Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 SENATE BILL 589 3
4
By: Senator C. Penzo 5
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For An Act To Be Entitled 8
AN ACT TO CREATE THE 340B PROGRAM TRANSPARENCY ACT; 9
TO REQUIRE TRANSPARENCY FROM CERTAIN 340B-COVERED 10
ENTITIES CONCERNING THE USE OF 340B PROGRAM SAVINGS; 11
TO REQUIRE CERTAIN 340B -COVERED ENTITIES TO ANNUALLY 12
REPORT THE UTILIZATION AND DISTRIBUTION OF 340B 13
PROGRAM SAVINGS TO ENSURE ACCOUNTABILITY AND 14
TRANSPARENCY; AND FOR OTHER PURPOSES. 15
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17
Subtitle 18
TO CREATE THE 340B PROGRAM TRANSPARENCY 19
ACT; AND TO AMEND THE LAW CONCERNING 20
TRANSPARENCY AND ACCOUNTABILITY FOR 21
CERTAIN 340B-COVERED ENTITIES. 22
23
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 24
25
SECTION 1. Arkansas Code Title 20, Chapter 6, is amended to add an 26
additional subchapter to read as follows: 27
Subchapter 5 — 340B Program Transparency Act 28
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20-6-501. Title. 30
This subchapter shall be known and may be cited as the "340B Program 31
Transparency Act". 32
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20-6-502. Definitions. 34
As used in this subchapter: 35
(1) "340B program" means the federal drug discount program 36 SB589
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established under Section 340B of the Public Health Service Act, 42 U.S.C. § 1
256b, as it existed on January 1, 2025, that requires a drug manufacturer to 2
provide discounted outpatient medications to a covered entity that serves a 3
significant number of low -income and uninsured patients; 4
(2) "340B savings" means the difference between the actual price 5
paid by a covered entity or its contract pharmacy under the 340B program for 6
a given drug or biological product and one (1) of the following acquisition 7
costs, applied in the order of priority stated below, using date -sensitive 8
and comparable data: 9
(A)(i) The actual acquisition cost the covered entity or 10
contract pharmacy has paid for the same drug or biological product when 11
dispensed to non-340B qualifying patients based on verifiable transaction 12
records from the same month as the 340B purchase. 13
(ii) If data from the same month is not available, 14
then data from the same calendar quarter shall be used; 15
(B) The actual acquisition cost for the same drug or 16
biological product as reflected in published acquisition data from the same 17
month, if available, or from the same calendar quarter if monthly data is not 18
available, and that is accessible to the covered entity or contract pharmacy 19
from a distributor or group purchasing organization, as long as the 20
distributor or group purchasing organization was utilized to acquire the drug 21
or biological product by the covered entity or contract pharmacy within the 22
same month or calendar quarter; or 23
(C)(i) If neither subdivision (2)(A) or subdivision (2)(B) 24
of this section is available for the specific product, the estimated 25
acquisition cost the covered entity or contract pharmacy would have paid for 26
the drug or biological product in the absence of participation in the 340B 27
program, ensuring to the extent possible that the estimation uses data from 28
the same month or, if not available, from the same calendar quarter. 29
(ii) A covered entity or contract pharmacy shall 30
rely on subdivision (2)(C) of this section only if neither subdivision (2)(A) 31
or subdivision (2)(B) of this section is feasible for that specific drug or 32
biological product; 33
(3) "Contract pharmacy" means a pharmacy that has executed a 34
contract with a covered entity to dispense 340B drugs on behalf of the 35
covered entity consistent with federal regulations and guidelines; 36 SB589
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(4) "Covered entity" means a hospital or other healthcare 1
provider located in this state that participates in the 340B program as 2
defined by 42 U.S.C. § 256b, as it existed on January 1, 2025; and 3
(5)(A) "Medically underserved area" means an entire county that, 4
at any point during the reporting period, has an active medically underserved 5
area designation from the United States Health Resources and Services 6
Administration if the medically underserved area designation is for a single 7
county and has not been withdrawn or proposed for withdrawal. 8
