119-hr5256

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5256 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 5256

To amend the Public Health Service Act to reform the 340B drug pricing 
 program, and for other purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 September 10, 2025

Mr. Carter of Georgia (for himself and Mrs. Harshbarger) introduced the 
 following bill; which was referred to the Committee on Energy and 
 Commerce, and in addition to the Committee on Ways and Means, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
 committee concerned

_______________________________________________________________________

 A BILL

To amend the Public Health Service Act to reform the 340B drug pricing 
 program, and for other purposes.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``340B Affording 
Care for Communities and Ensuring a Strong Safety-net Act'' or the 
``340B ACCESS Act''.

    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

Sec. 2. Definitions.

Sec. 3. Prevention of Medicaid duplicate discounts; oversight of 
 covered entities.

Sec. 4. Hospital child site requirements.

Sec. 5. Contract pharmacies.

Sec. 6. Ensuring patient affordability of drugs purchased under 

section 340B.

Sec. 7. Requirements for nonhospital covered entities and subgrantees.

Sec. 8. Claims modifiers; covered entity data submission.

Sec. 9. Covered entity reporting on scope of grant, contract, and 
 project.

Sec. 10. Ensuring covered entity transparency.

Sec. 11. Revisions to existing 340B hospital eligibility requirements.

Sec. 12. Additional requirements for 340B hospitals.

Sec. 13. 340B program.

Sec. 14. Audits of private nonhospital contracts with State and local 
 governments.

Sec. 15. Ensuring covered entity compliance with transparency 
 requirements.

Sec. 16. 340B claims data clearinghouse.

Sec. 17. Limitation on administrator service fees and contract pharmacy 
 fees.

Sec. 18. Clarification.

Sec. 19. Ensuring the equitable treatment of 340B covered entities and 
 pharmacies participating in the 340B drug 
 discount program.

Sec. 20. Effective date.

SEC. 2. DEFINITIONS.

    (a) Definition of Patient.--

Section 340B

    (b) of the Public Health 
Service Act (42 U.S.C. 256b

    (b) ) is amended by adding at the end the 
following:
 ``

    (3) Patient.--
 ``
        (A) In general.--In this section, the term 
 `patient' means, with respect to a covered entity 
 described in subsection

    (a)

    (4) , an individual who, on a 
 prescription-by-prescription or order-by-order basis--
 ``
            (i) is dispensed or administered a 
 covered outpatient drug that is--
 ``
            (I) directly related to the 
 service described in clause
            (iii) ;
 ``
            (II) ordered or prescribed by a 
 covered entity provider described in 
 clause
            (ii) as a result of the service 
 described in clause
            (iii) ; and
 ``
            (III) dispensed or administered 
 on site at a covered entity location, a 
 child site (as defined in subsection

    (a)

    (5)
        (E) ), or an entity pharmacy (as 
 defined in subsection

    (a)

    (5)
        (F) ) listed 
 in the identification system described 
 in subsection
            (d) (2)
        (B)
            (iv) , or on site 
 at a contract pharmacy in accordance 
 with subsection

    (a)

    (5)
        (F) or dispensed 
 through a mail order pharmacy in 
 accordance with subsection

    (a)

    (5)
        (F) ;
 ``
            (ii) receives the health care service 
 described in clause
            (iii) from a `covered 
 entity provider', meaning a health care 
 professional who either--
 ``
            (I) is an employee or independent 
 contractor of the covered entity, such 
 that the covered entity bills for 
 services furnished by the health care 
 professional and is responsible for the 
 care furnished by such professional; or
 ``
            (II) furnishes health care 
 services under an ongoing contractual 
 obligation to the covered entity such 
 that responsibility for the care 
 provided remains with the covered 
 entity and meets the other requirements 
 in this paragraph, in the event State 
 law prohibits or otherwise 
 substantially limits the ability of the 
 covered entity to bill for services of 
 the health care professional;
 ``
            (iii) receives a covered outpatient drug 
 in connection with a health care service 
 furnished at the covered entity (including a 
 child site) and such drug and service are paid 
 by the insurer or third-party payor as 
 outpatient items and services (or where third-
 party reimbursement is not made, such items and 
 services are deemed outpatient if less than 24 
 hours have elapsed between such individual's 
 hospital registration and discharge);
 ``
            (iv) is described in a category of 
 individuals within the scope of, and receives a 
 health care service at the covered entity 
 (including a child site) that is within the 
 scope of--
 ``
            (I) the Federal grant, project, 
 or Federal grant-authorizing statute, 
 as applicable, that qualifies such 
 entity for participation in the program 
 under this section, if the covered 
 entity is described in one of 
 subparagraphs
        (A) through
        (K) of 
 subsection

    (a)

    (4) ; or
 ``
            (II) the contract as required in 
 paragraphs

    (4)
            (L) 
            (i) and

    (11) of 
 subsection

    (a) , if the covered entity 
 is a private nonprofit hospital which 
 has, as the basis for participating in 
 the program under this section, a 
 contract with a State or local 
 government to provide health care 
 services to specified individuals, 
 provided that clause
            (iv) shall not 
 apply with respect to a covered entity 
 described in subsection

    (a)

    (4)
        (N) or a 
 sole community hospital described in 
 subsection

    (a)

    (4)
        (O) ; and
 ``
            (v) has an ongoing relationship with the 
 covered entity such that the covered entity 
 creates and maintains auditable health care 
 records which demonstrate compliance with this 
 paragraph and that the covered entity--
 ``
            (I) has a provider-to-patient 
 relationship with the individual;
 ``
            (II) is responsible for the 
 individual's health care service that 
 resulted in the prescription or order 
 for the drug; and
 ``
            (III) (aa) has provided a health 
 care service to the individual through 
 an in-person visit within the past 12 
 months, if the covered entity is a 
 hospital described in subparagraph
            (L) or subparagraph
            (M) of subsection

    (a)

    (4) or is a rural referral center 
 described in subparagraph
        (O) of such 
 subsection; or
 ``

    (bb) has provided a health care 
 service to the individual through an 
 in-person visit within the past 24 
 months, if the covered entity is 
 described in one of subparagraphs
        (A) through
        (K) of subsection

    (a)

    (4) , 
 subparagraph
        (N) of such subsection, or 
 is a sole community hospital described 
 in subparagraph
        (O) of such subsection.
 ``
        (B) Telehealth and telemedicine.--
 ``
            (i) In general.--A prescription for a 
 covered outpatient drug resulting from a health 
 care service furnished to an individual through 
 telehealth, telemedicine, or other remote 
 health care service arrangements shall not 
 qualify for pricing described in subsection

    (a)

    (1) unless--
 ``
            (I) the covered entity (including 
 child site, as applicable) at which 
 such service is furnished is a covered 
 entity (or a child site of a covered 
 entity, as applicable) described in one 
 of subparagraphs
        (A) through
        (K) of 
 subsection

    (a)

    (4) , subparagraph
        (N) of 
 such subsection, or is a sole community 
 hospital described in subparagraph
        (O) of such subsection; and
 ``
            (II) subject to the exception in 
 clause
            (ii) , a covered entity provider 
 has conducted an in-person examination 
 of the individual within the 6-month 
 time period immediately preceding the 
 health care service resulting in the 
 prescription or order for the drug.
 ``
            (ii) Exception.--The requirement in 
 clause
            (i) 
            (II) shall not apply with respect to 
 an individual for whom the covered entity 
 maintains auditable records sufficient to 
 demonstrate that such entity verified such 
 individual is determined eligible for benefits 
 under either title II of the Social Security 
 Act or title XVI of such Act in accordance with 
 the provisions of such applicable title.
 ``
            (C) Prescriptions from non-covered entity 
 providers ineligible.--
 ``
            (i) In general.--Subject to the exception 
 for care coordination described in clause
            (ii) , 
 a covered outpatient drug prescribed or ordered 
 for an individual by a health care professional 
 who is not a covered entity provider shall not 
 qualify for pricing described in subsection

    (a)

    (1) .
 ``
            (ii) Exception for care coordination.--In 
 the case of a covered outpatient drug 
 prescribed or ordered for an individual 
 resulting from care coordination provided by 
 the covered entity, all requirements in 
 subparagraph
        (A) shall apply, except for 
 clauses
            (i) 
            (I) ,
            (i) 
            (II) ,
            (ii) ,
            (iii) , and
            (v) 
            (II) of such subparagraph. For purposes of 
 this paragraph, `care coordination' shall refer 
 to the sequence of occurrences described in 
 this clause for which a covered entity 
 maintains documentation sufficient to 
 demonstrate that--
 ``
            (I) a covered entity provider 
 evaluates and recommends to the 
 individual, during an encounter at the 
 covered entity (including child site, 
 as applicable), that such individual 
 receive a specified type of specialty 
 health care not available at the 
 covered entity and such recommendation 
 is contemporaneously documented, at the 
 time of such encounter, in the medical 
 record the covered entity creates and 
 maintains for such individual;
 ``
            (II) within one year of the date 
 of the encounter and recommendation 
 described in subclause
            (I) , the 
 individual receives a health care 
 service from a medical specialist of 
 the type described in such 
 recommendation;
 ``
            (III) within the time period 
 specified in subclause
            (II) , the 
 covered entity provider making the 
 recommendation receives, directly from 
 the medical specialist that furnishes 
 the health care service described in 
 subclause
            (II) , written documentation 
 specifying the service or services 
 furnished to such individual and the 
 diagnoses made in connection with such 
 service or services; and
 ``
            (IV) the covered entity retains 
 overall responsibility for the care of 
 the individual.
 ``
            (iii) Covered entity eligibility for care 
 coordination.--Notwithstanding any other 
 provision in this section, a covered entity 
 shall not qualify for pricing described in 
 subsection

    (a)

    (1) with respect to a 
 prescription or order for a covered outpatient 
 drug resulting from care coordination provided 
 by the covered entity unless such covered 
 entity--
 ``
            (I) is described in subparagraph
        (N) of subsection

    (a)

    (4) ;
 ``
            (II) is a sole community hospital 
 described in subparagraph
        (O) of such 
 subsection; or
 ``
            (III) is described in one of 
 subparagraphs
        (A) through
        (K) of such 
 subsection, is not a specified 
 nonhospital covered entity (as defined 
 in subsection

    (b)

    (4) ), and has a 
 Federal grant that requires such entity 
 to contract or refer for the health 
 care service or services furnished to 
 the individual by the medical 
 specialist described in clause
            (ii) .
 ``
            (D) Health care service required.--For purposes 
 of this section, an individual shall not be considered 
 a patient of the covered entity described in subsection

    (a)

    (4) if the individual receives from the covered 
 entity only the administration or infusion of a drug or 
 drugs, or the dispensing of a drug or drugs for 
 subsequent self-administration or administration in the 
 home setting, without a covered entity provider-to-
 patient encounter involving the provision of a health 
 care service.''.

    (b) Definition of Specified Nonhospital Covered Entity.--

Section 340B

    (b) of the Public Health Service Act (42 U.S.C. 256b

    (b) ) is further 
amended by adding at the end the following:
 ``

    (4) Specified nonhospital covered entity.--In this 
 section, the term `specified nonhospital covered entity' means 
 a covered entity that--
 ``
        (A) is described in one of subparagraphs
        (B) through
        (K) of subsection

    (a)

    (4) , other than a covered 
 entity described in subparagraph
        (G) of such 
 subsection, and--
 ``
            (i) has average annual operating revenues 
 exceeding $1,000,000,000 calculated over the 
 most recent three-year period for which data 
 are available, which revenue threshold shall be 
 adjusted for inflation annually to reflect rate 
 of change in the Consumer Price Index for All 
 Urban Consumers published by the Bureau of 
 Labor Statistics; or
 ``
            (ii) is an affiliate of a hospital; or
 ``
        (B) is described in subsection

    (a)

    (4)
        (A) and 
 becomes affiliated with a hospital on or after December 
 1, 2024.
 For purposes of this definition, the term `affiliate' shall 
 mean an entity that, directly or indirectly, controls, is 
 controlled by, or is under common control with the referenced 
 entity, including the referenced entity's parent, and the term 
 `control' shall mean the power to direct the management and 
 policies of an entity, directly or indirectly, whether through 
 the ownership of voting securities, by contract, or 
 otherwise.''.

SEC. 3. PREVENTION OF MEDICAID DUPLICATE DISCOUNTS; OVERSIGHT OF 
 COVERED ENTITIES.

 

Section 340B

    (a)

    (5) of the Public Health Service Act (42 U.S.C. 
256b

    (a)

    (5) ) is amended--

    (1) in subparagraph
        (A) --
        (A) in clause
            (ii) , by striking ``The Secretary'' 
 and inserting ``Subject to subsection
            (d) (2)
            (C) , the 
 Secretary''; and
        (B) by adding at the end the following:
 ``
            (iii) Regulations.--Not later than 1 year 
 after the date of enactment of this clause, the 
 Secretary shall promulgate final regulations 
 through notice-and-comment rulemaking 
 describing--
 ``
            (I) methodologies State Medicaid 
 programs and all covered entities under 
 subsection

    (a)

    (4) , and their contract 
 pharmacies, shall use to identify and 
 bill drugs purchased under the 340B 
 program in a manner that ensures 
 compliance with applicable prohibitions 
 regarding duplicate discounts or 
 rebates, including the duplicate 
 discount prohibition under this 
 subparagraph and the prohibitions under 
 sections 1927

    (j)

    (1) and 
 1903
            (m) (2)
        (A)
            (xiii) of the Social 
 Security Act, to include the 
 application of such prohibitions to 
 340B drugs used by Medicaid managed 
 care enrollees; and
 ``
            (II) procedures State Medicaid 
 programs shall use to exclude requests 
 for Medicaid rebates on covered 
 outpatient drugs purchased under the 
 340B program that are dispensed, 
 administered, or otherwise furnished to 
 a Medicaid managed care enrollee and 
 requirements for State Medicaid 
 programs to promulgate rules to provide 
 affected manufacturers a prompt remedy 
 with respect to any incorrectly billed 
 rebates for such drugs.'';

    (2) in subparagraph
            (C) --
        (A) by striking ``A covered entity shall permit'' 
 and inserting:
 ``
            (i) Duplicate discounts and drug 
 resale.--A covered entity shall permit'';
        (B) by striking ``
        (A) or
        (B) '' and inserting ``
        (A) ,
        (B) ,
        (J) , or
        (K) ''; and
            (C) by adding at the end the following:
 ``
            (ii) Use of margin.--A covered entity 
 shall permit the Secretary to audit, at the 
 Secretary's expense, the records of the entity 
 to determine--
 ``
            (I) how the margin (as defined in 
 subparagraph
            (L) 
            (iv) ) generated on 
 covered outpatient drugs subject to an 
 agreement under this section dispensed 
 or furnished by such entity (or a 
 contract pharmacy described in 
 subsection

    (a)

    (5)
        (F) ) is used by such 
 entity; and
 ``
            (II) such entity's compliance 
 with subparagraph
            (L) .
 ``
            (iii) Records retention.--Covered 
 entities shall retain such records and provide 
 such records and reports as determined 
 necessary by the Secretary for carrying out 
 this subparagraph.''; and

    (3) in subparagraph
            (D) , by striking ``
        (A) or
        (B) '' and 
 inserting ``
        (A) ,
        (B) ,
        (J) , or
        (K) ''.

SEC. 4. HOSPITAL CHILD SITE REQUIREMENTS.

