Senate introduces bipartisan SUSTAIN 340B Act aimed to protect county hospital drug pricing

Key Takeaways

On August 5, 2026, Sens. Jerry Moran (R-Kan.), Tammy Baldwin (D-Wis.), Shelley Moore Capito (R-W.Va.), Tim Kaine (D-Va.), John Boozman (R-Ark.) and John Hickenlooper (D-Colo.) introduced the Supporting Underserved and Strengthening Transparency, Accountability and Integrity Now and for the Future of 340B Act (SUSTAIN 340B) in the Senate.  The bipartisan bill would protect the 340B drug discount program, which helps safety-net hospitals and clinics save money to fund other essential patient services. County governments own and operate many of the hospitals and health systems that rely on 340B savings to keep their doors open and expand care in underserved communities, making this legislation a direct priority for counties.

What is the 340B program?

The 340B program requires drug companies participating in Medicaid to sell certain outpatient prescription drugs at a discount to hospitals and clinics that serve a lot of low-income or uninsured patients. 

This program allows qualifying hospitals to stretch federal resources. The savings from 340B can be used to pay for things like mental health care, addiction treatment and emergency care.

Why does this program need protecting?

A few key items have put the program at risk in recent years:

• Drug companies have been limiting access. Since 2020, some manufacturers have restricted which pharmacies hospitals can use to fill 340B prescriptions, making it harder for patients, especially in rural areas, to get their medications.
• A new government proposal could add costs. In August 2025, HRSA announced a 340B Rebate Model Pilot Program that would have required hospitals to buy drugs at full wholesale price and then file claims with manufacturers to be reimbursed the difference later, rather than getting the 340B discount up front. This change would have created significant financial and administrative burdens for safety-net hospitals. A federal court blocked the pilot in December 2025, and HHS has since withdrawn that version of it. However, HRSA has proposed a revised version of the rebate pilot, set to begin in January 2027. The 340B rebate model would shift the financial burden from drug companies to county safety-net hospitals who serve high volumes of patients insured by Medicaid or who remain uninsured.

What would the SUSTAIN 340B Act do?

• Guarantee hospitals can use contract pharmacies. It would make it illegal for drug companies to block hospitals from using outside pharmacies to fill 340B prescriptions, or to add extra conditions before giving the discount.
• Create clear rules for who qualifies. It would define exactly who counts as a "340B patient" and set new rules for how hospitals must document and report their use of the program.
• Terminate HHS’s 340B Rebate Model Pilot Program. It would end the rebate model plan within a year and prohibit similar programs.  This would be replaced by a national clearinghouse aimed at addressing duplicate discount concerns. 
• Increase oversight. It would add new reporting and audit requirements for pharmacies participating in the program, funded by new fees starting in 2031.

Impact to counties

County governments own and operate hospitals, public health departments and correctional health systems that depend on 340B savings every day. Nearly three-quarters of small, rural critical access hospitals report relying on 340B savings just to keep their doors open, and research has shown that 340B savings have allowed rural hospitals to add services like cancer screening and treatment that they otherwise couldn't afford.

 A shift to a rebate-based model would put that funding at serious risk. An independent analysis found that moving to a rebate model would force the average disproportionate share hospital (DSH) to front more than $72 million a year to drug manufacturers while waiting to be reimbursed. By codifying contract pharmacy access and permanently ending the rebate pilot, the SUSTAIN 340B Act would help protect the financial stability of county-owned hospitals and preserve access to care in rural and underserved communities.

NACo supports this bill and similar legislation that protects the 340B program.

Resources to learn more:

 Fact Sheet: The 340B Drug Pricing Program | AHA