Findings and purposes

(a) Findings Congress finds the following: (1) Section 340B of the Public Health Service Act (42 U.S.C. 256b) enables covered entities to stretch scarce resources as far as possible, reaching more patients and providing more comprehensive services than would be possible without such program. (2) Such section 340B requires drug manufacturers to offer discounted prices on covered outpatient drugs to covered entities participating in the program, and, as a condition of participating in the Medicaid program and part B of the Medicare program, drug manufacturers are required to offer drug discount pricing to covered entities when requested. (3) Savings on the purchase of drugs under the drug discount program under section 340B of the Public Health Service Act enables hospitals, clinics, and health centers to provide comprehensive services to the communities they serve, and covered entities are in the best position to assess the use of their savings for community needs. (4) Since the early years of such program, covered entities have contracted with pharmacies to dispense covered outpatient drugs purchased by a covered entity at drug discount program pricing to patients of the covered entity, consistent with how Congress intended for covered entities to use the program. (5) Covered entities use savings generated through contract pharmacy relationships to stretch scarce resources and support patient care, consistent with the purpose of the program. (6) Section 340B of the Public Health Service Act requires drug manufacturers to offer discount pricing for drugs purchased by covered entities regardless of the manner or location in which a drug is dispensed, including drugs dispensed through contract pharmacies. (7) Such section 340B does not allow drug manufacturers to place conditions on the ability of a covered entity to purchase or use a covered outpatient drug at discounted pricing regardless of the manner or location in which a drug is dispensed, including by restricting a covered entity’s ability to dispense drugs purchased at such discount to patients through a contractual relationship with a contracted pharmacy or refusing to ship covered outpatient drugs to a pharmacy or location identified by a covered entity. (8) The inflationary penalty provisions under section 340B of the Public Health Service Act, which have saved $7,000,000,000 in spending under part D of the Medicare program between 2013 and 2017, have a proven record of reducing drug price increases, and use of the drug discount program in contract pharmacies contributes to these savings. (9) Specialty drugs, which are often used to treat chronic, serious, or life-threatening conditions such as cancer, rheumatoid arthritis, growth hormone deficiency, and multiple sclerosis, play a critical role in the care provided by covered entities. These drugs often require specialized handling, are not usually available to walk-in customers, and are typically available only through specialty or mail order pharmacies that are located hundreds of miles from a covered entity. The use of contract pharmacy arrangements under section 340B of the Public Health Service Act are often the only means by which covered entities can access these vital drugs. (b) Purposes The purposes of this Act are the following: (1) To clarify that section 340B of the Public Health Service Act (42 U.S.C. 256b)— (A) requires drug manufacturers to offer drug discount pricing pursuant to an agreement under subsection (a) of such section with respect to drugs purchased by a covered entity regardless of the manner or location in which the drug is dispensed; and (B) prohibits drug manufacturers from placing conditions on the ability of covered entities to purchase covered outpatient drugs pursuant to an agreement under subsection (a) of such section, regardless of the manner or location in which they are dispensed. (2) To clarify that— (A) covered entities may contract with pharmacies to dispense drugs purchased pursuant to an agreement under section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)) on a covered entity’s behalf, to assist covered entities in stretching resources to provide care to more patients and provide more comprehensive services; and (B) the requirements and prohibitions that apply to manufacturers under section 340B of such Act apply in the case of a covered entity that elects to contract with a pharmacy to dispense covered outpatient drugs.