    (a) Hospital Child Site Requirements.--

Section 340B

    (a)

    (5) of the 
Public Health Service Act (42 U.S.C. 256b

    (a)

    (5) ) is amended by adding 
at the end the following:
 ``
        (E) Hospital child site requirements.--
 ``
            (i) In general.--A covered entity 
 described in one of subparagraphs
            (L) through
        (O) of paragraph

    (4) may register an off-campus 
 outpatient facility associated with such 
 covered entity for inclusion in the 
 identification system described in subsection
            (d) (2)
        (B)
            (iv) to participate in the program 
 under this section as an integral part of such 
 covered entity if such covered entity 
 demonstrates to the Secretary, in a manner 
 specified by the Secretary, that such facility 
 satisfies each of the requirements in this 
 subparagraph. For purposes of this section, 
 each facility registered to participate in the 
 program under this section and satisfying the 
 requirements in this subparagraph shall be 
 referred to as a `child site'.
 ``
            (I) The facility is listed on the 
 covered entity's most recently filed 
 Medicare cost report on a line that is 
 reimbursable under the Medicare program 
 (or, if the covered entity is a 
 children's hospital that does not file 
 a Medicare cost report, the covered 
 entity submits to the Secretary a 
 signed statement certifying that the 
 facility would be correctly included on 
 a reimbursable line of a Medicare cost 
 report if the covered entity filed a 
 cost report).
 ``
            (II) Such cost report 
 demonstrates that the services provided 
 at the facility have associated costs 
 and charges for hospital outpatient 
 department services under title XVIII 
 of the Social Security Act (or, if the 
 covered entity is a children's hospital 
 that does not file a Medicare cost 
 report, the covered entity submits to 
 the Secretary a signed statement 
 certifying that the services provided 
 at the facility include outpatient 
 services).
 ``
            (III) The facility is wholly 
 owned by the covered entity.
 ``
            (IV) The Secretary has made a 
 determination, under the process 
 described in 

section 413.65

    (b) of title 
 42, Code of Federal Regulations (or any 
 successor regulations), that the 
 facility meets the Medicare provider-
 based standards under 

section 413.65 of 
 title 42, Code of Federal Regulations 
 (or any successor regulations) for an 
 off-campus outpatient department of the 
 covered entity.
 ``
            (V) The facility provides 
 outpatient health care services that 
 are not limited to only dispensing, 
 administering, or otherwise furnishing 
 covered outpatient drugs.
 ``
            (VI) The facility is subject to 
 and adheres to all charity care and 
 sliding fee scale policies of the 
 covered entity and makes such policies 
 publicly available in a manner 
 consistent with requirements 
 established under 

section 501

    (r) of the 
 Internal Revenue Code of 1986 
 applicable to hospital financial 
 assistance policies.
 ``
            (VII) The facility is located in 
 an area with a shortage of personal 
 health services that is--
 ``

    (aa) initially designated 
 by the Secretary pursuant to 
 

section 254b

    (b)

    (3) of title 42, 
 United States Code, on or 
 before December 1, 2024; or
 ``

    (bb) designated by the 
 Secretary pursuant to 
 subparagraphs
        (A) through
            (C) of 

section 254b

    (b)

    (3) of title 
 42, United States Code, after 
 December 1, 2024, using the 
 scoring methodology and 
 criteria specified by the 
 Secretary as of December 1, 
 2024.
 ``
            (VIII) In the case of a covered 
 entity described in one of 
 subparagraphs
            (L) through
        (O) of 
 paragraph

    (4) that is a private 
 nonprofit hospital that has, as the 
 basis for its participation in the 
 program under this section, a contract 
 with a State or local government to 
 provide health care services to low-
 income individuals who are uninsured, 
 as described in paragraphs

    (4)
            (L) 
            (i) and

    (11) , the facility independently 
 complies with all requirements 
 applicable to such covered entity with 
 respect to such contract.
 ``
            (IX) For the most recent year, 
 the facility's total cost incurred for 
 charity care (as such term is defined 
 in line 23 of worksheet S-10 to the 
 Medicare cost report, or in any 
 successor form) furnished at such 
 facility during such year, as a share 
 of the facility's total patient service 
 revenue, is greater than or equal to 
 the amount described in item

    (aa) or 
 item

    (bb) , whichever is greater--
 ``

    (aa) for such year, the 
 total cost incurred for charity 
 care, as a share of total 
 patient service revenue, 
 furnished at the covered 
 entity's on-campus locations 
 (as `campus' is defined in 
 

section 413.65

    (a)

    (2) of title 
 42, Code of Federal Regulations 
 (or any successor 
 regulations)); or
 ``

    (bb) the average cost 
 incurred for charity care, as a 
 share of total patient service 
 revenue, calculated for the 
 year prior to the most recent 
 year for which data is 
 available, across all hospitals 
 in the State where the facility 
 is located that receive 
 payments for inpatient hospital 
 services under the prospective 
 payment system established 
 under 

section 1886
            (d) of the 
 Social Security Act.
 ``
            (X) For the most recent year, the 
 facility's share of total outpatient 
 services revenue derived from base 
 reimbursement to such entity (excluding 
 supplemental and indirect 
 reimbursement) under title XIX of the 
 Social Security Act (including with 
 respect to individuals also entitled to 
 benefits under part A of title XVIII of 
 such Act or enrolled in part B of title 
 XVIII of such Act) and payments under 
 title XXI of such Act for items and 
 services furnished on an outpatient 
 basis at the facility (including any 
 cost sharing for such items and 
 services) is greater than or equal to 
 the amount described in item

    (aa) or 
 item

    (bb) , whichever is greater--
 ``

    (aa) for such year, the 
 share of total outpatient 
 services revenue derived from 
 base reimbursement to such 
 entity (excluding supplemental 
 and indirect reimbursement) 
 under title XIX of the Social 
 Security Act (including with 
 respect to individuals also 
 entitled to benefits under part 
 A of title XVIII of such Act or 
 enrolled in part B of title 
 XVIII of such Act) and payments 
 under title XXI of such Act for 
 items and services furnished on 
 an outpatient basis at the on-
 campus locations of the covered 
 entity with which the facility 
 is associated (including any 
 cost sharing for such items and 
 services) (`campus' shall have 
 the meaning given such term in 
 

section 413.65

    (a)

    (2) of title 
 42, Code of Federal Regulations 
 (or any successor 
 regulations)); or
 ``

    (bb) the average share of 
 total outpatient services 
 revenue derived from base 
 reimbursement (excluding 
 supplemental and indirect 
 reimbursement) under title XIX 
 of the Social Security Act 
 (including with respect to 
 individuals also entitled to 
 benefits under part A of title 
 XVIII of such Act or enrolled 
 in part B of title XVIII of 
 such Act) and payments under 
 title XXI of such Act for items 
 and services furnished on an 
 outpatient basis (including any 
 cost sharing for such items and 
 services), calculated for the 
 year prior to the most recent 
 year for which data is 
 available, across all hospitals 
 in the state where the facility 
 is located that receive 
 payments for outpatient 
 hospital services under the 
 prospective payment system for 
 covered outpatient department 
 services established under 
 

section 1833

    (t) of such Act.
 ``
            (XI) The covered entity 
 certifies, at the time such facility is 
 initially registered for inclusion in 
 the identification system described in 
 subsection
            (d) (2)
        (B)
            (iv) to participate 
 in the drug pricing program under this 
 section and annually thereafter as part 
 of the recertification process, that 
 the facility satisfies all applicable 
 requirements under this subparagraph.
 ``
            (ii) Limitation.--Only an off-campus 
 outpatient facility that meets each of the 
 requirements under this subparagraph may 
 purchase covered outpatient drugs under the 
 340B program or use covered outpatient drugs 
 purchased under the 340B program by another 
 part of the covered entity that is authorized 
 to participate in such program. Any transfer of 
 340B drugs to another facility or another part 
 of a covered entity that is not authorized to 
 participate in the 340B program shall be deemed 
 a violation of subparagraph
        (B) .
 ``
            (iii) Deregistration.--If at any time 
 following registration a requirement described 
 in clause
            (i) is no longer fully satisfied with 
 respect to a facility, the covered entity 
 described in such clause shall immediately 
 notify the Secretary that such facility no 
 longer fully satisfies the relevant 
 requirement, deregister the facility from the 
 program under this section, remove the facility 
 from the identification system described in 
 subsection
            (d) (2)
        (B)
            (iv) , and take all 
 necessary actions to prohibit such facility 
 from making any purchases under the program 
 under this section or representing to third 
 parties that such facility may purchase covered 
 outpatient drugs under such program.
 ``
            (iv) Obligation to self-disclose.--A 
 covered entity described in clause
            (i) shall 
 immediately disclose to the Secretary and the 
 manufacturer of the affected covered outpatient 
 drug any purchase made under the program under 
 this section by or on behalf of the covered 
 entity with respect to a facility that, at the 
 time of the purchase of such drug, did not 
 fully satisfy the requirements in such clause. 
 Any such purchase shall require the covered 
 entity to promptly conduct an audit supervised 
 by the Secretary to identify the full scope of 
 noncompliance with such requirements and to 
 provide the written results of such audit to 
 the Secretary and the manufacturer of the 
 affected covered outpatient drug. The covered 
 entity shall be liable to the manufacturer of 
 the covered outpatient drug that is the subject 
 of the noncompliance in an amount equal to the 
 reduction in the price of the drugs provided 
 under paragraph

    (1) , plus interest on such 
 amount, which shall be compounded monthly and 
 equal to the current short-term interest rate 
 as determined by the Federal Reserve for the 
 time period for which the covered entity is 
 liable.
 ``
            (v) Civil monetary penalty.--Where a 
 covered entity knowingly and intentionally 
 violates clause
            (ii) or otherwise fails to 
 satisfy a requirement in clause
            (iii) or clause
            (iv) , the covered entity shall be required to 
 pay a civil monetary penalty equal to $2,500 
 for each such violation, which amount shall be 
 adjusted for inflation annually to reflect the 
 rate of change in the Consumer Price Index for 
 All Urban Consumers published by the Bureau of 
 Labor Statistics. The provisions of 

section 1128A of the Social Security Act (other than 
 subsections

    (a) and

    (b) ) shall apply to a civil 
 monetary penalty under this clause in the same 
 manner as such provisions apply to a penalty or 
 proceeding under 

section 1128A

    (a) . The Office 
 of Inspector General of the Department of 
 Health and Human Services shall carry out the 
 provisions related to the imposition of civil 
 monetary penalties under this clause.
 ``
            (vi) Secretarial publication of 
 reports.--On an annual basis, the Secretary 
 shall prepare and make available to the public 
 in an electronic, machine readable format 
 separate reports listing facilities that 
 satisfy the requirements in each of subclauses
            (IX) and
            (X) of clause
            (i) .''.

    (b) Effective Date.--The provisions in 

section 340B

    (a)

    (5)
        (E) of the 
Public Health Service Act, as added by this Act, shall become effective 
120 days after the date of enactment of this Act.
            (c) Implementation of Hospital Child Site Standards.--Not later 
than 60 days prior to the effective date of 

section 340B

    (a)

    (5)
        (E) of 
the Public Health Service Act, as added by this Act, the Secretary 
shall issue program instructions directing each covered entity 
described in 

section 340B

    (a)

    (5)
        (E)
            (i) of the Public Health Service Act, 
as amended by this Act, to, before the effective date of 

section 340B

    (a)

    (5)
        (E) of the Public Health Service Act, as added by this Act, 
register in the identification system described in 

section 340B
            (d) (2)
        (B)
            (iv) of the Public Health Service Act, or update existing 
registrations in such system for, off-campus outpatient facilities 
associated with such covered entity that satisfy the requirements in 
such section. Such instructions shall direct each such covered entity 
to, on or before the effective date of 

section 340B

    (a)

    (5)
        (E) of the 
Public Health Service Act, as added by this Act, remove from such 
system the existing registration of any off-campus outpatient facility 
associated with such covered entity that does not satisfy the 
requirements in 

section 340B

    (a)

    (5)
        (E)
            (i) of the Public Health Service 
Act. Clauses
            (iii) through
            (v) of 

section 340B

    (a)

    (5)
        (E) of the Public 
Health Service Act shall apply with respect to any covered entity 
described in one of subparagraphs
            (L) through
        (O) of 

section 340B

    (a)

    (4) of the Public Health Service Act that fails to remove a facility 
described in the immediately preceding sentence on or before the 
effective date of 

section 340B

    (a)

    (5)
        (E) of the Public Health Service 
Act, as added by this Act.

SEC. 5. CONTRACT PHARMACIES.

 

Section 340B

    (a)

    (5) of the Public Health Service Act (42 U.S.C. 
256b

    (a)

    (5) ) is further amended by adding at the end the following:
 ``
        (F) Contract pharmacies.--
 ``
            (i) In general.--Subject to the 
 conditions set forth in this subparagraph, a 
 covered entity may enter into written 
 agreements with contract pharmacies to dispense 
 to patients of such entity covered outpatient 
 drugs purchased by such entity under the 340B 
 program. Subject to such conditions, a 
 manufacturer of covered outpatient drugs shall 
 ship or facilitate shipment of such drugs to 
 contract pharmacies at the request of such 
 covered entity. Except with respect to covered 
 outpatient drugs shipped to and dispensed by a 
 contract pharmacy as provided in this 
 subparagraph, and notwithstanding any other 
 provision in this section, a manufacturer of 
 covered outpatient drugs shall have no 
 obligation to pay a discount or rebate under 
 this section with respect to covered outpatient 
 drugs delivered or otherwise transferred to any 
 location other than a registered address of the 
 covered entity (including an entity pharmacy or 
 child site, as applicable) listed in the 
 identification system described in subsection
            (d) (2)
        (B)
            (iv) .
 ``
            (ii) Conditions for covered entity use of 
 contract pharmacies.--In order for a covered 
 entity to enter into a written agreement with a 
 contract pharmacy to dispense to patients of 
 such entity covered outpatient drugs purchased 
 by such entity under the program under this 
 section, the entity shall--
 ``
            (I) (aa) be described in one of 
 subparagraphs
        (A) through
        (K) of 
 paragraph

    (4) and purchase covered 
 outpatient drugs for its patients 
 within the scope of the Federal grant, 
 project, or Federal grant-authorizing 
 statute, as applicable, that qualifies 
 such entity for participation in the 
 program under this section; or
 ``

    (bb) be described in one of 
 subparagraphs
            (L) through
        (O) of 
 paragraph

    (4) ;
 ``
            (II) establish and implement 
 compliance procedures to satisfy the 
 requirements described in subparagraphs
        (A) ,
        (B) ,
        (G) (as applicable),
        (H) (as 
 applicable),
        (J) , and
        (K) of paragraph

    (5) and 

section 1193
            (d) of the Social 
 Security Act with respect to covered 
 outpatient drugs purchased by the 
 covered entity under this section, 
 including with respect to such drugs 
 dispensed by a contract pharmacy, which 
 compliance procedures shall be 
 considered records of the covered 
 entity subject to audit under 
 subparagraph
            (C) ;
 ``
            (III) prior to purchasing covered 
 outpatient drugs subject to an 
 agreement under this section to be 
 shipped to or dispensed by such 
 pharmacy, register such pharmacy in the 
 identification system described in 
 subsection
            (d) (2)
        (B)
            (iv) as a contract 
 pharmacy, to include such pharmacy's 
 national provider identifier, and 
 certify to the Secretary upon initial 
 registration of such pharmacy in such 
 system and annually thereafter that 
 such pharmacy complies with all 
 requirements under this subparagraph, 
 including the covered entity compliance 
 procedures described in subclause
            (II) ; 
 and
 ``
            (IV) as applicable, comply with 
 the requirements and limitations set 
 forth in clauses
            (iii) through
            (vii) of 
 this subparagraph.
 ``
            (iii) Limitation on contract pharmacies 
 for certain hospital covered entities.--
 Notwithstanding clause
            (ii) , a covered entity 
 described in paragraph

    (4)
            (L) , a free-standing 
 cancer hospital described in paragraph

    (4)
            (M) , 
 and a rural referral center described in 
 paragraph

    (4)
        (O) may not enter into written 
 agreements with more than 5 contract pharmacies 
 to dispense covered outpatient drugs purchased 
 by the covered entity under this section to 
 patients of such entity under this 
 subparagraph. For purposes of this clause, a 
 contract pharmacy shall not include a mail 
 order pharmacy.
 ``
            (iv) Service area requirement for 
 eligible contract pharmacies.--A contract 
 pharmacy with which a covered entity enters 
 into a written agreement to dispense covered 
 outpatient drugs to patients of such entity 
 subject to the conditions in this subparagraph 
 shall be located in the service area of the 
 covered entity (as defined in clause
            (x) 
            (IV) ). 
 Notwithstanding any other provision in this 
 subparagraph, this clause
            (iv) shall not apply 
 with respect to a covered entity described in 
 paragraph

    (4)
        (G) or a contract pharmacy that is 
 a mail order pharmacy.
 ``
            (v) Requirements for use of mail order 
 pharmacies.--
 ``
            (I) In general.--Notwithstanding 
 any other provision in this section, a 
 covered outpatient drug subject to an 
 agreement under this section may be 
 dispensed to a patient of a covered 
 entity through a mail order pharmacy 
 only if--
 ``

    (aa) the covered entity 
 dispensing such drug (or on 
 whose behalf such drug is 
 dispensed) through a mail order 
 pharmacy to such a patient is 
 described in one of 
 subparagraphs
        (A) through
        (K) of paragraph

    (4) , such entity 
 is not a specified nonhospital 
 covered entity (as defined in 
 subsection

    (b)

    (4) ), and, except 
 for a covered entity described 
 in subparagraph
        (G) of such 
 subsection, the patient 
 dispensed such drug resides 
 within the service area of the 
 covered entity (as defined in 
 clause
            (x) 
            (IV) ); or
 ``

