With an increase in both prescription use and drug prices, many states sought to improve access to affordable medications in their 2025 legislative session, including bills targeting the 340B program. The 340B program is vital for safety net providers, like Community Health Centers (CHCs), to purchase outpatient drugs at significantly reduced costs. CHCs are the largest primary care network nationwide and serve as the safety net for millions of patients in underserved communities. However, ongoing actions by drug manufacturers threaten patient access to essential medicines and divert savings away from patient care. CHCs are losing mission-critical funds due to discriminatory contracting practices by pharmacy benefit managers (PBMs) and contract pharmacy restrictions.
This past legislative session saw a flurry of activity protecting contract pharmacies, and a novel but growing push for more data reporting from covered entities on the state level. So far, 37 states have enacted laws to protect CHC 340B savings, and 11 have passed laws with 340B data reporting requirements. This blog provides a brief overview of the trends from the states’ legislative sessions in 2025. For more information, see NACHC’s state legislation 340B tracker.
More Contract Pharmacy Protections Will Improve Access to Affordable Medications
Many CHCs lack the financial resources to operate an entity-owned pharmacy and depend on contracts with local pharmacies to fill patient prescriptions. Unfortunately, drug manufacturers have imposed restrictions that have hindered CHC’s use of contract pharmacies. Arkansas became the first state to pass legislation in 2021 prohibiting manufacturers from restricting access to 340B discounted drugs at contract pharmacies. As of the publication of this blog, 21 states have enacted these laws, with many passing in 2025. While most contract pharmacy bills appear similar, there are some differences among the 2025 bills:
- Tennessee’s law only applies to drugmaker restrictions placed after July 2025.
- New Mexico’s protections only apply to CHCs.
- Some state bills included additional provisions around reporting requirements and hospital price caps (the maximum that can be charged for a drug).
While federal action on contract pharmacy protections remains stalled, states can pass legislation to protect contract pharmacies and ultimately improve patients’ access to affordable medications.
Additional Reporting Requirements May Increase Administrative Burden on Pharmacies
In addition to the required annual reporting to HRSA’s Uniform Data System (UDS), CHCs also report data to stay compliant with the 340B program. CHCs are also statutorily required to reinvest every penny of 340B savings directly into patient care. As scrutiny has increased on how covered entities use 340B savings, nearly a dozen states have passed legislation in 2025 with 340B data reporting requirements, both through standalone and inclusions in contract pharmacy protection bills. These requirements vary by state and differ in which entities need to report and what information they must provide, including information on how 340B savings are used to benefit patients, total 340B prescription cost, and information on their contract pharmacies:
- Idaho, Indiana, Ohio, Rhode Island, and Hawaii all passed 340B reporting requirements for CHCs in 2025.
- Colorado, Maine, and Vermont’s 340B reporting requirements also passed, but only applied to hospitals.
CHCs support transparency in the 340B program. However, these requirements can add administrative burden to safety net providers with limited financial resources and an existing, strained workforce. Through the health center program, CHCs already report data about patient population, sliding fee discounts, and other services that directly support patient care. In many states, implementation has only just begun, so the true burden has yet to be seen. As CHCs differ from other providers in the 340B program, the data collected and shared should continue to tell the story of how CHCs are responsible stewards of the 340B program.
Additional Legislation and State Budget Provisions Could Predict Future Trends
Although there were observable trends in state 340B actions in 2025, emerging activities in some states may be a sign of proposals to come:
- Indiana’s state budget included a provision that would allow the state Medicaid agency to determine whether 340B drugs prescribed to a small subset of Medicaid managed care patients would get an upfront 340B discount or be subject to a rebate.
- Connecticut’s bill, which died in committee, would have allowed the state to withhold Medicaid funding from CHCs if they did not report how 340B savings are used to benefit patients.
States may look for other ways to creatively cut down on state spending through targeting the 340B program.
What’s next?
While these trends represent the first half of 2025, 2026 may see:
- Continued lawsuits: A signed bill does not mean a done deal; many states have faced lawsuits from drug manufacturers arguing issues like federal preemption, due process, and unconstitutional vagueness. We will continue seeing rulings and legal challenges that further shape the landscape.
- Legislation Carryover: Some states do not carry over introduced bills. As the 2025 session concludes, lawmakers must reintroduce bills for any further action. However, 2025 marked the start of the ‘odd year carryover’ for some states, meaning bills that have not been voted on in the 2025 session could still be acted upon.
- Federal action: As we await more information on the 340B rebate pilot program, the future of how CHCs can use 340B savings to support patient care is uncertain. We may also see increased federal activity and appetite for 340B-related bills on Capitol Hill.
NACHC Resources
NACHC’s State and Regulatory Affairs teams are here to support Primary Care Associations (PCAs) and CHCs as they work to protect 340B savings. NACHC hosts monthly 340B calls, sharing federal, state, and litigation updates and focus topics. Contact Regulatory Affairs at [email protected] if you have any questions.