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View our Educational Resources to Learn More about the 340B Drug Pricing Program

340B Background

View our Educational Resources to Learn More about the 340B Drug Pricing Program

Enacted in 1992, the 340B Drug Pricing Program is a discount based pricing program aiming to expand healthcare coverage to disparate populations. The program has evolved greatly since its adoption, inviting push-back from suppliers due to logistical concerns. 

Visit our full 340B Timeline to learn more: 

>> ACCESS TIMELINE

Enacted in 1992, the 340B Drug Pricing Program is a discount based pricing program aiming to expand healthcare coverage to disparate populations. The program has evolved greatly since its adoption, inviting push-back from suppliers due to logistical concerns. 

Visit our full 340B Timeline to learn more: 

>> ACCESS TIMELINE

340B Differences State to State:

AAlthough a federal program, there is some nuance that varies state to state; in some cases, state requirements call on Covered Entities to utilize Alternative Distribution Models to ensure compliance and program integrity. 

ConsortiEX 340B Support is able to meet the documentation needs of either distribution model. 

Traditional Model

Also known as the Bill-To/ Ship-To Model, where suppliers can send product directly to Contract Pharmacies who are affiliated with Covered Entities.

Alternative Distribution Model

Developed in response to supplier pushback on the expansion of Contract Pharmacies. In this model, suppliers only send product to the primary Covered Entity, who then transfers the product. 

Unsure of your state’s requirements? Take a look at our map below!

340B Differences State to State:

Although a federal program, there is some nuance that varies state to state; in some cases, state requirements call on Covered Entities to utilize Alternative Distribution Models to ensure compliance and program integrity. 

ConsortiEX 340B Support is able to meet the documentation needs of either distribution model. 

Traditional Model

Also known as the Bill-To/ Ship-To Model, where suppliers can send product directly to Contract Pharmacies who are affiliated with Covered Entities.

Alternative Distribution Model

Developed in response to supplier pushback on the expansion of Contract Pharmacies. In this model, suppliers only send product to the primary Covered Entity, who then transfers the product. 

Unsure of your state’s requirements? Take a look at our map below!

Although the 340B program exists on the national level, states retain the right to lay out additional requirements for their 340B programs. These requirements have spurned the adoption of Alternative Distribution Models (ADM) to maintain 340B standing in applicable states.

Reference this map for a snapshot of ADM viability for your state!*

* – The information above is not legal advice; customers should complete an internal review to ensure program compliance with state regulations. 

* – The information above is not legal advice; customers should complete an internal review to ensure program compliance with state regulations. 

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340B FAQ & Terms

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Still unsure about your requirements? 

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340b doc for website

Additional Resources:

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ConsortiEX 340B

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340B FAQ & Terms

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340B History

What Makes ConsortiEX the Industry Leader in 340B ADM?

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What Makes ConsortiEX the Industry Leader in 340B ADM?

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Moderate Viability:

Alabama recently passed the Alabama Community Pharmacy Relief Act, requiring that community pharmacies are reimbursed at a rate equal to the Alabama Medicaid wait. This change has led to larger entities adopting the Alternative Distribution Model, to ensure they have total ownership over acquisition cost data. For smaller sites, the traditional Bill-to/Ship-to model remains feasible.

Additional legislation is currently being debated.

Low Pertinence:

Alaska has passed legislation that offers some light protections to Covered Entities utilizing Contract Pharmacies for their 340B program. Although while not as explicitly stated as other states, Alaska’s legislation and policies make Alternative Distribution Model’s a non-factor for Alaskan providers.

Additional legislation is underway, which would grant more strict and explicit protections to the Contract Pharmacy, Bill-to/Ship-to, model.

Low Pertinence:

Arkansas recently had its 340B protections upheld at the federal level.

Moderate Pertinence:

Arizona is in the process of passing legislation that would establish protections for contract pharmacies. In the meantime, some sites utilize an Alternative Distribution Model.

High Pertinence:

California is a central state in the proposed Pilot Rebate Program, which was set to begin in 2026, prior to being paused.

California currently lacks explicit legislative protections for the numbed of Contract Pharmacy sites, making an Alternative Distribution Model an appealing solution to ensure program continuity.

Low Pertinence:

Colorado recently passed legislation protecting Contract Pharmacies and limiting claims level data requests.