    (bb) the covered entity 
 dispensing such drug (or on 
 whose behalf such drug is 
 dispensed) through a mail order 
 pharmacy to such a patient is 
 described in subparagraph
        (N) of paragraph

    (4) or is a sole 
 community hospital described in 
 subparagraph
        (O) of such 
 paragraph, and the patient 
 dispensed such drug resides in 
 a county that is not part of a 
 Metropolitan Statistical Area, 
 as defined by the Office of 
 Management and Budget.
 ``
            (II) Requirements for use of mail 
 order contract pharmacies.--Subject to 
 the conditions set forth in this 
 subparagraph, a covered entity 
 described in item

    (aa) or

    (bb) of 
 subclause
            (I) may enter into written 
 agreements with contract pharmacies 
 that are mail order pharmacies to 
 dispense to patients described in such 
 relevant clause covered outpatient 
 drugs purchased by such entity under 
 the 340B program.
 ``
            (vi) Requirements for covered entity 
 compliance procedures and written agreements.--
 Not later than 180 days following the date of 
 enactment of the 340B ACCESS Act, the Secretary 
 shall issue guidance to covered entities 
 specifying requirements for--
 ``
            (I) covered entity compliance 
 procedures described in clause
            (ii) 
            (II) that the Secretary determines are 
 sufficient to ensure that covered 
 outpatient drugs are not subject to 
 duplicate discounts in violation of 
 subsection

    (a)

    (5)
        (A) (including with 
 respect to such drugs used by Medicaid 
 managed care enrollees), that such 
 drugs cannot be resold or otherwise 
 transferred to persons who do not meet 
 the definition of a patient of the 
 covered entity in violation of 
 subparagraph
        (B) , that the patient 
 affordability requirements specified in 
 subparagraphs
        (G) and
        (H) , as 
 applicable, are appropriately applied 
 at the point of drug dispense or 
 administration, that data and other 
 information is submitted in accordance 
 with subparagraphs
        (J) and
        (K) , and 
 that the nonduplication requirement in 
 

section 1193
            (d) of the Social Security 
 Act is satisfied; and
 ``
            (II) written agreements between 
 covered entities and contract 
 pharmacies described in clause
            (vii) .
 ``
            (vii) Written agreement required.--The 
 written agreement between a covered entity and 
 a contract pharmacy described in this 
 subparagraph shall include binding and 
 enforceable obligations on the contract 
 pharmacy to comply with the covered entity's 
 compliance procedures described in clause
            (ii) 
            (II) with respect to covered outpatient 
 drugs dispensed to patients of such entity in 
 accordance with this subparagraph. Within 30 
 days of the applicable effective date of such 
 written agreement, including any amendment or 
 addendum thereto, the covered entity shall 
 submit a copy of the agreement, together with 
 any amendments or addenda, to the Secretary in 
 a form and manner specified by the Secretary. 
 The Secretary shall review all such agreements, 
 including amendments and addenda, for 
 compliance with the requirements set forth in 
 this subparagraph and may require a covered 
 entity and contract pharmacy to modify an 
 agreement to conform to the requirements of 
 this subparagraph. Such agreements, including 
 amendments and addenda, shall be considered 
 records of the covered entity subject to audit 
 under subparagraph
            (C) .
 ``
            (viii) Clarification for covered 
 outpatient drugs subject to restricted 
 distribution.--Notwithstanding any other 
 provision in this section, a manufacturer of a 
 covered outpatient drug requiring exclusive use 
 of a specialty pharmacy or a restricted 
 distribution network shall be deemed to have 
 satisfied its obligations under this 
 subparagraph with respect to a contract 
 pharmacy if such manufacturer offers each 
 covered entity such drug for purchase at or 
 below the applicable ceiling price described in 
 paragraph

    (1) through a wholesaler, 
 distributor, or pharmacy included in the 
 restricted distribution network for such drug.
 ``
            (ix) Penalties for contract pharmacy 
 compliance violations.--
 ``
            (I) In general.--A contract 
 pharmacy that is found to have violated 
 the covered entity compliance 
 procedures described in clause
            (ii) 
            (II) , violated subparagraph
        (A) , or 
 violated subparagraph
        (B) shall--
 ``

    (aa) in the first 
 instance of such violation, be 
 liable to a manufacturer of a 
 covered outpatient drug that is 
 the subject of such violation 
 in an amount equal to the 
 reduction in the price of such 
 drug (as described in 
 subsection

    (a)

    (1) ), plus 
 interest on such amount, which 
 shall be compounded monthly and 
 equal to the current short-term 
 interest rate as determined by 
 the Federal Reserve for the 
 time period for which the 
 covered entity is liable;
 ``

    (bb) in the second 
 instance of such violation--

 ``

    (AA) be liable to 
 a manufacturer of a 
 covered outpatient drug 
 that is the subject of 
 such violation in an 
 amount equal to the 
 reduction in the price 
 of the drug (as 
 described in paragraph

    (1) ), plus interest on 
 such amount, which 
 shall be calculated in 
 the manner specified in 
 item

    (aa) ; and

 ``

    (BB) be required 
 to pay a civil monetary 
 penalty equal to $3,000 
 for each claim for a 
 covered outpatient drug 
 that is subject to the 
 violation, which amount 
 shall be adjusted for 
 inflation annually to 
 reflect the rate of 
 change in the Consumer 
 Price Index for All 
 Urban Consumers 
 published by the Bureau 
 of Labor Statistics; 
 and

 ``
            (cc) in the third 
 instance of such violation--

 ``

    (AA) be liable to 
 a manufacturer of a 
 covered outpatient drug 
 that is the subject of 
 such violation in an 
 amount equal to the 
 reduction in the price 
 of the drug (as 
 described in paragraph

    (1) ), plus interest on 
 such amount, which 
 shall be calculated in 
 the manner specified in 
 item

    (aa) ;

 ``

    (BB) be required 
 to pay a civil monetary 
 penalty equal to $3,000 
 for each claim for a 
 covered outpatient drug 
 that is subject to the 
 violation, which amount 
 shall be adjusted for 
 inflation annually to 
 reflect the rate of 
 change in the Consumer 
 Price Index for All 
 Urban Consumers 
 published by the Bureau 
 of Labor Statistics; 
 and

 ``
            (CC) be removed 
 from the program under 
 this section and 
 disqualified from 
 reentry into such 
 program for a period of 
 not less than two 
 years, or such longer 
 period as the Secretary 
 may determine based on 
 the severity of the 
 violation (or 
 violations) and the 
 risk such pharmacy 
 presents to the 
 integrity of the 
 program, with no 
 ability to reenter the 
 program unless and 
 until the Secretary 
 determines such 
 pharmacy has resolved 
 the violation (or 
 violations) and taken 
 reasonable steps to 
 prevent similar future 
 violations.

 ``
            (II) Corrective action plan.--In 
 the first instance of a violation 
 described in subclause
            (I) (aa) , in the 
 second instance of a violation 
 described in subclause
            (I) (bb) , and 
 prior to reentry into the program 
 following a violation described in 
 subclause
            (I) 
            (cc) --
 ``

    (aa) the pharmacy shall 
 conduct an internal review to 
 identify the cause of the 
 violation (or violations) that 
 is inclusive of all calendar 
 quarters within the period in 
 which such violation (or 
 violations) occurred and all 
 covered outpatient drugs 
 subject to an agreement under 
 this section dispensed during 
 such period;
 ``

    (bb) the pharmacy shall 
 prepare a written corrective 
 action plan, in a form 
 specified by the Secretary, 
 which shall include, at a 
 minimum, the results of such 
 internal review, the pharmacy's 
 methodology for identifying the 
 full scope of such violation 
 (or violations), and the 
 pharmacy's proposed corrective 
 actions, and submit such plan 
 to the Secretary in a form and 
 manner specified by the 
 Secretary; and
 ``
            (cc) the Secretary shall 
 review such plan, notify the 
 pharmacy of any revisions to 
 such plan, including additional 
 corrective actions, necessary 
 for the Secretary to approve 
 such plan, and publish the 
 approved plan on a public 
 website of the Department of 
 Health and Human Services (with 
 redactions of any confidential 
 or proprietary information).
 ``
            (III) Civil monetary penalty for 
 violations by removed pharmacy.--A 
 contract pharmacy removed from the 
 program under this section pursuant to 
 subclause
            (I) 
            (cc) that dispenses a 
 covered outpatient drug subject to an 
 agreement under this section during a 
 time period that such pharmacy is 
 removed from the program and is not 
 approved for reentry shall be required 
 to pay a civil monetary penalty equal 
 to $3,000 for each claim for each such 
 drug dispensed during such period, 
 which amount shall be adjusted for 
 inflation annually to reflect the rate 
 of change in the Consumer Price Index 
 for All Urban Consumers published by 
 the Bureau of Labor Statistics.
 ``
            (IV) Procedures and delegation.--
 The provisions of 

section 1128A of the 
 Social Security Act (other than 
 subsections

    (a) and

    (b) ) shall apply 
 for purposes of any payment, civil 
 monetary penalty, or removal described 
 in this clause in the same manner as 
 such provisions apply to a penalty or 
 proceeding under 

section 1128A

    (a) . The 
 Office of Inspector General of the 
 Department of Health and Human Services 
 shall carry out the provisions of this 
 clause.
 ``
            (x) === Definitions. ===
-In this subparagraph:
 ``
            (I) Contract pharmacy.--The term 
 `contract pharmacy' means, with respect 
 to a covered entity described in clause
            (ii) , any individual pharmacy (as 
 determined by a national provider 
 identifier unique to the pharmacy 
 address) that is--
 ``

    (aa) licensed as a 
 pharmacy by the relevant State 
 (or States);
 ``

    (bb) authorized to 
 dispense covered outpatient 
 drugs subject to an agreement 
 under this section to patients 
 of such entity (as defined in 
 subsection

    (b)

    (3) ) pursuant to 
 a valid written agreement with 
 such entity (as described in 
 this subparagraph); and
 ``
            (cc) not an entity 
 pharmacy.
 ``
            (II) Entity pharmacy.--The term 
 `entity pharmacy' means any individual 
 pharmacy (as determined by a national 
 provider identifier unique to the 
 pharmacy address) that is--
 ``

    (aa) 

    (AA) licensed as a 
 pharmacy by the relevant State 
 (or States); and
 ``

    (BB) the same legal 
 entity as the covered entity 
 and located within the covered 
 entity's service area, if the 
 covered entity is described in 
 one of subparagraphs
        (A) through
        (K) of paragraph

    (4) and is not a specified 
 nonhospital covered entity (as 
 defined in subsection

    (b)

    (4) ); 
 or
 ``

    (bb) the same legal 
 entity as the covered entity 
 and located within the covered 
 entity's four walls, if the 
 covered entity is described in 
 one of subparagraphs
            (L) through
        (O) of paragraph

    (4) or 
 is a specified nonhospital 
 covered entity (as defined in 
 subsection

    (b)

    (4) ).
 ``
            (III) Mail order pharmacy.--The 
 term `mail order pharmacy' is a 
 pharmacy that is licensed as a pharmacy 
 by the State (or States) and that 
 dispenses prescription medications to 
 individuals primarily through the mail, 
 as determined in accordance with 
 guidance issued by the Secretary in 
 connection with part 447, subpart I of 
 title 42 of the Code of Federal 
 Regulations (or any successor 
 regulations).
 ``
            (IV) Service area.--The term 
 `service area' means, with respect to a 
 covered entity described in paragraph

    (4) , other than a covered entity 
 described in subparagraph
        (G) of such 
 paragraph, the Public Use Microdata 
 Area (as defined by the United States 
 Census Bureau) in which such entity is 
 located and all Public Use Microdata 
 Areas that are contiguous with the 
 Public Use Microdata Area in which such 
 entity is located, each of which shall 
 be listed in the identification system 
 described in subsection
            (d) (2)
        (B)
            (iv) .
 ``
            (xi) Rules of construction.--
 ``
            (I) Location.--For purposes of 
 this subparagraph, the location of a 
 covered entity shall be determined 
 based on the physical address of the 
 entity listed in the identification 
 system described in subsection
            (d) (2)
        (B)
            (iv) without regard to any 
 off-campus outpatient facilities.
 ``
            (II) Same legal entity.--For 
 purposes of this subparagraph, a 
 pharmacy is the same legal entity as 
 the covered entity if the name, 
 ownership, and employer identification 
 number of the pharmacy is identical to 
 the name, ownership, and employer 
 identification number of the covered 
 entity.''.

SEC. 6. ENSURING PATIENT AFFORDABILITY OF DRUGS PURCHASED UNDER 

SECTION 340B.

    (a) In General.--

Section 340B

    (a)

    (5) of the Public Health Service 
Act (42 U.S.C. 256b

    (a)

    (5) ) is further amended by adding at the end the 
following:
 ``
        (G) Patient affordability requirements for 
 hospital covered entities.--
 ``
            (i) In general.--Notwithstanding any 
 other provision of law, a covered entity 
 described in one of subparagraphs
            (L) through
        (O) of paragraph

    (4) shall establish a sliding 
 fee scale that results in the covered entity 
 providing, on behalf of an eligible patient (as 
 defined in clause
            (iv) ), a discount that 
 results in such patient paying no more than the 
 maximum out-of-pocket obligation (as defined in 
 clause
            (ii) ), with respect to each covered 
 outpatient drug subject to an agreement under 
 this section dispensed, furnished, or 
 administered to such patient at such covered 
 entity, any child site, or any entity pharmacy. 
 The sliding fee scale and related policies 
 shall be written and posted prominently at each 
 such covered entity location, including any 
 child site and entity pharmacy, and shall be 
 included in any billing-related communications 
 sent by such covered entity to any patient 
 dispensed, furnished, or administered a covered 
 outpatient drug at such covered entity 
 location, including any child site or entity 
 pharmacy. Eligibility for a reduced out-of-
 pocket obligation pursuant to this clause shall 
 be based on insurance and income information 
 provided by the eligible patient. With respect 
 to covered outpatient drugs that are self-
 administered by an eligible patient, the out-
 of-pocket reductions described in this clause 
 shall apply at the point of sale.
 ``
            (ii) Maximum out-of-pocket obligation.--
 For each dispense or administration of a 
 covered outpatient drug, the maximum out-of-
 pocket obligation for an eligible patient with 
 family income--
 ``
            (I) below the Federal poverty 
 guidelines is $0;
 ``
            (II) at or above the Federal 
 poverty guidelines but below 200 
 percent of the Federal poverty 
 guidelines is the lesser of 20 percent 
 of the otherwise applicable out-of-
 pocket obligation or $35, which shall 
 be adjusted for inflation annually to 
 reflect rate of the change in the 
 Consumer Price Index for All Urban 
 Consumers published by the Bureau of 
 Labor Statistics; and
 ``
            (III) at or above 200 percent of 
 the Federal poverty guidelines is the 
 lesser of 30 percent of the otherwise 
 applicable out-of-pocket obligation or 
 $50, which shall be adjusted for 
 inflation annually to reflect rate of 
 the change in the Consumer Price Index 
 for All Urban Consumers published by 
 the Bureau of Labor Statistics.
 ``
            (iii) Applicability to contract 
 pharmacies.--With respect to an eligible 
 patient of a covered entity described in clause
            (i) dispensed a covered outpatient drug subject 
 to an agreement under this section on behalf of 
 such covered entity at a contract pharmacy 
 pursuant to subparagraph
        (F) , such covered 
 entity shall require such contract pharmacy to 
 provide discounts to eligible patients on 
 behalf of such covered entity and comply with 
 all other requirements described in clauses
            (i) and
            (ii) as if such contract pharmacy were a 
 covered entity described in clause
            (i) .
 ``
            (iv) === Definitions. ===
-In this subparagraph:
 ``
            (I) Child site.--The term `child 
 site' shall have the meaning given such 
 term in subparagraph
        (E) .
 ``
            (II) Contract pharmacy.--The term 
 `contract pharmacy' shall have the 
 meaning given such term in subparagraph
        (F) .
 ``
            (III) Eligible patient.--The term 
 `eligible patient' means a patient, as 
 defined in subsection

    (b)

