies as a patient eligible for discounted drugs — and whether providers can use contract pharmacies to dispense them — has been among the diciest issues shaping the program’s future. Some providers want to use contract pharmacies to dispense 340B drugs but recently have been prohibited from doing so by drugmakers. The bill would set standards for them without limiting their use.

The lawmakers are both members of the House Energy and Commerce Committee, which has jurisdiction over health.

Pharmaceutical Research and Manufacturers of America, the main lobbying group for drugmakers, said it has concerns with some provisions in the draft, though it didn’t elaborate.

Competing legislation

Meanwhile, a bipartisan Senate working group focused on 340B is expected to release another draft before the August recess, according to several people familiar with the matter.

The group, consisting of Sens. Jerry Moran, R-Kan., Tammy Baldwin, D-Wis., Shelley Moore Capito, R-W.Va., John Hickenlooper, D-Colo., Tim Kaine, D-Va., and John Boozman, R-Ark., released a draft in 2023 that left some of the most difficult questions unanswered, including how to define a patient and how to address contract pharmacies.  

And outgoing Sen. Bill Cassidy, R-La., introduced a 340B discussion draft last month that is viewed as more favorable to drugmakers.

It would allow manufacturers greater flexibility in how they deliver discounts, including through rebate models, and would limit the use of contract pharmacies by requiring they be within a provider’s service area. Provider groups largely oppose the legislation, wary of anything that would narrow their participation in the program.

That follows action this month by the House Ways and Means Committee to advance a bill that would require additional reporting from hospitals participating in 340B. The proposal has raised concerns about how that information would be used.

“We want a long-term program guarantee,” said Jillanne Schulte Wall, senior director of health and regulatory policy at the American Society of Health-System Pharmacists.

She said the organization is open to transparency, but questions remain about how the data would ultimately be used. “Whatever happens to the program, it needs to be maintained in a way that keeps things stable,” she said.

The House Energy and Commerce Committee, which has primary jurisdiction over 340B, has not committed to holding hearings on the proposals, according to a source familiar.

‘Wild West’

The issue, hitting in an election year, has fueled multimillion-dollar lobbying and advertising campaigns between the two main players: hospitals and pharmaceutical companies. Overall, several lobbyists and staff working on the issue say they do not expect action this year, given limited legislative days remaining and lingering disagreements over some of the program’s most contentious issues.

“Potentially, all of these bills and drafts will lay the groundwork for additional work in the new Congress,” said Aimee Kuhlman, vice president of advocacy, grassroots and government relations for the American Hospital Association.

In the meantime, uncertainty continues to cloud the program and strain providers as drugmakers change how they deliver discounts.

“It has become the Wild West to a certain extent,” Kuhlman said.

The administration has said it is “reconsidering” whether it will move to a rebate model, which would require providers to pay full price for drugs upfront and then seek reimbursement for the 340B discount — a major shift from how the program has operated for decades.

Lobbying efforts to include language blocking that rule in a spending bill were unsuccessful. This month, the administration also proposed significant cuts to Medicare Part B reimbursement for 340B drugs.

A large concern for hospitals arose when Eli Lilly and Co. earlier this month said it would block 340B discounts to providers that do not submit additional claims data, a major escalation in the long-running fight over the program.

Hospital groups say that approach creates significant administrative and financial burdens. At least one impacted hospital, Tampa General, filed a lawsuit against Lilly last week.

A group of lawmakers, led by Reps. Doris Matsui, D-Calif., and Jack Bergman, R-Mich., urged the Health Resources and Services Administration, which oversees the 340B program, to take “immediate action” to block the move.

The agency has not yet acted, and a spokesperson said it is reviewing the policy to determine next steps. Matsui has also introduced legislation that would require drug manufacturers to provide 340B discounts to covered entities regardless of whether they use contract pharmacies, while barring manufacturers from imposing additional conditions on those discounts.

Drug manufacturers have also restricted entities’ use of contract pharmacies, which has further fueled the dispute, including in the courts.

The uncertainty especially impacts health centers, said Pears Kelly of Advocates for Community Health, which supports the Peters-Joyce bill. Upcoming changes to Medicaid coverage and financing will also strain health centers, so doing nothing is no longer an option, she said.

“In the meantime, we’re bleeding out and no one is doing anything,” she said. ​