Moderate Pertinence:

Connecticut has passed protections for Covered Entities and Contract Pharmacies, but there has been recent talk to require transparency on 340B savings, and how they are used. The centralized ownership of acquisition data that comes with an Alternative Distribution model can be beneficial for reporting purposes.

High Pertinence:

Delaware currently lacks protections for the number of Contact Pharmacies must ship to, making the Alternative Distribution Model a favorable option for some systems.

Moderate Pertinence:

Florida has ongoing legislation that would offer protections to Contract Pharmacies. While the legislation is in progress, some large sites utilize the Alternative Distribution Model.

Learn More: Link

Moderate Pertinence:

Georgia has ongoing legislation in place to establish protections for Contract Pharmacies. While this bill is in progress, many are utilizing the Alternative Distribution Model.

Low Pertinence:

Hawaii upheld the states 340B protections, prohibiting suppliers from restricting access to Contract Pharmacies. Alternative Distribution Models can still offer benefits when reconciling costs in case of financial audit.

High Pertinence:

Idaho has passed protections for the number of Contract Pharmacies must ship to, but has also mandated detailed reporting by Covered Entities.

Alternative Distribution Models can be advantageous in the event of financial audit.

Moderate Pertinence:

Illinois is close to passing legislation that would offer extensive protection to Covered Entities and Contract pharmacies. However, cost acquisition transparency requirements are easier to manage under the Alternative Distribution model.

Learn more:

High Pertinence:

Indiana is implementing reporting requirements that make Alternative Distribution Models advantageous.

Moderate Pertinence:

2025 efforts (Chapter 510D) focused on nondiscriminatory protections surrounding 340B participants by PBMs. Additional legislation that would require manufacturers to ship directly to contract pharmacies has been introduced but is still in consideration.

Follow Bill IA HF590: Link

Moderate Pertinence:

While Kansas has protections for the number of Contract Pharmacies, it also has strict reporting requirements that make an Alternative Distribution Model a good fit for larger organizations.

Moderate Pertinence:

There are competing pieces of legislation impacting Kentucky’s requirements under 340B. While one aims to improve pricing transparency and ensure that suppliers offer equal pricing as they do in other states, the other would introduce transparency requirements that may impact 340B programs (HB685). Because of this, many sites are utilizing an Alternative Distribution Model in the meantime, as legislation is discussed.

Follow HB685: Link

Low Pertinence:

Louisiana upheld the states 340B protections, prohibiting suppliers from restricting access to Contract Pharmacies. Alternative Distribution Models can give greater inventory control and visibility into high cost drugs.

Moderate Viability:

Maine has protections for Contract Pharmacies, but also strict transparency/reporting requirements for Covered Entities. Some large sites opt for the Alternative Distribution Model to simplify audits.

High Pertinence:

Massachusetts has various pieces of legislation underway that would impact the 340B drug pricing program, offering extensive protection to the Bill-to/Ship-to method. However, potential changes in payment structures, such as value based rebates, have led many sites are utilizing the Alternative Distribution Model to better separate 340B inventory from non-340B inventory, in a measure to prevent incidentally dispensing a 340B product to a non-eligible patient.

High Pertinence:

Although there is active legislation aiming to protect the use of Contract Pharmacies, this bill has faced opposition from industry groups, making the Alternative Distribution Model especially appealing to sites in this state.

Learn More: Link

High Pertinence:

While there are established cost protections, Missouri lacks protections for the number of Contract Pharmacies that suppliers must ship to. This makes the Alternative Distribution Model a viable workaround for providers.

Low Pertinence:

Mississippi recently upheld a ruling protecting Contract Pharmacies from interference by suppliers.

Alternative Distribution Models remain advantageous for auditing purposes, but not for general program continuity.

High Pertinence:

Montana lacks protections for Contract Pharmacies and also has cost reporting requirements that make an Alternative Distribution Model advantageous.

Moderate Pertinence:

Nebraska has recently passed legislation protecting pricing and the use of Contract Pharmacies; Alternative Distribution Models helping to separate 340B and Medicaid inventory, reducing your exposure to an audit.

Moderate Pertinence:

While there is legislation offering protections on purchase price, Nevada does not have legislation offering explicit protections to Covered Entities using an “unlimited” number Contract Pharmacies, making the Alternative Distribution Model a viable option for larger health systems.

High Pertinence:

A recent bill offering protections for Contract Pharmacies failed to pass, allowing suppliers to implement “single-site” restrictions.