    (3) , who is 
 not covered under minimum essential 
 coverage as defined under 

section 5000A

    (f) of the Internal Revenue Code 
 of 1986 or has family income below 200 
 percent of the Federal poverty 
 guidelines and is covered under a group 
 health plan, health insurance coverage 
 in the individual market or group 
 market (as such terms are defined in 
 

section 2791 of the Public Health 
 Service Act) or coverage described in 
 

section 156.602

    (a) , title 45, Code of 
 Federal Regulations or successor 
 regulation.
 ``
            (IV) Entity pharmacy.--The term 
 `entity pharmacy' shall have the 
 meaning given such term in subparagraph
        (F) .
 ``
            (V) Federal poverty guidelines.--
 The term `Federal poverty guidelines' 
 means the poverty guidelines updated 
 periodically in the Federal Register by 
 the Department of Health and Human 
 Services pursuant to 

section 9902

    (2) of 
 title 42, United States Code.
 ``
            (VI) Out-of-pocket obligation.--
 The term `out-of-pocket obligation' 
 means any copayment, coinsurance, 
 deductible, or other cost sharing 
 amount or payment required from an 
 eligible patient in connection with 
 such patient's receipt of a specific 
 health care item or service, including 
 a covered outpatient drug.
 ``
            (v) Civil monetary penalty.--A covered 
 entity or contract pharmacy that violates a 
 requirement of this subparagraph shall be 
 subject to a civil monetary penalty of $2,500 
 for each such violation, which amount shall be 
 adjusted for inflation annually to reflect the 
 rate of change in the Consumer Price Index for 
 All Urban Consumers published by the Bureau of 
 Labor Statistics. The provisions of 

section 1128A of the Social Security Act (other than 
 subsections

    (a) and

    (b) ) shall apply to a civil 
 monetary penalty under this clause in the same 
 manner as such provisions apply to a penalty or 
 proceeding under 

section 1128A

    (a) . The Office 
 of Inspector General of the Department of 
 Health and Human Services shall carry out the 
 provisions of this clause.
 ``
            (vi) Regulations.--The Secretary shall 
 promulgate regulations through notice and 
 comment rulemaking to implement the 
 requirements described in this subparagraph and 
 shall issue final regulations not later than 90 
 days after the date of enactment of this 
 subparagraph. The authority to promulgate 
 regulations under this clause is limited to 
 specifying the obligations of covered entities 
 and contract pharmacies under this subparagraph 
 and other details necessary to carry out the 
 requirements of this subparagraph efficiently, 
 effectively, and in conformity with this 
 subparagraph.
 ``
            (vii) OIG studies.--The Office of 
 Inspector General of the Department of Health 
 and Human Services shall conduct and publish 
 annual studies of covered entity (including 
 child site and entity pharmacy) and contract 
 pharmacy practices with respect to the 
 requirements under this subparagraph and 
 evaluate whether eligible patients are 
 receiving assistance to reduce their out-of-
 pocket obligations in accordance with this 
 subparagraph.
 ``
        (H) Patient affordability requirements for 
 certain nonhospital covered entities.--
 ``
            (i) In general.--Notwithstanding any 
 other provision of law, a covered entity 
 described in one of subparagraphs
        (A) through
        (K) of paragraph

    (4) that is required by the 
 Federal statute authorizing the grant, project, 
 or contract that is the basis for such entity's 
 participation in the program under this section 
 to provide affordability assistance to eligible 
 individuals receiving health care items or 
 services from such entity shall, with respect 
 to an eligible patient (as defined in clause
            (iii) ) dispensed or administered a covered 
 outpatient drug subject to an agreement under 
 this section at a covered entity site, 
 including an entity pharmacy, establish a 
 policy that provides a discount to reduce the 
 out-of-pocket obligation of an eligible patient 
 with respect to such drug to an amount 
 sufficient to ensure such patient is not denied 
 access to such drug based on such patient's 
 ability to pay for such drug.
 ``
            (ii) Applicability to contract 
 pharmacies.--With respect to an eligible 
 patient of a covered entity described in clause
            (i) dispensed a covered outpatient drug subject 
 to an agreement under this section on behalf of 
 such covered entity at a contract pharmacy 
 pursuant to subparagraph
        (F) , such covered 
 entity shall require such contract pharmacy to 
 provide discounts to eligible patients on 
 behalf of such covered entity in accordance 
 with the covered entity's policy described in 
 clause
            (i) .
 ``
            (iii) === Definitions. ===
-In this subparagraph:
 ``
            (I) Contract pharmacy.--The term 
 `contract pharmacy' shall have the 
 meaning given such term in subparagraph
        (F) .
 ``
            (II) Eligible patient.--The term 
 `eligible patient' means a patient, as 
 defined in subsection

    (b)

    (3) , who is 
 not covered under minimum essential 
 coverage as defined under 

section 5000A

    (f) of the Internal Revenue Code 
 of 1986 or has family income below 200 
 percent of the Federal poverty 
 guidelines and is covered under a group 
 health plan, health insurance coverage 
 in the individual market or group 
 market (as such terms are defined in 
 

section 2791 of the Public Health 
 Service Act) or coverage described in 
 

section 156.602

    (a) , title 45, Code of 
 Federal Regulations or successor 
 regulation.
 ``
            (III) Entity pharmacy.--The term 
 `entity pharmacy' shall have the 
 meaning given such term in subparagraph
        (F) .
 ``
            (IV) Federal poverty 
 guidelines.--The term `Federal poverty 
 guidelines' means the poverty 
 guidelines updated periodically in the 
 Federal Register by the Department of 
 Health and Human Services pursuant to 
 

section 9902

    (2) of title 42, United 
 States Code.
 ``
            (V) Out-of-pocket obligation.--
 The term `out-of-pocket obligation' 
 means any copayment, coinsurance, 
 deductible, or other cost sharing 
 amount or payment required from an 
 eligible patient in connection with 
 such patient's receipt of a specific 
 health care item or service, including 
 a covered outpatient drug.''.

SEC. 7. REQUIREMENTS FOR NONHOSPITAL COVERED ENTITIES AND SUBGRANTEES.

 

Section 340B

    (a)

    (5) of the Public Health Service Act (42 U.S.C. 
256b

    (a)

    (5) ) is further amended by adding at the end the following:
 ``
            (I) Additional requirements for nonhospital 
 covered entities; requirements for subgrantees.--
 ``
            (i) Additional requirements for 
 nonhospital covered entities.--A covered entity 
 described in one of subparagraphs
        (A) through
        (K) of paragraph

    (4) shall, as a condition of 
 participation in the program under this 
 section--
 ``
            (I) be a nonprofit or public 
 entity (as determined by the 
 Secretary);
 ``
            (II) be eligible to purchase a 
 covered outpatient drug subject to an 
 agreement under this section only with 
 respect to a patient receiving a health 
 care service at a registered covered 
 entity site, and such service and such 
 drug are within the scope and time 
 period of the Federal grant, project, 
 or Federal grant-authorizing statute, 
 as applicable, that qualifies such 
 covered entity for participation in the 
 program under this section;
 ``
            (III) oversee the participation 
 in the program under this section of 
 any subgrantee with which such covered 
 entity enters into an enforceable 
 written agreement in accordance with 
 subclause
            (IV) and be directly liable 
 for noncompliance by any such 
 subgrantee with any requirement under 
 this section;
 ``
            (IV) have an enforceable written 
 agreement with any subgrantee, which 
 shall apply to all registered sites of 
 such subgrantee, and require such 
 subgrantee to comply with all 
 requirements under this section 
 otherwise applicable to the covered 
 entity and to maintain written records, 
 which shall be made available to the 
 Secretary upon request, sufficient to 
 demonstrate such subgrantee's receipt 
 of eligible Federal funds or an in-kind 
 contribution purchased with such funds, 
 as described in clause
            (iii) , and the 
 grant under which such subgrantee 
 receives such funds or contribution; 
 and
 ``
            (V) maintain written records 
 sufficient to demonstrate such entity 
 authorized such subgrantee to, prior to 
 purchasing covered outpatient drugs 
 subject to an agreement under this 
 section, register each subgrantee site 
 in the covered entity identification 
 system established under subsection
            (d) (2)
        (B)
            (iv) to participate in the 
 program under this section as a 
 subgrantee of such entity and provide 
 the Secretary with such registration 
 information as requested to demonstrate 
 such subgrantee's receipt of eligible 
 Federal funds or an in-kind 
 contribution purchased with such funds, 
 as described in clause
            (iii) , and the 
 grant under which the subgrantee 
 receives such funds or contribution.
 ``
            (ii) Requirements for subgrantees.--
 Notwithstanding any other provision in this 
 section, a subrecipient of a Federal grant 
 shall be eligible to participate in the program 
 under this section only if such subrecipient is 
 a subgrantee (as defined in clause
            (iii) ) and 
 such subgrantee--
 ``
            (I) is a nonprofit or public 
 entity (as determined by the 
 Secretary);
 ``
            (II) prior to purchasing covered 
 outpatient drugs subject to an 
 agreement under this section--
 ``

    (aa) enters into an 
 enforceable written agreement 
 with the covered entity 
 providing eligible Federal 
 funds or an in-kind 
 contribution, pursuant to 
 clause
            (i) 
            (IV) ;
 ``

    (bb) maintains written 
 records, which shall be made 
 available to the Secretary upon 
 request, sufficient to 
 demonstrate such subgrantee's 
 receipt of eligible Federal 
 funds or an in-kind 
 contribution purchased with 
 such funds, as described in 
 clause
            (iii) , and the grant 
 under which such subgrantee 
 receives such funds or 
 contribution; and
 ``
            (cc) registers each 
 subgrantee site to participate 
 in the program under this 
 section in the covered entity 
 identification system 
 established under subsection
            (d) (2)
        (B)
            (iv) ;
 ``
            (III) purchases covered 
 outpatient drugs subject to an 
 agreement under this section only with 
 respect to a patient receiving a health 
 care service at a registered subgrantee 
 site, and such service and such drug 
 are within the scope and time period of 
 the Federal grant, project, or grant-
 authorizing statute, as applicable, 
 that qualifies such subgrantee for 
 participation in the program under this 
 section;
 ``
            (IV) in the case of a subgrantee 
 that receives an in-kind contribution 
 from a covered entity described in 
 paragraph

    (4)
        (K) , demonstrates to such 
 covered entity and to the Secretary, 
 upon initial registration to 
 participate in the program under this 
 section and on an annual basis 
 thereafter, that the number of 
 individuals aged 19 to 64 years 
 receiving a health care service at the 
 registered subgrantee site during the 
 most recent calendar year who are 
 enrolled under a State plan under title 
 XIX of the Social Security Act (or a 
 waiver of such plan), as a share of all 
 individuals aged 19 to 64 years 
 receiving a health care service at the 
 registered subgrantee site during such 
 calendar year, exceeds the number of 
 individuals aged 19 to 64 years who 
 reside in the State where such 
 subgrantee site is located and are 
 enrolled under a State plan under title 
 XIX of such Act (or a waiver of such 
 plan), as a share of all individuals 
 aged 19 to 64 who reside in such State, 
 each as measured by data available from 
 the American Community Survey of the 
 Bureau of the Census for the calendar 
 year preceding the most recent calendar 
 year;
 ``
            (V) in the case of a subgrantee 
 that receives an in-kind contribution 
 from a covered entity described in 
 paragraph

    (4)
        (K) , submits to such 
 covered entity and to the Secretary, 
 upon receipt of each in-kind 
 contribution described in clause
            (iii) --
 ``

    (aa) a written plan in a 
 form specified by the Secretary 
 describing how such 
 contribution will be used to 
 further the goals of the 
 relevant Federal grant, how 
 such subgrantee will ensure 
 that purchases of covered 
 outpatient drugs under the 
 program under this section are 
 consistent with the goals of 
 such grant, and how such 
 subgrantee will ensure 
 compliance with the 
 requirements under subparagraph
        (A) and
        (B) ; and
 ``

    (bb) a written plan in a 
 form specified by the Secretary 
 and using criteria established 
 by the Secretary to determine 
 the date upon which its 
 eligibility to participate in 
 the program under this section, 
 as a result of such 
 contribution, shall terminate 
 (absent such subgrantee's 
 receipt of additional funds or 
 contributions described in 
 clause
            (iii) );
 ``
            (VI) subject to subclause
            (VII) , 
 immediately notifies the Secretary, 
 disenrolls from the program under this 
 section, and discontinues making 
 purchases under such program and 
 representing to third parties that it 
 may purchase under such program as of 
 the date described in subclause
            (V) (bb) or if, at any time during its 
 participation in the program under this 
 section, it no longer meets one or more 
 applicable requirements under this 
 section; and
 ``
            (VII) not later than 30 days 
 following the date on which the covered 
 entity with which such subgrantee has 
 an agreement pursuant to clause
            (i) ceases participation in the program 
 under this section, such subgrantee 
 either--
 ``

    (aa) disenrolls from the 
 program under this section and 
 discontinues making purchases 
 under such program and 
 representing to third parties 
 that such subgrantee may 
 purchase under such program; or
 ``

    (bb) enters into an 
 enforceable written agreement 
 with a different covered entity 
 described in one of 
 subparagraphs
        (A) through
        (K) of paragraph

    (4) that is 
 participating in the program 
 under this section, and 
 satisfies all applicable 
 requirements under this section 
 with respect to such different 
 covered entity.
 ``
            (iii) Subgrantee defined.--
 ``
            (I) In general.--In this 
 subparagraph, the term `subgrantee' 
 means a subrecipient of a Federal grant 
 that--
 ``

    (aa) receives eligible 
 Federal funds from a covered 
 entity described in one of 
 subparagraphs
        (A) through
        (K) of paragraph

    (4) in the form of 
 nonnominal and ongoing payments 
 by such covered entity directly 
 to such subrecipient to 
 directly support the provision 
 of health care services by such 
 subrecipient to individuals 
 within the scope and time 
 period of the Federal grant, 
 project, or Federal grant-
 authorizing statute, as 
 applicable, that qualifies such 
 covered entity for 
 participation in the program 
 under this section; or
 ``

    (bb) receives in-kind 
 contributions from a covered 
 entity described in paragraph

    (4)
        (K) and such contributions--

 ``

    (AA) are ongoing 
 and are in the form of 
 real property, 
 equipment, supplies, or 
 services;

 ``

    (BB) subject to 
 subclause
            (II) , have a 
 value exceeding $25,000 
 per year, which shall 
 be adjusted for 
 inflation annually to 
 reflect the rate of 
 change in the Consumer 
 Price Index for All 
 Urban Consumers 
 published by the Bureau 
 of Labor Statistics and 
 determined by the 
 subrecipient and 
 approved by the covered 
 entity providing such 
 contribution in a 
 manner specified by the 
 Secretary;

 ``
            (CC) are 
 specifically 
 identifiable and 
 provided by such 
 covered entity directly 
 to such subrecipient; 
 and

 ``
            (DD) directly 
 support the provision 
 of health care items 
 and services by such 
 subrecipient solely to 
 individuals within the 
 scope and time period 
 of the Federal grant 
 that qualifies such 
 covered entity for 
 participation in the 
 program under this 
 section.

 ``
            (II) Exclusion.--The requirement 
 specified in subclause
            (I) (bb) 

    (BB) shall not apply with respect to a 
 subrecipient of a Federal grant that 
 receives in-kind contributions from a 
 covered entity described in paragraph

    (4)
        (K) if--
 ``

    (aa) as of January 1, 
 2025, such subrecipient is 
 participating in the program 
 under this section as such a 
 subrecipient and is in 
 compliance with all 
 requirements under this section 
 otherwise applicable to such 
 subrecipient; and
 ``

    (bb) with respect to any 
 in-kind contribution such 
 subrecipient receives after 
 January 1, 2025, such 
 subrecipient has continuously 
 participated in the program 
 under this section as such a 
 subrecipient in compliance with 
 all requirements under this 
 section for the period 
 beginning on January 1, 2025, 
 and continuing through the date 
 on which program participation 
 ends as determined in the plan 
 submitted to the Secretary 
 pursuant to clause
            (ii) 
            (V) (bb) or any such earlier date on 
 which program participation 
 ends.
 ``
            (iv) Rule of construction.--For purposes 
 of this section, any subgrantee that is not 
 itself a covered entity described in one of 
 subparagraphs
        (A) through
        (K) of paragraph

    (4) shall be subject to the obligations under this 
 section applicable to the covered entity with 
 which such subgrantee has an enforceable 
 written agreement pursuant to clause
            (i) . 
 Further, for purposes of this section, each 
 registered site of such subgrantee shall be 
 subject to the requirements set forth in 
 subparagraph
        (F) as if such site were the 
 covered entity with which such subgrantee has 
 an enforceable written agreement pursuant to 
 clause
            (i) .''.

SEC. 8. CLAIMS MODIFIERS; COVERED ENTITY DATA SUBMISSION.

