7/8/2025 – “One Big Beautiful Bill” Act Signed Into Law
On Friday, President Trump signed the reconciliation bill (“The One Big Beautiful Bill” Act) into law. The bill passed the Senate on July 1st, and the House passed the Senate version of the bill on July 3rd.
Nothing in the final law amends the 340B statute or changes how the 340B program operates. Previous drafts of the legislation contained spread pricing and transparency language that, if enacted, would have affected covered entities, but that language was removed.
Congress has repeatedly introduced legislation to prevent so-called “spread pricing” practices in Medicaid. Broadly, these proposals aim to prevent pharmacy benefit managers (“PBMs”) and pharmacies from charging state Medicaid programs and managed care organizations more than the amount the PBM or pharmacy pays for a prescription drug.
The language that was included in previous bills reflects a compromise by 340B covered entity hospitals. The hospitals acquiesced to covered entity reporting requirements because the language was far less onerous than drug pricing changes widely opposed by the covered entity community that Congress sought to include in the original bill.
The transparency language would have required that all covered entities report annually the aggregate difference between ingredient costs and actual acquisition costs. The information would have been published by the Secretary of Health and Human Services by state and covered entity type. The spread pricing and transparency language was removed due to the Senate’s “Byrd Rule,” which prohibits provisions that do not relate to taxing or spending from being included in reconciliation legislation.
The final law includes vast cuts to the Medicaid program, estimated by the Congressional Budget Office (CBO) at $1 trillion over the next ten years. In part, these changes include Medicaid enrollee work requirements, increased eligibility redeterminations, decreased retroactive coverage periods, several reductions in federal payment incentives to states, individual cost sharing requirements for the expansion population, and caps on provider taxes.
CBO estimated that these Medicaid policy changes will result in 11.8 million individuals losing health care coverage, primarily due to a reduction in state Medicaid resources. Loss of Medicaid support will be particularly detrimental to covered entities with a high proportion of Medicaid patients and covered entities in rural and underserved communities. With substantially decreased federal support from the Medicaid program and new administrative burdens on states, more than ever, the 340B program will be critical to cover the cost of serving the uninsured and other vulnerable populations.
Disproportionate share (DSH) hospitals must also consider how Medicaid cuts may impact their 340B eligibility. With fewer patients classified as Medicaid enrollees, DSH hospitals may have greater difficulty meeting the statutory disproportionate share percentage required to be eligible for the 340B program. DSH hospitals should closely monitor their disproportionate share percentage to avoid the potential cumulative impact of both Medicaid cuts and loss of 340B eligibility.