Moderate Pertinence:

New Jersey has active legislation aiming to provide payment protections to Covered Entities, however they have not mandated that suppliers deliver directly to an unlimited number of Contract Pharmacies. Alternative Distribution Models also offer benefits in terms of audit response, thanks to centralized data storage.

Learn More: Link

Moderate Pertinence:

New Mexico has protections for Contract Pharmacies and acquisition costs, in exchange for extensive transparency requirements. Alternative Distribution Models remain valuable in order to maintain a single source of truth for inventory data.

High Pertinence:

The Alternative Distribution Model is advantageous in New York because of ongoing legislation protecting contract pharmacies, and additional cost acquisition transparency requirements.

Follow Bill S1913: Link

High Pertinence:

Although North Carolina has pricing protections for Covered Entities, they are in the process of introducing aggressive transparency laws that make an Alternative Distribution Model advantageous in case of an audit.

Learn More: Link

High Pertinence:

Due to pending federal litigation, North Dakota’s 340B protections are in limbo, making an Alternative Distribution Model an ideal solution to ensure program continuity.

High Pertinence:

Ohio has implemented strict reporting requirements that make the Alternative Distribution Model advantageous.

Low Pertinence:

Oklahoma has some of the strongest 340B protections in the country, with explicit legislation the prohibits manufacturers and distributors from denying, restricting or otherwise interfering with the delivery of 340B product to a Contract Pharmacy.

Moderate Pertinence:

While Oregon has protections for Contract Pharmacies, they also have reporting requirements that make an Alternative Distribution Model advantageous.

Moderate Pertinence:

Although Pennsylvania is in the process of passing legislation protecting the use of Contract Pharmacies, they are also passing transparency requirements, making the Alternative Distribution Model a viable alternative for larger systems.

High Pertinence:

Rhode Island has

High Pertinence:

South Carolina has introduced audit protections that make it advantageous to have a single source of truth for inventory data. Additionally, while they have protections for costs, they do not require suppliers to ship to contract pharmacies.

Low Pertinence:

South Dakota has some of the strongest protections for Covered Entities and their Contract Pharmacies in the country.

High Pertinence:

Tennessee has

Moderate Pertinence:

Texas has established protections for the use of Contract Pharmacies, however there are also audit-level cost reporting requirements.

For large organizations, an Alternative Distribution Model can be advantageous.

Moderate Pertinence:

Utah has some of the strongest protections for Contract Pharmacies in the country, in exchange for extensive transparency requirements. Alternative Distribution Models remain valuable in order to maintain a centralized database for reporting purposes.

Low Pertinence:

Vermont has recently passed strong protections for Contract Pharmacies, and limitations for suppliers to request claims-level data as a condition for discounts.

Moderate Pertinence:

Virginia is in the process of passing legislation that would grant protections to contract pharmacies. However, many sites are utilizing an Alternative Distribution Model to ensure program continuity while this law is finalized.

Learn More: Link

Low Pertinence:

Washington recently passed some of the strongest 340B protections in the country. The law expressly prohibits manufacturers from restricting 340B shipments to Contract Pharmacies. However, they have also adopted a number of data transparency requirements. Due to the ease of managing your own data, as opposed to requesting data from others, this change has led to the utilization of Alternative Distribution Models for larger locations.

Learn more on Bill 5981: Link

Moderate Pertinence:

Wisconsin is currently debating legislation that would offer protections to the Contract Model (Bill-to/ship-to) model; this bill has faced opposition. Current legal standing makes the Alternative Distribution Model a viable workaround as possible legislative changes loom.

High Pertinence:

Wyoming recently paste legislation that requires Covered Entities to submit a highly detailed 340B report that is to be made available to the public. Utilizing an Alternative Distribution Model can help in maintaining transaction records and acquisition costs.

High Pertinence:

West Virginia passed protections for Contract Pharmacies, but an injunction is preventing it from being enforced.

Alternative Distribution Models can be critical in maintaining flow of 340B product.

Moderate Pertinence:

Maryland recently passed protections for the usage of Contract Pharmacies; but, due to auditing requirements, an Alternative Distribution Model can be advantageous for larger systems.

Moderate Pertinence:

Maryland recently passed protections for the usage of Contract Pharmacies; but, due to auditing requirements, an Alternative Distribution Model can be advantageous for larger systems.