 

Section 340B

    (a)

    (5) of the Public Health Service Act (42 U.S.C. 
256b

    (a)

    (5) ) is further amended by adding at the end the following:
 ``
        (J) Claims modifier and covered entity data 
 submission.--
 ``
            (i) Claims modifier.--All claims 
 submitted to a payor, including, without 
 limitation, Medicare and Medicaid, by a covered 
 entity or a contract pharmacy under a contract 
 with a covered entity in compliance with 
 subparagraph
        (F) for reimbursement of a unit of 
 a covered outpatient drug purchased under the 
 program under this section shall include the 
 relevant 340B modifier established by the 
 Secretary under Medicare Part B (that is `JG', 
 `TB', or any successor modifier) or the 
 Submission Clarification Code of `20' or any 
 successor modifier developed by the National 
 Council for Prescription Drug Programs

    (NCPDP) to identify claims for covered outpatient drugs 
 purchased under such program. All claims 
 submitted by a covered entity or a contract 
 pharmacy described in this clause to a payor, 
 including, without limitation, Medicare and 
 Medicaid, for reimbursement of a unit of a 
 covered outpatient drug not purchased under 
 such program shall also include a relevant non-
 340B modifier, which shall be established by 
 the Secretary, or a non-340B modifier developed 
 by the NCPCP to identify such claims.
 ``
            (ii) Covered entity data submission.--A 
 covered entity described in paragraph

    (4) shall 
 (and shall cause any entity acting on its 
 behalf to) furnish to the clearinghouse 
 described in subsection
            (d) (2)
            (C) the data 
 described in clause
            (iii) , in a machine-
 readable format, with respect to each covered 
 outpatient drug dispensed, furnished, or 
 administered by the covered entity (including 
 such drugs dispensed by a contract pharmacy 
 under contract with such covered entity in 
 compliance with subparagraph
        (F) ), for which 
 such covered entity seeks or has received 
 discounted pricing under this section. Such 
 covered entity shall provide, or cause to be 
 provided, such data to the clearinghouse within 
 45 days after the date on which the covered 
 outpatient drug was dispensed, furnished, or 
 administered (or such shorter time period as 
 may be specified by the Secretary through 
 notice-and-comment rulemaking) in an electronic 
 format specified by the Secretary. The covered 
 entity shall require (and shall cause any 
 entity acting on its behalf to require) that 
 data on pharmacy-dispensed drugs described in 
 this subparagraph be submitted to the 
 clearinghouse directly by the pharmacy 
 dispensing such drug.
 ``
            (iii) Claim level data elements.--The 
 data described in this clause shall include the 
 following, as applicable:
 ``
            (I) Self-administered drugs.--
 With respect to a self-administered 
 drug dispensed at a pharmacy, by a mail 
 order service, or by another 
 dispenser--
 ``

    (aa) prescription number;
 ``

    (bb) prescribed date;
 ``
            (cc) prescription fill 
 date;
 ``
            (dd) national drug code

    (NDC) of the drug;
 ``

    (ee) quantity dispensed;
 ``

    (ff) bank identification 
 number, processor control 
 number, and group number of the 
 plan receiving the claim (as 
 applicable);
 ``

    (gg) national provider 
 identifier

    (NPI) of the 
 prescriber;
 ``

    (hh) NPI of the 
 dispensing pharmacy;
 ``
            (ii) name and 340B 
 identifier of the covered 
 entity dispensing the drug, or 
 on whose behalf the drug is 
 dispensed;
 ``

    (jj) 340B/non-340B claim 
 modifier;
 ``

    (kk) wholesaler invoice 
 number; and
 ``
            (ll) an indicator, which 
 shall be specified by the 
 clearinghouse or the Secretary, 
 denoting that the drug was or 
 was not dispensed as a result 
 of care coordination described 
 in subsection

    (b)

    (3) .
 ``
            (II) Provider-administered 
 drugs.--With respect to a drug 
 furnished or administered by a 
 physician or other provider of services 
 or a supplier--
 ``

    (aa) drug billing and 
 payment code/HCPCS code;
 ``

    (bb) NDC of the drug;
 ``
            (cc) claim number;
 ``
            (dd) Medicare provider 
 number of prescriber (as 
 applicable);
 ``

    (ee) NPI of the 
 prescriber;
 ``

    (ff) name and 340B 
 identifier of the covered 
 entity furnishing or 
 administering the drug;
 ``

    (gg) date drug furnished 
 or administered;
 ``

    (hh) claim adjudication 
 date;
 ``
            (ii) quantity furnished 
 or administered;
 ``

    (jj) 340B/non-340B claim 
 modifier; and
 ``

    (kk) an indicator, which 
 shall be specified by the 
 clearinghouse or the Secretary, 
 denoting that the drug was or 
 was not furnished or 
 administered as a result of 
 care coordination described in 
 subsection

    (b)

    (3) .
 ``
            (iv) Information privacy and security.--A 
 covered entity described in paragraph

    (4) shall 
 provide the data specified in clause
            (iii) to 
 the clearinghouse in a secure manner, 
 consistent with such entity's obligations under 
 the Security Standards for the Protection of 
 Electronic Protected Health Information 
 described in part 164 of subpart C of title 45, 
 Code of Federal Regulations (or any successor 
 regulations). A covered entity shall not be 
 required to obtain an individual authorization 
 under part 164 of subpart E of title 45, Code 
 of Federal Regulations (or any successor 
 regulations) for its reporting of such data to 
 the clearinghouse.
 ``
            (v) Standardization of reported data 
 elements; prohibition on modifications.--A 
 covered entity described in paragraph

    (4) shall 
 take reasonable steps to ensure the data 
 specified in clause
            (iii) submitted to the 
 clearinghouse fully complies with the data 
 submission standards (including field 
 descriptors and definitions) specified by the 
 clearinghouse or the Secretary following 
 consultation with relevant stakeholders, 
 including manufacturers of covered outpatient 
 drugs. A covered entity described in paragraph

    (4) is prohibited, and shall prohibit any 
 entity acting on its behalf (including any 
 affiliate of such entity), from taking or 
 refraining from taking any action that would 
 cause such information to no longer comply with 
 the standards described in this clause. In 
 specifying the data submission standards 
 described in this clause, the clearinghouse and 
 the Secretary, as applicable, shall seek to 
 minimize administrative burden on covered 
 entities while ensuring such data satisfies the 
 intent of this subparagraph.
 ``
            (vi) Covered entities that fail to 
 report.--A covered entity that fails to furnish 
 the information as required under this 
 subparagraph shall be subject to a civil 
 monetary penalty in the amount of $2,500 for 
 each day of such violation, which amount shall 
 be adjusted for inflation annually to reflect 
 the rate of change in the Consumer Price Index 
 for All Urban Consumers published by the Bureau 
 of Labor Statistics. The provisions of 

section 1128A of the Social Security Act (other than 
 subsections

    (a) and

    (b) ) shall apply to a civil 
 monetary penalty under this clause in the same 
 manner as such provisions apply to a penalty or 
 proceeding under 

section 1128A

    (a) . The Office 
 of Inspector General of the Department of 
 Health and Human Services shall carry out the 
 provisions of this clause.''.

SEC. 9. COVERED ENTITY REPORTING ON SCOPE OF GRANT, CONTRACT, AND 
 PROJECT.

 

Section 340B

    (a)

    (5) of the Public Health Service Act (42 U.S.C. 
256b

    (a)

    (5) ) is further amended by adding at the end the following:
 ``
        (K) Reporting on scope of grant, contract, and 
 project.--A covered entity described in one of 
 subparagraphs
        (A) through
        (K) of paragraph

    (4) shall 
 submit information specified by the Secretary to the 
 identification system described in subsection
            (d) (2)
        (B)
            (iv) at least annually, in a form and manner 
 specified by the Secretary, describing the scope of its 
 Federal grant or project, or the Federal grant-
 authorizing statute, as applicable, that is the basis 
 for such entity's eligibility for the program under 
 this section. Such information shall include copies of 
 agreements between such entity and any subgrantee, as 
 described in subparagraph
            (I) . Access to information 
 described in this subparagraph shall be made available 
 to a manufacturer of a covered outpatient drug, upon 
 request, in a manner specified by the Secretary.''.

SEC. 10. ENSURING COVERED ENTITY TRANSPARENCY.

    (a) In General.--

Section 340B

    (a)

    (5) of the Public Health Service 
Act (42 U.S.C. 256b

    (a)

    (5) ) is further amended by adding at the end the 
following:
 ``
            (L) Reporting.--
 ``
            (i) In general.--During the first year 
 beginning on or after the date that is 14 
 months after the date of enactment of this 
 subparagraph and during each subsequent year, 
 each covered entity described in subparagraph
            (L) of paragraph

    (4) (and any other covered 
 entity specified by the Secretary) shall report 
 to the Secretary (at a time and in a form and 
 manner specified by the Secretary) the 
 following information with respect to the 
 preceding year:
 ``
            (I) With respect to such covered 
 entity and each child site, as 
 applicable, of such entity--
 ``

    (aa) the total number of 
 individuals who were dispensed 
 or administered covered 
 outpatient drugs during such 
 preceding year that were 
 subject to an agreement under 
 this section; and
 ``

    (bb) the number of such 
 individuals described in a 
 category specified in clause
            (iii) , broken down by each such 
 category.
 ``
            (II) With respect to such covered 
 entity and each child site, as 
 applicable, of such entity--
 ``

    (aa) the percentage of 
 the total number of individuals 
 furnished items and services 
 during such preceding year who 
 were dispensed or administered 
 covered outpatient drugs during 
 such preceding year that were 
 subject to an agreement under 
 this section; and
 ``

    (bb) for each category 
 specified in clause
            (iii) , the 
 percentage of the total number 
 of individuals described in 
 such category furnished items 
 and services during such 
 preceding year who were 
 dispensed or administered 
 covered outpatient drugs during 
 such preceding year that were 
 subject to an agreement under 
 this section.
 ``
            (III) With respect to such 
 covered entity and each child site, as 
 applicable, of such entity, the total 
 costs incurred during the year at each 
 such site and the cost incurred at each 
 such site for charity care (as defined 
 in line 23 of worksheet S-10 to the 
 Medicare cost report, or in any 
 successor form).
 ``
            (IV) With respect to such covered 
 entity and each child site, as 
 applicable, of such entity, the costs 
 incurred during the year of furnishing 
 items and services at each such entity 
 or site to patients of such entity who 
 were entitled to benefits under part A 
 of title XVIII of the Social Security 
 Act or enrolled under part B of such 
 title, enrolled in a State plan under 
 title XIX of such Act (or a waiver of 
 such plan), or who were uninsured for 
 services, minus the sum of--
 ``

    (aa) payments under title 
 XVIII of such Act for such 
 items and services (including 
 any cost sharing for such items 
 and services);
 ``

    (bb) payments under title 
 XIX of such Act for such items 
 and services (including any 
 cost sharing for such items and 
 services); and
 ``
            (cc) payments by 
 uninsured patients for such 
 items and services.
 ``
            (V) With respect to such covered 
 entity and each child site, as 
 applicable, of such entity, the margin 
 (as defined in clause
            (iv) ) generated 
 on covered outpatient drugs subject to 
 an agreement under this section 
 dispensed or furnished by such entity 
 or site (and any entity pharmacy or 
 contract pharmacy dispensing such drugs 
 on behalf of such entity in accordance 
 with subparagraph
        (F) ), with each 
 component of the margin calculation 
 described in item

    (aa) through
            (cc) of 
 such clause listed as a separate line 
 item.
 ``
            (VI) To the extent the Secretary 
 requires covered entities described in 
 one of subparagraphs
        (A) through
        (K) of 
 paragraph

    (4) to report information 
 pursuant to this subparagraph, with 
 respect to each such covered entity, 
 use of margin (as defined in clause
            (iv) ) generated on covered outpatient 
 drugs subject to an agreement under 
 this section in the following 
 categories of expenditures, if 
 applicable, which the Secretary shall 
 define in interim final regulations in 
 a manner consistent with reporting 
 under the Health Resources and Services 
 Administration Uniform Data System

    (UDS) --
 ``

    (aa) medical care;
 ``

    (bb) dental care;
 ``
            (cc) mental health;
 ``
            (dd) pharmaceuticals, 
 which shall include margin used 
 to provide free and discounted 
 covered outpatient drugs 
 subject to an agreement under 
 this section dispensed or 
 furnished to eligible patients 
 (as defined in subparagraph
        (H) ), notwithstanding any UDS 
 reporting requirement that may 
 limit or interfere with the 
 inclusion of margin used for 
 such purpose;
 ``

    (ee) sliding fee 
 discounts;
 ``

    (ff) case management;
 ``

    (gg) transportation;
 ``

    (hh) patient and 
 community education;
 ``
            (ii) community health 
 workers;
 ``

    (jj) outreach;
 ``

    (kk) eligibility 
 assistance; and
 ``
            (ll) nutritional 
 assessment and referral.
 ``
            (ii) Publication.--The Secretary shall 
 publish data reported under clause
            (i) with 
 respect to a year annually on the public 
 website of the Department of Health and Human 
 Services in an electronic and searchable 
 format, which may include the 340B Office of 
 Pharmacy Affairs Information System (or a 
 successor to such system), in a manner that 
 shows each category of data reported in the 
 aggregate and identified by the specific 
 covered entity submitting such data. The 
 Secretary shall include in such publication the 
 disproportionate patient percentage (as defined 
 in 

section 1886
            (d) (5)
        (F)
            (vi) of the Social 
 Security Act) of each such covered entity (if 
 applicable) for each cost reporting period 
 occurring during such year.
 ``
            (iii) Categories specified.--For purposes 
 of clause
            (i) , the categories specified in this 
 clause are the following:
 ``
            (I) Individuals covered under a 
 group health plan or group or 
 individual health insurance coverage 
 (as such terms are defined in 

section 2791).
 ``
            (II) Individuals entitled to 
 benefits under part A or enrolled under 
 part B of title XVIII of the Social 
 Security Act.
 ``
            (III) Individuals enrolled under 
 a State plan under title XIX of such 
 Act (or a waiver of such plan).
 ``
            (IV) Individuals enrolled under a 
 State child health plan under title XXI 
 of such Act (or a waiver of such plan).
 ``
            (V) Individuals not described in 
 any preceding subclause and not covered 
 under any Federal health care program 
 (as defined in 

section 1128B of such 
 Act but including the program 
 established under chapter 89 of title 
 5, United States Code).
 ``
            (iv) === Definitions. ===
-In this subparagraph:
 ``
            (I) Child site.--The term `child 
 site' shall have the meaning given such 
 term in subparagraph
        (E) .
 ``
            (II) Entity pharmacy.--The term 
 `entity pharmacy' shall have the 
 meaning given such term in subparagraph
        (F) .
 ``
            (III) Margin.--The term `margin' 
 means, with respect to covered 
 outpatient drugs purchased by a covered 
 entity under an agreement under this 
 section, the following amount for such 
 drugs dispensed, furnished, or 
 administered to an individual by such 
 entity or a child site of such entity 
 (and any entity pharmacy or contract 
 pharmacy dispensing such drugs on 
 behalf of such entity in accordance 
 with subparagraph
        (F) )--
 ``

    (aa) aggregate payments 
 received by the covered entity 
 for such drugs from individuals 
 (including cost-sharing 
 amounts) and third parties, 
 including government and 
 private payors;
 ``

    (bb) aggregate costs to 
 acquire such drugs at either 
 the ceiling price described in 
 paragraph

    (1) or any voluntary 
 subceiling price at which the 
 covered entity purchased such 
 drug or drugs, as applicable; 
 minus
 ``
            (cc) aggregate costs 
 incurred by the covered entity 
 that are necessary for such 
 entity to participate in the 
 program under this section and 
 to comply with such program's 
 requirements, including 
 program-related compliance, 
 legal, educational, and 
 administrative costs (such 
 costs shall be determined in 
 accordance with Generally 
 Accepted Accounting 
 Principles), and compensation 
 paid to third-party 
 administrators or contract 
 pharmacies to carry out 
 program-related functions.''.

    (b) Rulemaking.--Not later than 180 days after the date of 
enactment of this Act, the Secretary of Health and Human Services shall 
issue an interim final rule to carry out 

section 340B

    (a)

    (5)
            (L) of the 
Public Health Service Act, as added by subsection

    (a) .

SEC. 11. REVISIONS TO EXISTING 340B HOSPITAL ELIGIBILITY REQUIREMENTS.