(B) "Medically underserved area" does not include a 9
medically underserved area that is for a county subdivision, partial areas of 10
a county, a census tract, or other smaller geographic unit or that has been 11
withdrawn or proposed for withdrawal. 12
13
20-6-503. Annual 340B transparency report. 14
(a)(1) Each covered entity shall submit an annual 340B transparency 15
report to the Department of Health on or before March 31 of each year, 16
covering the previous calendar year. 17
(2) The department shall develop a standard reporting form 18
consistent with the requirements of this subchapter. 19
(b) At a minimum, a covered entity shall report: 20
(1) Aggregate 340B savings for the prior calendar year, 21
including without limitation: 22
(A) The total number of prescription, infusion, and 23
injection drug claims processed by the covered entity or its contract 24
pharmacies; 25
(B) The total number of 340B -eligible prescription, 26
infusion, and injection drug claims processed by the covered entity or its 27
contract pharmacies; 28
(C) An estimate of the total 340B savings realized by the 29
covered entity; and 30
(D) A description of the methodology used to calculate the 31
aggregate 340B savings; 32
(2) Utilization of 340B savings, including a detailed accounting 33
of how the 340B savings were allocated or reinvested, specifying: 34
(A)(i)(a) The aggregate amount directed toward offsetting 35
the cost of uncompensated care or charity care. 36 SB589
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(b) The amount reported under subdivision 1
(b)(2)(A)(i)(a) of this section shall reflect only the funds actually 2
disbursed or redeemed from the 340B savings, rather than merely allocated or 3
earmarked for future use. 4
(ii) However, for purposes of this calculation: 5
(a) Contractual discounts or adjustments 6
already applied by insurance companies or government healthcare programs 7
shall not be included; 8
(b) Charges for denied services or medical 9
supplies unrelated to the drug or biological product, or unrelated to the 10
administration of the drug or biological product, shall not be included; and 11
(c) Any other discounts, reductions, 12
incentives, or offsets that covered entity patients customarily receive in 13
the normal course of business shall not be included; 14
(B)(i) The aggregate amount directed to patient financial 15
assistance or support programs, including without limitation transportation, 16
nutritional counseling, and housing assistance. 17
(ii) The amount reported shall reflect only the 18
funds actually disbursed or redeemed from the 340B savings, rather than 19
merely allocated or earmarked for future use; 20
(C) The aggregate amount used to expand patient access to 21
healthcare services, including without limitation new facility or clinic 22
sites, extended hours, or additional programs that directly expand patient 23
access to healthcare services for populations living in and having a primary 24
residence located in a medically underserved area in this state; 25
(D) The aggregate amount directed, used, or allocated to 26
administrative operations, including without limitation: 27
(i) Salaries, wages, bonuses, and other forms of 28
employee compensation; 29
(ii) Benefits, such as retirement contributions, 30
health insurance premiums, or stipends; 31
(iii) General overhead expenses, including without 32
limitation facility maintenance, utilities, office supplies, and information 33
technology; 34
(iv) Marketing, public relations, or advertising 35
costs; 36 SB589
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(v) Management or consulting fees; and 1
(vi) Any other administrative expenditures not 2
directly related to patient care or financial assistance; 3
(E) The amount allocated to any foundations or charitable 4
organizations affiliated with the covered entity; 5
(F) Any other uses of 340B savings, itemized to provide 6
meaningful transparency without disclosing confidential business information 7
that is protected by state or federal law; and 8
(G) The total amounts disclosed under subdivisions 9
(b)(2)(A)-(F) of this section, which do not exceed the total amount reported 10
under subdivision (b)(1)(C) of this section; 11
(3) The charity care and uncompensated care metrics provided by 12
the covered entity, including without limitation: 13
(A) The total dollar value of charity care or 14
uncompensated care provided by the covered entity; 15
(B) The total dollar value of bad debt or unreimbursed 16