 

Section 340B

    (a)

    (4) of the Public Health Service Act (42 U.S.C. 
256b

    (a)

    (4) ) is amended--

    (1) in subparagraph
            (L) 
            (i) --
        (A) by inserting ``and that was registered with the 
 340B program in the covered entity identification 
 system established under subsection
            (d) (2)
        (B)
            (iv) as 
 such a hospital on or before December 1, 2024'' after 
 ``formally granted governmental powers by a unit of 
 state or local government''; and
        (B) by striking ``not entitled to benefits under 
 title XVIII of the Social Security Act'' and all that 
 follows up to the semicolon at the end and inserting 
 ``uninsured, as such terms are defined in subsection

    (a)

    (11) '';

    (2) by amending subparagraph
        (N) to read as follows:
 ``
        (N) An entity that is a critical access hospital 
 (as determined under 

section 1820
            (c) (2) of the Social 
 Security Act (42 U.S.C. 1395i-4
            (c) (2) )) or a rural 
 emergency hospital (as determined under the 
 requirements in 

section 1861

    (kkk) of the Social 
 Security Act (42 U.S.C. 1395x

    (kkk) and in implementing 
 regulations set forth in parts 419, 424, 485, 488, and 
 489 of title 42 of the Code of Federal Regulations in 
 effect as of January 1, 2024)), and that meets the 
 requirements of subparagraph
            (L) 
            (i) .''; and

    (3) in subparagraph
        (O) by inserting ``that demonstrates to 
 the Secretary that at least 60 percent of annual inpatient 
 discharges for cost reporting periods beginning after December 
 1, 2024, are for inpatients who reside in a county that is not 
 part of a Metropolitan Statistical Area, as defined by the 
 Director of the Office of Management and Budget'' before ``, or 
 a sole community hospital''.

SEC. 12. ADDITIONAL REQUIREMENTS FOR 340B HOSPITALS.

 

Section 340B

    (a) of the Public Health Service Act (42 U.S.C. 
256b

    (a) ) is amended by adding at the end the following:
 ``

    (11) Clarification of eligibility standards for private 
 nonprofit hospitals with a contract with a state or local 
 government to provide health care services.--
 ``
        (A) Contract requirements.--For purposes of 
 paragraph

    (4)
            (L) 
            (i) and cross-references to 
 subparagraph
            (L) or clause
            (i) of such paragraph 
 appearing in subparagraph
            (M) and subparagraph
        (O) of 
 such paragraph with respect to a rural referral center, 
 a private nonprofit hospital has a contract with a 
 State or local government to provide health care 
 services to low-income individuals who are uninsured 
 if--
 ``
            (i) the hospital submits a copy of the 
 contract (including any appendices or addenda 
 or subsequent amendments) to the Secretary for 
 review;
 ``
            (ii) the Secretary determines that the 
 contract creates an enforceable obligation for 
 the hospital to provide direct medical care to 
 low-income individuals who are uninsured in an 
 amount that represents at least 10 percent of 
 the hospital's total costs of care;
 ``
            (iii) the Secretary further determines, 
 based on a review of the contract (as described 
 in clause
            (i) ) that the contract creates an 
 enforceable obligation for the hospital to 
 furnish the individuals described in clause
            (ii) the full range of services provided at the 
 hospital (including any child sites); and
 ``
            (iv) the contract (as described in clause
            (i) ) is available to the public as part of the 
 information describing the hospital in the 
 covered entity identification system 
 established under subsection
            (d) (2)
        (B)
            (iv) .
 ``
        (B) Deregistration.--If at any time a hospital 
 not owned or operated by a unit of State or local 
 government that has been participating in the program 
 under this section on the basis of having a contract 
 with a State or local government to provide health care 
 services that is subject to subparagraph
        (A) no longer 
 satisfies a requirement under such subparagraph, the 
 hospital shall immediately notify the Secretary that 
 the hospital no longer satisfies the relevant 
 requirement, deregister the hospital from the program 
 under this section and the identification system 
 described in subsection
            (d) (2)
        (B)
            (iv) , and cease making 
 purchases under such program and representing to third 
 parties that it may purchase under such program.
 ``
            (C) Obligation to self-disclose.--A covered 
 entity described in subparagraph
        (B) shall immediately 
 disclose to the Secretary and the manufacturer of the 
 affected covered outpatient drug any purchase made 
 under the program under this section by such covered 
 entity that, at the time of the purchase of such drug, 
 did not fully satisfy the requirements in subparagraph
        (A) . Any such purchase shall require the covered entity 
 to promptly conduct an audit supervised by the 
 Secretary to identify the full scope of noncompliance 
 with such requirements and to provide the written 
 results of such audit to the Secretary and the 
 manufacturer of the affected covered outpatient drug. 
 The covered entity shall be liable to the manufacturer 
 of the covered outpatient drug that is the subject of 
 the noncompliance in an amount equal to the reduction 
 in the price of the drugs provided under subsection

    (a)

    (1) , plus interest on such amount, which shall be 
 compounded monthly and equal to the current short-term 
 interest rate as determined by the Federal Reserve for 
 the time period for which the covered entity is liable.
 ``
            (D) Civil monetary penalty.--Where a covered 
 entity fails to satisfy a requirement in subparagraph
        (B) or
            (C) , the covered entity shall be required to pay 
 a civil monetary penalty equal to $2,500 for each 
 violation, which amount shall be adjusted for inflation 
 annually to reflect the rate of change in the Consumer 
 Price Index for All Urban Consumers published by the 
 Bureau of Labor Statistics. The provisions of 

section 1128A of the Social Security Act (other than 
 subsections

    (a) and

    (b) ) shall apply to a civil 
 monetary penalty under this subparagraph in the same 
 manner as such provisions apply to a penalty or 
 proceeding under 

section 1128A

    (a) . The Office of 
 Inspector General of the Department of Health and Human 
 Services shall carry out the provisions related to the 
 imposition of civil monetary penalties under this 
 subparagraph.
 ``
        (E) === Definitions. ===
-In this paragraph:
 ``
            (i) Federal poverty guidelines.--The term 
 `Federal poverty guidelines' means the poverty 
 guidelines updated periodically in the Federal 
 Register by the Department of Health and Human 
 Services pursuant to 

section 9902

    (2) of title 
 42, United States Code.
 ``
            (ii) Low-income individual.--The term 
 `low-income individual' means an individual 
 with family income at or below 200 percent of 
 the Federal poverty guidelines.
 ``
            (iii) Uninsured.--The term `uninsured' 
 means lacking minimum essential coverage, as 
 defined in subsection 5000A

    (f) of the Internal 
 Revenue Code (26 U.S.C. 5000A

    (f) ) and 
 implementing regulations.
 ``

    (12) Additional requirement for private nonprofit 
 disproportionate share hospitals located in urban areas.--
 ``
        (A) In general.--A covered entity described in 
 paragraph

    (4)
            (L) 
            (i) that is either a private nonprofit 
 hospital that has as the basis for its participation in 
 the program under this section a contract with a State 
 or local government as described in such paragraph and 
 in paragraph

    (11) , or that is a private nonprofit 
 corporation which is formally granted governmental 
 powers by a unit of State or local government, and such 
 entity is located in a county that is part of a 
 Metropolitan Statistical Area, as defined by the Office 
 of Management and Budget, must, for the preceding year, 
 fall within the top 40 percent of hospitals on each of 
 the lists described in subparagraphs
        (B) and
            (C) prepared by the Secretary with respect to the State in 
 which the covered entity is located. As described 
 further in subparagraph
            (D) , placement in the top 40 
 percent of hospitals on both of such lists is a 
 condition of such covered entity's participation in the 
 program under this section and failure to meet this 
 condition shall require deregistration and self-
 disclosure using the procedures described in 
 subparagraphs
        (B) and
            (C) of paragraph

    (11) . Such 
 covered entity shall be subject to a civil monetary 
 penalty described in paragraph

    (11)
            (D) for failure to 
 deregister and self-disclose in accordance with the 
 preceding sentence.
 ``
        (B) Medicaid and chip outpatient revenue.--Within 
 90 days following the conclusion of a year, the 
 Secretary shall prepare and make available to the 
 public in an electronic, machine-readable format for 
 each State for the concluded year, a list that ranks 
 all acute care hospitals in such State in descending 
 order based on each hospital's share of total 
 outpatient services revenue derived from base 
 reimbursement to such hospital (excluding supplemental 
 and indirect reimbursement) under title XIX of the 
 Social Security Act (including with respect to 
 individuals also entitled to benefits under part A of 
 title XVIII of such Act or enrolled in part B of title 
 XVIII of such Act) and payments under title XXI of such 
 Act for items and services furnished on an outpatient 
 basis at the hospital (including any cost sharing for 
 such items and services). The Secretary shall specify 
 the threshold for the top 40 percent of hospitals on 
 the list.
 ``
            (C) Uncompensated outpatient care.--Within 90 
 days following the conclusion of a year, the Secretary 
 shall prepare and make available to the public in an 
 electronic, machine-readable format for each State for 
 the concluded year, a list that ranks all acute care 
 hospitals in such State in descending order based on 
 each hospital's total cost of uncompensated care for 
 items and services furnished on an outpatient basis as 
 a share of the hospital's total outpatient services 
 revenue. For purposes of this list, costs of 
 uncompensated outpatient care shall be determined in a 
 manner consistent with the instructions on worksheet S-
 10 to the Medicare cost report (or any successor form), 
 with adjustments to limit uncompensated outpatient care 
 costs to those incurred in providing items and services 
 on an outpatient basis at the hospital. The Secretary 
 shall specify the threshold for the top 40 percent of 
 hospitals on the list.
 ``
            (D) Deregistration.--Within 30 days following the 
 Secretary's publication of the lists described in 
 subparagraphs
        (B) and
            (C) , each covered entity subject 
 to this paragraph that is not included in the top 40 
 percent of hospitals on both lists shall notify the 
 Secretary that the covered entity does not satisfy one 
 or more requirements described in this paragraph, 
 deregister the entity from the program under this 
 section and the identification system described in 
 subsection
            (d) (2)
        (B)
            (iv) , and cease making purchases 
 under such program and representing to third parties 
 that it may purchase under such program. Such an entity 
 may seek to register under another covered entity 
 category described in paragraph

    (4) if such entity 
 meets the criteria for such a category and applicable 
 requirements under this section.
 ``
        (E) Obligation to self-disclose.--A covered 
 entity described in subparagraph
            (D) shall immediately 
 disclose to the Secretary and the manufacturer of the 
 affected covered outpatient drug any purchase made 
 under the program under this section by such covered 
 entity that, at the time of the purchase of such drug, 
 did not fully satisfy the requirements in subparagraphs
        (B) and
            (C) . Any such purchase shall require the 
 covered entity to promptly conduct an audit supervised 
 by the Secretary to identify the full scope of 
 noncompliance with such requirements and to provide the 
 written results of such audit to the Secretary and the 
 manufacturer of the affected covered outpatient drug. 
 The covered entity shall be liable to the manufacturer 
 of the covered outpatient drug that is the subject of 
 the noncompliance in an amount equal to the reduction 
 in the price of the drugs provided under paragraph

    (1) , 
 plus interest on such amount, which shall be compounded 
 monthly and equal to the current short-term interest 
 rate as determined by the Federal Reserve for the time 
 period for which the covered entity is liable.
 ``
        (F) Civil monetary penalty.--Where a covered 
 entity fails to satisfy a requirement in subparagraph
            (D) or
        (E) , the covered entity shall be required to pay 
 a civil monetary penalty equal to $2,500 for each 
 violation, which amount shall be adjusted for inflation 
 annually to reflect the rate of change in the Consumer 
 Price Index for All Urban Consumers published by the 
 Bureau of Labor Statistics. The provisions of 

section 1128A of the Social Security Act (other than 
 subsections

    (a) and

    (b) ) shall apply to a civil 
 monetary penalty under this subparagraph in the same 
 manner as such provisions apply to a penalty or 
 proceeding under 

section 1128A

    (a) . The Office of 
 Inspector General of the Department of Health and Human 
 Services shall carry out the provisions related to the 
 imposition of civil monetary penalties under this 
 subparagraph.
 ``

    (13) Prohibition against extraordinary collection 
 actions.--
 ``
        (A) Ecas prohibited.--A covered entity described 
 in subparagraphs
            (L) through
        (O) of paragraph

    (4) is 
 prohibited from engaging in extraordinary collection 
 actions

    (ECAs) , as such term is described in 

section 501

    (r)

    (6) of the Internal Revenue Code and its 
 implementing regulations set forth in 

section 1.501

    (r) -
 6 of title 26 of the Code of Federal Regulations (or 
 any successor regulations), with respect to health care 
 items and services furnished to uninsured individuals 
 or low-income individuals.
 ``
        (B) Audits.--The Secretary shall audit for 
 covered entity compliance with this paragraph, 
 establish a process for individuals to report suspected 
 violations of this paragraph to the Secretary, and 
 promptly and fully investigate such reports of 
 suspected violations.
 ``
            (C) Civil monetary penalty.--Where a covered 
 entity violates the prohibition in this paragraph, the 
 covered entity shall be required to pay a civil 
 monetary penalty equal to $2,500 for each extraordinary 
 collection action taken with respect to an individual 
 described in this paragraph, which amount shall be 
 adjusted for inflation annually to reflect the rate of 
 change in the Consumer Price Index for All Urban 
 Consumers published by the Bureau of Labor Statistics. 
 The provisions of 

section 1128A of the Social Security 
 Act (other than subsections

    (a) and

    (b) ) shall apply to 
 a civil monetary penalty under this paragraph in the 
 same manner as such provisions apply to a penalty or 
 proceeding under 

section 1128A

    (a) . The Office of 
 Inspector General of the Department of Health and Human 
 Services shall carry out the provisions related to the 
 imposition of civil monetary penalties under this 
 paragraph.
 ``
            (D) === Definitions. ===
-In this paragraph, the terms 
 `low-income individual' and `uninsured' have the 
 meanings given such terms in paragraph

    (11) .
 ``

    (14) Additional requirement for certain hospitals.--
 ``
        (A) In general.--During the first calendar year 
 beginning on or after the date that is 24 months after 
 the date of enactment of this paragraph and during each 
 subsequent calendar year, a covered entity described in 
 paragraph

    (4)
            (L) shall determine by October 1 of each 
 such year, based on the most recent year of data it has 
 reported to the Secretary under paragraph

    (5)
            (L) at 
 that point in time, whether the annual charity care 
 costs it incurred for the year reported were greater 
 than or equal to the margin it realized under the 
 program under this section for that same year. As 
 described further in subparagraph
            (D) , for the period 
 specified in the preceding sentence, having annual 
 charity care costs that equal or exceed the margin for 
 the most recently reported year is a condition of such 
 covered entity's participation in the program under 
 this section for the upcoming calendar year, and 
 failure to meet this condition shall require 
 deregistration and self-disclosure using the procedures 
 described in subparagraphs
            (D) and
        (E) . Such covered 
 entity shall be subject to a civil monetary penalty 
 described in subparagraph
        (F) for failure to deregister 
 and self-disclose in accordance with the preceding 
 sentence.
 ``
        (B) Annual charity care costs.--The term `annual 
 charity care costs' means the total costs incurred 
 during the year by the covered entity and its child 
 sites (as defined in paragraph

    (5)
        (E)
            (i) ) for charity 
 care (as defined in line 23 of worksheet S-10 to the 
 Medicare cost report, or in any successor form).
 ``
            (C) Margin.--The term `margin' means the margin 
 reported by the covered entity for the year pursuant to 
 paragraph

    (5)
            (L) 
            (i) 
            (V) .
 ``
            (D) Deregistration and conditions for subsequent 
 registration.--
 ``
            (i) De-registration.--On October 1 of 
 each year beginning on or after the date that 
 is 24 months after the date of enactment of 
 this paragraph, each covered entity subject to 
 this paragraph that has reported at least one 
 year of data to the Secretary under paragraph

    (5)
            (L) and that does not have, for the most 
 recently reported year, annual charity care 
 costs greater than or equal to the margin, 
 shall notify the Secretary that it does not 
 meet the condition of participation under this 
 paragraph for the upcoming calendar year, 
 deregister the entity from the program under 
 this section and the identification system 
 described in subsection
            (d) (2)
        (B)
            (iv) for the 
 upcoming calendar year, cease making purchases 
 under such program as of the start of the 
 upcoming calendar year, cease representing to 
 third parties that it may purchase under such 
 program beyond the current calendar year, and 
 refrain from purchasing covered outpatient 
 drugs under this section in quantities 
 exceeding such entity's bona fide needs for the 
 remainder of the current calendar year.
 ``
            (ii) Registration following de-
 registration.--
 ``
            (I) Registration under another 
 covered entity category.--A covered 
 entity that must deregister under this 
 subparagraph shall not be prohibited 
 from registering to participate in the 
 program under this section under 
 another covered entity category 
 described in paragraph

    (4) if such 
 entity meets the criteria for such a 
 category and applicable requirements 
 under this section.
 ``
            (II) Registration under paragraph

    (4)
            (l) .--In order to register under 
 paragraph

    (4)
            (L) , a hospital that has 
 been required to deregister under this 
 subparagraph must demonstrate to the 
 Secretary (in a form and manner 
 specified by the Secretary, and in 
 addition to demonstrating that it 
 satisfies the other applicable 
 registration criteria under paragraph

    (4)
            (L) ) that its annual charity care 
 cost (as defined in subparagraph
        (B) ) 
 for the most recent year that the 
 hospital would have reported under 
 paragraph

    (4)
            (L) absent the 
 deregistration exceeded by at least one 
 percent point the annual charity care 
 cost for the year preceding 
 deregistration by the hospital. If the 
 hospital is found to meet this 
 requirement and approved by the 
 Secretary for registration under 
 paragraph

    (4)
            (L) , then the hospital 
 will be required to resume reporting 
 under paragraph

    (5)
            (L) and (once the 
 entity has reported at least one year 
 of data to the Secretary under 
 paragraph

    (5)
            (L) ) to meet the condition 
 of participation described in this 
 paragraph for the most recently 
 reported year as of October 1 of each 
 year.
 ``
        (E) Obligation to self-disclose.--A covered 
 entity described in subparagraph
            (D) shall immediately 
 disclose to the Secretary and the manufacturer of the 
 affected covered outpatient drug any purchase it made 
 under this section during a calendar year in which it 
 was ineligible to participate in the program under this 
 section. Any such purchase shall require the covered 
 entity promptly to conduct an audit supervised by the 
 Secretary to identify the full scope of noncompliance 
 and to provide the written results of such audit to the 
 Secretary and the manufacturer of the affected covered 
 outpatient drug. The covered entity shall be liable to 
 the manufacturer of the covered outpatient drug that is 
 the subject of the noncompliance in an amount equal to 
 the reduction in the price of the drugs provided under 
 paragraph

    (1) , plus interest on such amount, which 
 shall be compounded monthly and equal to the current 
 short-term interest rate as determined by the Federal 
 Reserve for the time period for which the covered 
 entity is liable.
 ``
        (F) Civil monetary penalty.--Where a covered 
 entity fails to satisfy a requirement in subparagraph
            (D) or
        (E) , the covered entity shall be required to pay 
 a civil monetary penalty equal to $2,500 for each 
 violation, which amount shall be adjusted for inflation 
 annually to reflect the rate of change in the Consumer 
 Price Index for All Urban Consumers published by the 
 Bureau of Labor Statistics. The provisions of 

section 1128A of the Social Security Act (other than 
 subsections

    (a) and

    (b) ) shall apply to a civil 
 monetary penalty under this subparagraph in the same 
 manner as such provisions apply to a penalty or 
 proceeding under 

section 1128A

    (a) . The Office of 
 Inspector General of the Department of Health and Human 
 Services shall carry out the provisions related to the 
 imposition of civil monetary penalties under this 
 subparagraph.''.

SEC. 13. 340B PROGRAM.

 

Section 340B

    (a) of the Public Health Service Act (42 U.S.C. 
256b

    (a) ) is further amended by adding at the end the following:
 ``

    (15) 340B program.--The intent of this section is to 
 provide for manufacturer price reductions that enable covered 
 entities, whose mission is to serve underserved or otherwise 
 vulnerable communities, to increase access to affordable drugs 
 and health services for these communities.''.

SEC. 14. AUDITS OF PRIVATE NONHOSPITAL CONTRACTS WITH STATE AND LOCAL 
 GOVERNMENTS.

 

Section 340B
            (d) (2)
        (B) of the Public Health Service Act (42 U.S.C. 
256b
            (d) (2)
        (B) ) is amended by adding at the end the following:
 ``
            (vi) The conducting of annual audits by 
 the Secretary of contracts between a covered 
 entity described in subparagraph
            (L) or 
 subparagraph
            (M) of subsection

    (a)

    (4) , or 
 subparagraph
        (O) of such subsection with 
 respect to a rural referral center, that is a 
 private nonprofit hospital subject to the 
 requirements in subsections

    (a)

    (4)
            (L) 
            (i) and

    (a)

    (11) and a State or local government for at 
 least 10 percent of all such entities 
 participating in the program under this 
 section. The Secretary shall develop and 
 publicly disclose standards used to determine 
 whether such contracts satisfy the applicable 
 requirements described in subsections

    (a)

    (4)
            (L) 
            (i) and

    (a)

    (11) and publicly disclose 
 the findings from such audits. The Secretary 
 shall remove from the program under this 
 section any such entity that does not have a 
 contract in effect with a State or local 
 government that satisfies the applicable 
 requirements set forth in subsections

    (a)

    (4)
            (L) 
            (i) and

    (a)

    (11) , and such removal 
 shall require such covered entity to promptly 
 conduct an audit supervised by the Secretary to 
 identify discounts on covered outpatient drugs 
 purchased at a discount under this section to 
 which such covered entity was not eligible and 
 provide the written results of such audit to 
 the Secretary and the manufacturer of the 
 affected covered outpatient drug. Such covered 
 entity shall be liable to the manufacturer of 
 such covered outpatient drug in an amount equal 
 to the reduction in the price of the drugs 
 provided under subsection

    (a)

    (1) , plus interest 
 on such amount, which shall be compounded 
 monthly and equal to the current short-term 
 interest rate as determined by the Federal 
 Reserve for the time period for which the 
 covered entity is liable. Where a covered 
 entity described in this clause knowingly and 
 intentionally violates a requirement in 
 subsection

    (a)

    (4)
            (L) 
            (i) or

    (a)

    (11) , the covered 
 entity shall be required to pay a civil 
 monetary penalty equal to $1,000 for each claim 
 for a covered outpatient drug that is subject 
 to the violation, which amount shall be 
 adjusted for inflation annually to reflect the 
 rate of change in the Consumer Price Index for 
 All Urban Consumers published by the Bureau of 
 Labor Statistics. The provisions of 

section 1128A of the Social Security Act (other than 
 subsections

    (a) and

    (b) ) shall apply to a civil 
 monetary penalty under this clause in the same 
 manner as such provisions apply to a penalty or 
 proceeding under 

section 1128A

    (a) . The Office 
 of Inspector General of the Department of 
 Health and Human Services shall carry out the 
 provisions related to the imposition of civil 
 monetary penalties under this clause.''.

SEC. 15. ENSURING COVERED ENTITY COMPLIANCE WITH TRANSPARENCY 
 REQUIREMENTS.

 

Section 340B
            (d) (2)
        (B) of the Public Health Service Act (42 U.S.C. 
256b
            (d) (2)
        (B) ) is further amended by adding at the end the following:
 ``
            (vii) The imposition of civil monetary 
 penalties in amounts determined appropriate by 
 the Secretary in the case that the Secretary 
 determines that a covered entity is not in 
 compliance with subsection

    (a)

    (5)
            (L) .''.

SEC. 16. 340B CLAIMS DATA CLEARINGHOUSE.

    (a) 340B Claims Data Clearinghouse.--

Section 340B
            (d) (2) of the 
Public Health Service Act (42 U.S.C. 256b
            (d) (2) ) is amended by adding 
at the end the following:
 ``
            (C) 340B claims data clearinghouse.--
 ``
            (i) In general.--The improvements 
 described in subparagraph
        (A) shall include the 
 establishment of a claims data clearinghouse 
 described in this subparagraph. Not later than 
 one year after the date of enactment of this 
 subparagraph, the Secretary shall enter into a 
 contract with a third-party entity that meets 
 the criteria specified in clause
            (ii) (such 
 entity is hereinafter referred to as the 
 `clearinghouse') for purposes of--
 ``
            (I) identifying claims for 
 covered outpatient drugs purchased 
 under the program under this section 
 for which reimbursement was made under 
 a State plan (or waiver of such plan) 
 and ensuring such claims are or were 
 not included in any State rebate 
 request under 

section 1927 of the 
 Social Security Act in violation of 
 sections 1903
            (m) (2)
        (A)
            (xiii) or 
 1927

    (j)

    (1) of such Act or 

section 340B

    (a)

    (5)
        (A) of this Act;
 ``
            (II) identifying claims for 
 covered outpatient drugs purchased 
 under the program under this section 
 that are selected drugs (as defined in 
 

section 1192
            (c) of the Social Security 
 Act) and ensuring that, for each such 
 claim, the nonduplication requirements 
 of 

section 1193
            (d) of such Act have 
 been met;
 ``
            (III) identifying claims for 
 covered outpatient drugs purchased 
 under the program under this section 
 that are either Part B rebatable drugs 
 or Part D rebatable drugs and providing 
 all relevant information regarding such 
 claims to the Secretary to ensure that 
 claims that are subject to a discount 
 under the program under this section 
 are excluded from inflation rebate 
 calculations pursuant to 

section 1847A
            (i) (3)
        (B)
            (ii) 
            (I) of the Social 
 Security Act (with respect to Part B 
 rebatable drugs) and 

section 1860D-
 14B

    (b)

    (1)
        (B) of such Act (with respect 
 to Part D rebatable drugs);
 ``
            (IV) identifying duplicate claims 
 for a rebate or discount submitted by 
 two or more covered entities (or an 
 entity or entities acting on their 
 behalf) with respect to the same unit 
 of a covered outpatient drug purchased 
 under the program under this section 
 and implementing a process to ensure a 
 manufacturer of such a drug does not 
 pay more than one rebate or discount 
 under this section with respect to such 
 unit; and
 ``
            (V) providing to manufacturers of 
 covered outpatient drugs, in a form and 
 manner specified by the Secretary in 
 consultation with manufacturers, access 
 to the data described in subsection

    (a)

    (5)
        (J) with respect to each dispense 
 or administration of a manufacturer's 
 covered outpatient drugs for which a 
 covered entity receives a discount 
 under this section.
 ``
            (ii) Criteria for clearinghouse.--The 
 criteria described in this clause include the 
 following:
 ``
            (I) The clearinghouse shall not 
 be owned by, overseen by, or affiliated 
 with a covered entity described in 
 subsection

    (a)

    (4) and shall not 
 currently be a party to a contractual 
 arrangement with the Health Resources 
 and Services Administration.
 ``
            (II) The clearinghouse shall have 
 demonstrated experience adjudicating 
 claims for health care items and 
 services in real time for self- and 
 provider-administered drugs and working 
 with protected health information and 
 confidential pricing information.
 ``
            (III) The clearinghouse shall 
 agree to confidentiality obligations 
 that prohibit the clearinghouse from 
 using information it receives under 
 this subparagraph for any purpose other 
 than a purpose set forth in this 
 subparagraph, or disclosing such 
 information to any individual or entity 
 other than the Secretary, provided the 
 Secretary shall not use such 
 information for purposes of making 
 reimbursement or coverage 
 determinations, or a manufacturer in 
 accordance with this subparagraph (and 
 only with respect to such 
 manufacturer's covered outpatient 
 drugs).
 ``
            (IV) The clearinghouse shall 
 maintain the security of the data 
 reported pursuant to this subsection

    (a)

    (5)
        (J) in a manner consistent with 
 the HIPAA Security Standards set forth 
 in sections 164.304-164.312 and 164.316 
 of title 45, Code of Federal 
 Regulations (or any successor 
 regulations), as if the clearinghouse 
 were subject to those standards as a 
 HIPAA covered entity.
 ``
            (iii) Duties of clearinghouse.--The 
 clearinghouse shall--
 ``
            (I) review claims level data for 
 covered outpatient drugs described in 
 subsection

    (a)

    (5)
        (J) submitted by 
 covered entities in accordance with 
 such subsection;
 ``
            (II) review claims level data, 
 including rebate file data, submitted 
 to the clearinghouse by State agencies 
 and Medicaid managed care organizations 
 for covered outpatient drugs subject to 
 an agreement under this section 
 dispensed or administered to 
 individuals enrolled under a State plan 
 (or a waiver of such plan) and claims 
 level data submitted by Medicare 
 Administrative Contractors, Medicare 
 Advantage organizations (including 
 Medicare Advantage Organizations 
 offering an MA-PD plan), and PDP 
 sponsors for covered outpatient drugs 
 subject to an agreement under this 
 section dispensed or administered to 
 individuals enrolled under Part B, Part 
 C, or Part D of title XVIII of the 
 Social Security Act;
 ``
            (III) within 5 days of 
 identification, provide written notice 
 of a duplicate discount or rebate to 
 the State agency, the Secretary, the 
 covered entity, and the affected drug 
 manufacturer itemizing any violation 
 described in clause
            (i) 
            (I) ;
 ``
            (IV) within 5 days of 
 identification, provide written notice 
 to the Secretary, the covered entity 
 (or entities, as applicable), and the 
 affected drug manufacturer itemizing 
 any violation described in subclauses
            (II) or
            (IV) of clause
            (i) ;
 ``
            (V) have access to the internet 
 website described in paragraph

    (1)
        (B)
            (iii) containing applicable 
 ceiling prices for covered outpatient 
 drugs for purposes of identifying 
 violations described in clause
            (i) 
            (II) ;
 ``
            (VI) subject to clauses
            (i) 
            (V) and
            (ii) 
            (III) , make the data described 
 in subclauses
            (I) and
            (II) available to 
 the manufacturer in electronic format 
 not later than 10 days after such data 
 is provided to the clearinghouse;
 ``
            (VII) upon request by the Centers 
 for Medicare & Medicaid Services, make 
 the data described in subclauses
            (I) and
            (II) available for purposes of 
 excluding 340B purchased units of Part 
 B rebatable drugs or Part D rebatable 
 drugs from Part B or Part D inflation 
 rebates pursuant to 

section 1847A
            (i) (3)
        (B)
            (ii) 
            (I) or 

section 1860D-
 14B

    (b)

    (1)
        (B) of the Social Security 
 Act; and
 ``
            (VIII) identify claims for 
 covered outpatient drugs subject to an 
 agreement under this section that are 
 submitted by pharmacies removed from 
 the 340B program pursuant to subsection

    (a)

    (5)
        (F)
            (ix) 
            (III) and notify the 
 Secretary of the submission of any such 
 claims by any such pharmacies.
 ``
            (iv) Resolution of violations.--
 ``
            (I) Medicaid duplicate 
 discounts.--The Secretary, in 
 consultation with the State, as 
 appropriate, shall take prompt action 
 to fairly and adequately resolve 
 violations described in clause
            (i) 
            (I) reported by the clearinghouse in 
 accordance with clause
            (iii) 
            (III) .
 ``
            (II) Nonduplication with maximum 
 fair price.--The Secretary shall take 
 prompt action to fairly and adequately 
 resolve violations described in clause
            (i) 
            (II) reported by the clearinghouse 
 in accordance with clause
            (iii) 
            (IV) .
 ``
            (III) Duplicate covered entity 
 discounts.--The Secretary shall develop 
 and implement a process to resolve 
 duplicate claims for a rebate or 
 discount under this section described 
 in clause
            (i) 
            (IV) such that the 
 manufacturer pays only one rebate or 
 discount under this section with 
 respect to the same unit of a covered 
 outpatient drug purchased under the 
 program under this section. Covered 
 entities (and any entities acting on 
 their behalf) shall be subject to 
 determinations made by the Secretary to 
 resolve such duplicate claims (and the 
 Secretary may contract this function to 
 the clearinghouse to make such 
 determinations). In making such 
 determinations, the Secretary shall 
 investigate duplicate claims for 
 rebates or discounts and require 
 covered entities (and any entities 
 acting on their behalf) to take action 
 to avoid or pay refunds to reverse a 
 duplicate claim.
 ``
            (IV) Refunds to manufacturers.--
 The Secretary shall be responsible for 
 promptly refunding affected 
 manufacturers of covered outpatient 
 drugs for violations described in 
 subclauses
            (I) and
            (II) of clause
            (i) and seeking subsequent repayment from 
 covered entities or States (with 
 respect to violations described in 
 clause
            (i) 
            (I) ), or providers or 
 dispensers (with respect to violations 
 described in clause
            (i) 
            (II) ). Subject 
 to the determination by the Secretary 
 or clearinghouse under subclause
            (III) , 
 the covered entity (or entities) shall 
 be liable to the manufacturer of the 
 covered outpatient drug that is the 
 subject of the violation described in 
 clause
            (i) 
            (IV) in an amount equal to 
 the reduction in the price of the drug 
 (as described in subsection

    (a)

    (1) ) and 
 shall repay such amount to such 
 manufacturer within 60 days of 
 receiving a notice described in clause
            (iii) 
            (IV) .''.