care; and 17
(C)(i) The distinct number of patients receiving charity 18
care or financial assistance. 19
(ii) The metric under subdivision (b)(3)(C)(i) of 20
this section shall be disclosed: 21
(a) As an aggregate; and 22
(b) By county, where county is based on the 23
patient’s home address or primary place of residence; 24
(4) Populations served, including without limitation: 25
(A)(i) The total number of distinct patients who receive 26
services from the covered entity. 27
(ii) The metric under subdivision (b)(4)(A)(i) of 28
this section shall be disclosed: 29
(a) As an aggregate; and 30
(b) By county, where county is based on the 31
patient's home address or primary place of residence; and 32
(B)(i) The total number of distinct patients who received 33
services from the covered entity with a home address or primary place of 34
residence located within a medically underserved area. 35
(ii) The metric under subdivision (b)(4)(B)(i) of 36 SB589
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this section shall be disclosed: 1
(a) As an aggregate; and 2
(b) By county, where county is based on the 3
patient's home address or primary place of residence; 4
(5) The total number of distinct clinics or facilities, listed 5
by physical address, operated by the covered entity located within a 6
medically underserved area; 7
(6) The total number of distinct patients who received services 8
from the clinics or facilities operated by the covered entity located within 9
a medically underserved area; and 10
(7) Contract pharmacy arrangements, including without 11
limitation: 12
(A) The name and address of each contract pharmacy; and 13
(B) The total number of 340B -eligible claims processed 14
through each contract pharmacy. 15
(c)(1) The department shall post each covered entity’s 340B 16
transparency report on a publicly accessible website no later than sixty (60) 17
days after the annual submission deadline, redacting any trade secrets or 18
proprietary data that is exempt from disclosure under Arkansas law. 19
(2) A covered entity may request that specific information be 20
classified as confidential, subject to review and approval by the department 21
under the Freedom of Information Act of 1967, § 25 -19-101 et seq. 22
23
20-6-504. Enforcement — Penalties. 24
(a) The Department of Health may: 25
(1) Receive and review annual 340B transparency reports for 26
completeness and accuracy; and 27
(2) Conduct compliance audits or investigations of a covered 28
entity’s 340B activities, as necessary, to verify the accuracy of reported 29
information. 30
(b)(1) If the department determines that a covered entity has failed to 31
submit a timely or complete 340B transparency report, the department shall 32
notify the covered entity in writing and provide thirty (30) days for the 33
covered entity to cure the deficiency. 34
(2) If the covered entity fails to cure the deficiency within 35
thirty (30) days, the department may impose an administrative penalty not to 36 SB589
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exceed five hundred dollars ($500) per day for each day of noncompliance, 1
subject to a maximum of one hundred fifty thousand dollars ($150,000) per 2
year. 3
(3) The department may waive or reduce penalties upon a showing 4
of good cause. 5
6
20-6-505. Rules. 7
(a) The Department of Health shall promulgate rules to implement and 8
administer this subchapter. 9
(b) The rules under subsection (a) of this section shall include 10
without limitation: 11
(1) The development of standardized reporting forms and 12
procedures; 13
(2) The process for requesting confidential treatment of 14
proprietary information; and 15
(3) The criteria for determining penalties for noncompliance. 16
17
20-6-506. Construction. 18
(a) This subchapter does not conflict with or preempt any federal law 19
or regulation governing the 340B program. 20
(b) To the extent a provision of this subchapter is in conflict with 21
federal law, that provision of this subchapter is void. 22
23
20-6-507. Severability. 24
If a section, subsection, subdivision, sentence, or clause of this 25
subchapter is held invalid or unconstitutional, the remaining provisions 26
shall remain in force and shall be construed to give effect to the intent of 27
the subchapter. 28
29
SECTION 2. DO NOT CODIFY. Effective date. 30
This act is effective on and after January 1, 2026. 31
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