    (b) Provision of Drug Claims Data by Medicaid; Removal of Duplicate 
Claims.--

    (1) Medicaid.--

Section 1902

    (a) of the Social Security Act 
 (42 U.S.C. 1396a

    (a) ) is amended--
        (A) in paragraph

    (86) , by striking ``and'' at the 
 end;
        (B) in paragraph

    (87)
            (D) , by striking the period 
 and inserting ``; and''; and
            (C) by inserting after paragraph

    (87) the following 
 new paragraph:
 ``

    (88) provide for a mechanism for the State agency to 
 furnish, and for the State agency to require each Medicaid 
 managed care organization (as defined in 

section 1903
            (m) (1)
        (A) ) 
 to furnish, to the clearinghouse, in a machine-readable format, 
 within 5 days following the date of claim payment, claims level 
 data, including rebate file data, for covered outpatient drugs 
 dispensed, furnished, or administered to individuals enrolled 
 under a State plan (or a waiver of such plan) that includes, 
 with respect to each dispense, furnishing, or administration of 
 such a drug, the data elements described in subsection 
 340B

    (a)

    (5)
        (J)
            (iii) of the Public Health Service Act, and for 
 the State agency to remove from any rebate request described in 
 

section 340B
            (d) (2)
            (C) 
            (i) 
            (I) of such Act any claim that is the 
 subject of a notice submitted by such entity under 

section 340B
            (d) (2)
            (C) 
            (iii) 
            (III) of such Act.''.
            (c) Provision of Drug Claims Data by Medicare.--

    (1) Medicare part b.--

Section 1842 of the Social Security 
 Act (42 U.S.C. 1395u) is amended by adding at the end the 
 following:
 ``
            (v) Provision of Drug Claims Data; Mechanism To Refund Duplicated 
Amounts.--Each Medicare administrative contractor shall furnish to the 
clearinghouse, in a machine-readable format, claims level data for 
covered outpatient drugs furnished or administered to individuals 
enrolled under this part that includes, with respect to each furnishing 
or administration of such a drug, the data elements described in 

section 340B

    (a)

    (5)
        (J)
            (iii) of the Public Health Service Act. Each 
Medicare administrative contractor shall furnish such data to the 
clearinghouse within 5 days following the date the claim for such drug 
is paid by the Medicare administrative contractor.''.

    (2) Medicare advantage organizations.--

Section 1857

    (e) of 
 the Social Security Act (42 U.S.C. 1395w-27

    (e) ) is amended by 
 adding at the end the following:
 ``

    (6) Provision of drug claims data; mechanism to refund 
 duplicated amounts.--A contract under this part shall require a 
 Medicare+Choice organization to furnish to the clearinghouse, 
 in a machine-readable format, claims level data for covered 
 outpatient drugs furnished or administered to individuals 
 enrolled with the organization under this part that includes, 
 with respect to each furnishing or administration of such a 
 drug, the data elements described in 

section 340B

    (a)

    (5)
        (J)
            (iii) of the Public Health Service Act. Such contract shall require 
 the Medicare+Choice organization to furnish such data to the 
 clearinghouse within 5 days following the date the claim for 
 such drug is paid by the Medicare+Choice organization.''.

    (3) Prescription drug plans.--

Section 1860D-12

    (b) of the 
 Social Security Act (42 U.S.C. 1395w-112

    (b) ) is amended by 
 adding at the end the following:
 ``

    (9) Provision of drug claims data; mechanism to refund 
 duplicated amounts.--A contract under this part shall require a 
 PDP sponsor to furnish to the clearinghouse in a machine-
 readable format, claims level data for covered outpatient drugs 
 dispensed to individuals enrolled in a prescription drug plan 
 offered by such sponsor under this part that includes, with 
 respect to each dispense of such drug, the data elements 
 described in 

section 340B

    (a)

    (5)
        (J)
            (iii) of the Public Health 
 Service Act. Such contract shall require a PDP sponsor to 
 furnish such data to the clearinghouse within 5 days following 
 the date the claim for such drug is paid by the PDP sponsor.''.

    (4) MA-pds.--

Section 1857

    (f)

    (3) of the Social Security Act 
 (42 U.S.C. 1395w-27

    (f)

    (3) ) is amended by adding at the end the 
 following:
 ``
        (F) Provision of drug claims data; mechanism to 
 refund duplicated amounts.--

Section 1860D-12

    (b)

    (9) .''.

SEC. 17. LIMITATION ON ADMINISTRATOR SERVICE FEES AND CONTRACT PHARMACY 
 FEES.

 

Section 340B of the Public Health Service Act (42 U.S.C. 256b) is 
amended by adding at the end the following:
 ``

    (f) Requirements for TPA and Contract Pharmacy Remuneration.--
 ``

    (1) Third-party administrator fees.--A third-party 
 administrator furnishing 340B program-related services on 
 behalf of a covered entity described in subsection

    (a)

    (4) , 
 including reviewing or processing claims or other information 
 to identify covered outpatient drugs dispensed to individuals 
 who are patients of the covered entity (as defined in 
 subsection

    (b)

    (3) ) may receive remuneration from such covered 
 entity for the performance of such services only if--
 ``
        (A) such remuneration is a flat dollar amount not 
 directly or indirectly based on any price of, or 
 discount or other remuneration provided with respect 
 to, a covered outpatient drug, paid for each unit of 
 service furnished to the covered entity, regardless of 
 whether a prescription was dispensed to an individual 
 who is a patient of the covered entity;
 ``
        (B) the amount of such remuneration is consistent 
 with fair market value in an arm's-length transaction 
 for the bona fide, itemized 340B-related services 
 actually performed on behalf of the covered entity; and
 ``
            (C) such remuneration complies with applicable 
 State and Federal law, including 

section 1128B

    (b) of 
 the Social Security Act.
 ``

    (2) Contract pharmacy fees.--A contract pharmacy that has 
 entered into a written agreement with a covered entity pursuant 
 to and satisfies the applicable requirements in subsection

    (a)

    (5)
        (F) may receive remuneration from such covered entity for 
 the performance of services associated with dispensing covered 
 outpatient drugs subject to an agreement under this section to 
 individuals who are patients of the covered entity (as defined 
 in subsection

    (b)

    (3) ) only if--
 ``
        (A) such remuneration is a flat dollar amount not 
 directly or indirectly based on any price of, or 
 discount or other remuneration provided with respect 
 to, a covered outpatient drug, paid for each dispense 
 of such a drug to a patient of the covered entity;
 ``
        (B) the amount of remuneration for each dispense 
 does not exceed 125 percent of the average per-
 prescription dispensing fee paid to such pharmacy by 
 all third-party payors, based on data from the most 
 recent full calendar year for which such data is 
 available;
 ``
            (C) the amount of such remuneration is consistent 
 with fair market value in an arm's-length transaction 
 for the bona fide, itemized 340B-related services 
 actually performed on behalf of the covered entity; and
 ``
            (D) such remuneration complies with applicable 
 State and Federal law, including 

section 1128B

    (b) of 
 the Social Security Act.
 For purposes of subparagraph
        (B) , if a covered entity has 
 entered into an agreement for contract pharmacy services 
 pursuant to subsection

    (a)

    (5)
        (F) that permits the contract 
 pharmacy service provider to dispense covered outpatient drugs 
 on behalf of the covered entity at more than one pharmacy 
 location, the average dispensing fee shall be calculated across 
 all pharmacy locations subject to such agreement.
 ``

    (3) Auditable records.--A covered entity shall retain 
 copies of written agreements with third-party administrators or 
 contract pharmacies described in this subsection for a period 
 of time specified by the Secretary and shall make copies of 
 such agreements available to the Secretary or their designee 
 upon request.
 ``

    (4) Civil monetary penalty.--A third-party administrator 
 or contract pharmacy described in this subsection that fails to 
 comply with the applicable requirements specified in this 
 subsection shall be required to pay a civil monetary penalty 
 equal to 10 times the amount such third-party administrator or 
 contract pharmacy received for the performance of relevant 
 services described in this subsection. The provisions of 
 

section 1128A of the Social Security Act (other than 
 subsections

    (a) and

    (b) ) shall apply to a civil monetary 
 penalty under this paragraph in the same manner as such 
 provisions apply to a penalty or proceeding under 

section 1128A

    (a) . The Office of Inspector General of the Department of 
 Health and Human Services shall carry out the provisions 
 related to the imposition of civil monetary penalties under 
 this paragraph.''.

SEC. 18. CLARIFICATION.

 

Section 340B of the Public Health Service Act (42 U.S.C. 256b) is 
further amended by adding at the end the following:
 ``

    (g) Clarification.--The provisions of this section supersede any 
provision or requirement of State or local law insofar as that State or 
local law may establish, implement, or continue in effect a standard or 
requirement that differs from or relates in any way to the provisions 
of this section or, except for any State regulations issued to carry 
out subsection

    (a)

    (5)
        (A)
            (iii) , relates in any way to the drug discount 
program under this section or covered outpatient drugs subject to an 
agreement under this section, including the distribution of such drugs. 
Except for any State regulations issued to carry out subsection

    (a)

    (5)
        (A)
            (iii) , no provision or requirement of State or local law shall 
grant additional rights or impose additional obligations related to the 
340B program.''.

SEC. 19. ENSURING THE EQUITABLE TREATMENT OF 340B COVERED ENTITIES AND 
 PHARMACIES PARTICIPATING IN THE 340B DRUG DISCOUNT 
 PROGRAM.

    (a) Group Health Plan and Health Insurance Issuer Requirements.--
Subpart II of part A of title XXVII of the Public Health Service Act 
(42 U.S.C. 300gg-11 et seq.) is amended by adding at the end the 
following:

``

SEC. 2730. REQUIREMENTS RELATING TO THE 340B DRUG DISCOUNT PROGRAM.

 ``

    (a) In General.--A group health plan, a health insurance issuer 
offering group or individual health insurance coverage, or a pharmacy 
benefit manager acting on behalf of such plan or issuer, may not 
discriminate against a covered entity (as defined in subsection

    (e)

    (1) ), a contract pharmacy (as defined in subsection

    (e)

    (2) ), or a 
participant, beneficiary, or enrollee of such plan or coverage by 
imposing requirements, exclusions, reimbursement terms, or other 
conditions on such entity or pharmacy that differ from those applied to 
entities or pharmacies that are not covered entities or contract 
pharmacies on the basis that the entity or pharmacy is a covered entity 
or contract pharmacy or that the entity or pharmacy dispenses 340B 
drugs, by taking any action prohibited under subsection

    (b) .
 ``

    (b) Specified Prohibited Actions.--A group health plan, a health 
insurance issuer offering group or individual health insurance 
coverage, or a pharmacy benefit manager acting on behalf of such plan 
or issuer, may not discriminate against a covered entity, a contract 
pharmacy, or a participant, beneficiary, or enrollee of such plan or 
coverage by doing any of the following:
 ``

    (1) Reimbursing a covered entity or contract pharmacy for 
 a quantity of a 340B drug (as defined in subsection

    (e) ) in an 
 amount less than such plan, issuer, or pharmacy benefit manager 
 (as applicable) would pay to any other similarly situated (as 
 specified by the Secretary) entity or pharmacy that is not a 
 covered entity or a contract pharmacy for such quantity of such 
 drug on the basis that the entity or pharmacy is a covered 
 entity or contract pharmacy or that the entity or pharmacy 
 dispenses 340B drugs.
 ``

    (2) Imposing any terms or conditions on covered entities 
 or contract pharmacies with respect to any of the following 
 that differ from such terms or conditions applied to other 
 similarly situated entities or pharmacies that are not covered 
 entities or contract pharmacies on the basis that the entity or 
 pharmacy is a covered entity or contract pharmacy or that the 
 entity or pharmacy dispenses 340B drugs:
 ``
        (A) Fees, chargebacks, clawbacks, adjustments, or 
 other assessments.
 ``
        (B) Professional dispensing fees.
 ``
            (C) Restrictions or requirements regarding 
 participation in standard or preferred pharmacy 
 networks.
 ``
            (D) Requirements relating to the frequency or 
 scope of audits or to inventory management systems 
 using generally accepted accounting principles.
 ``
        (E) Any other restrictions, conditions, 
 practices, or policies that interfere with the ability 
 of a covered entity or contract pharmacy to use the 
 discounts provided under 

section 340B in accordance 
 with applicable requirements under such section.
 ``

    (3) Interfering with an individual's choice to receive a 
 340B drug from a covered entity or contract pharmacy, whether 
 in person or via direct delivery, mail, or other form of 
 shipment, as permitted under 

section 340B.
 ``

    (4) Interfering with, limiting, or prohibiting actions by 
 a covered entity or contract pharmacy to identify, either 
 directly or through a third party, claims for 340B drugs, 
 including by submission of claims data or use of claims 
 modifiers or indicators.
 ``

    (5) Refusing to contract with a covered entity or 
 contract pharmacy for reasons other than those that apply 
 equally to entities or pharmacies that are not covered entities 
 or contract pharmacies, or on the basis that--
 ``
        (A) the entity or pharmacy is a covered entity or 
 a contract pharmacy; or
 ``
        (B) the entity or pharmacy is described in any of 
 subparagraphs
        (A) through
        (O) of 

section 340B

    (a)

    (4) .
 ``

    (6) With respect to a group health plan or health 
 insurance issuer for health insurance coverage, denying 
 coverage of a drug on the basis that such drug is a 340B drug.
 ``
            (c) Prohibited Actions in Derogation of 

Section 340B 
Affordability Assistance Provisions.--A group health plan, a health 
insurance issuer offering group or individual health insurance 
coverage, or a pharmacy benefit manager acting on behalf of such plan 
or issuer shall not prohibit or restrict, in contracts with pharmacies 
in their network that are contract pharmacies or entity pharmacies, or 
in any other manner, any reduction in or subsidy for the out-of-pocket 
amount for a 340B drug charged to an individual (including a 
participant, beneficiary, or enrollee of such plan or coverage) that is 
required or authorized by subparagraphs
        (G) or
        (H) of 

section 340B

    (a)

    (5) . Any general prohibition or restriction on reducing or 
subsidizing the out-of-pocket amount for a drug charged to an 
individual that lacks an express exemption for any reductions in or 
subsidies for the out-of-pocket amount for a 340B drug that are 
required or authorized by subparagraphs
        (G) or
        (H) of 

section 340B

    (a)

    (5) is a violation of this subsection. Any contractual provision 
that violates this subsection in any manner shall be void and 
unenforceable.
 ``
            (d) Enforcement Mechanism for Pharmacy Benefit Managers.--The 
Secretary shall impose a civil monetary penalty on any pharmacy benefit 
manager that violates the requirements of this section. Such penalty 
shall not exceed $5,000 per violation per day. The Secretary shall 
issue proposed regulations to implement this subsection not later than 
60 days after the date of the enactment of this subsection and shall 
finalize such regulations not later than 180 days after such date of 
enactment.
 ``

    (e) 

=== Definitions. ===
-For purposes of this section:
 ``

    (1) 340b drug.--The term `340B drug' means a drug that 
 is--
 ``
        (A) a covered outpatient drug (as defined for 
 purposes of 

section 340B); and
 ``
        (B) purchased under an agreement in effect under 
 such section.
 ``

    (2) Contract pharmacy.--The term `contract pharmacy' has 
 the meaning given such term in 

section 340B

    (a)

    (5)
        (F) .
 ``

    (3) Covered entity.--The term `covered entity' has the 
 meaning given such term in 

section 340B

    (a)

    (4) .
 ``

    (4) Entity pharmacy.--The term `entity pharmacy' has the 
 meaning given such term in 

section 340B

    (a)

    (5)
        (F) .''.

    (b) Application of Requirements to Medicare.--

    (1) Part d.--

Section 1860D-12

    (b) of the Social Security Act 
 (42 U.S.C. 1395w-112

    (b) ) is amended by adding at the end the 
 following:
 ``

    (10) Application of requirements relating to the 340b 
 drug discount program.--Each contract entered into under this 
 subsection with a PDP sponsor shall provide that the 
 requirements of 

section 2730 of the Public Health Service Act 
 apply to such sponsor, and to any pharmacy benefit manager that 
 contracts with such sponsor, in the same manner as such 
 requirements apply with respect to a group health plan, a 
 health insurance issuer, or a pharmacy benefit manager 
 described in such section.''.

    (2) Part c.--

Section 1857

    (f)

    (3) of the Social Security Act 
 (42 U.S.C. 1395w-27

    (f)

    (3) ) is amended by adding at the end the 
 following:
 ``
        (G) 340B drug discount program.--

Section 1860D-
 12

    (b)

    (10) .''.

SEC. 20. EFFECTIVE DATE.

 Except as otherwise specified, the provisions in this Act shall 
become effective on the date that is one year following the date of 
enactment of this Act.
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