340B may move from HRSA to CMS: What you need to know

Modern Healthcare – Monday, June 2, 2025
By Bridget Early

The Health and Human Services Department is eyeing a major shakeup with big implications for safety-net providers.

Under a budget plan issued Friday, the department confirmed it plans to shut down the 43-year-old Health Resources and Services Administration and redistribute its responsibilities. Perhaps the most consequential change would be moving management of the 340B Drug Pricing Program to the Centers for Medicare and Medicaid Services.

CMS would receive $12 million to run 340B in fiscal 2026 under the budget request, the same amount allotted to HRSA this year. HRSA itself would be absorbed into the new Administration for a Healthy America as part of an ongoing effort by Secretary Robert F. Kennedy Jr. to restructure the department.

Here are some key facts about the proposal to shift 340B from HRSA to CMS:

What is 340B?

The 340B Drug Pricing Program provides discounts on outpatient drugs to safety-net healthcare providers, known as covered entities, such as hospitals and federally qualified health centers. Participating providers typically save 25%-50% on drugs subject to 340B.

HRSA has run 340B since its inception in 1992.

What’s changing?

Simply put, CMS would take over 340B. Responsibilities would include “providing technical assistance to grantees and covered entities, performing eligibility checks and annual recertifications, conducting audits, and maintaining the critical Office of Pharmacy Affairs Information System that underpins 340B operations,” HHS wrote in a report on its budget request plan to Congress on Friday.

The Office of Pharmacy Affairs Information System comprises the 340B registration and pricing databases that collect drug-pricing information from pharmaceutical manufacturers and makes those prices available to 340B providers.

CMS wields far greater regulatory authority than HRSA and the HHS budget repeatedly emphasizes oversight and program integrity, so providers and drugmakers may face stricter scrutiny if CMS is in charge of 340B, said Greg Fliszar, a shareholder at the law and lobbying firm Baker Donelson.

“For covered entity providers, I think they’re going to have to focus a lot more on compliance, let’s put it that way,” Fliszar said.

One potential benefit would be having a single agency managing several prescription drug programs, said Elizabeth Lee, a policy advisor at Advocates for Community Health, which represents community health centers.

CMS handles Medicare outpatient drug price negotiations and Medicare Part B inpatient medication pricing and already regulates duplicate discount restrictions, which occur when 340B providers and state Medicaid programs receive discounts on the same drugs, Lee said. The reorganization could streamline oversight in these areas, she said.

“If moving the program to CMS helps bring accountability and transparency to the program, I think that’s a good thing,” Lee said.

The HHS budget and the accompanying report to Congress released Friday offer mere outlines of the department’s plans, and spokespeople for HHS, HRSA and CMS didn’t respond to requests for comment.

One significant question is how much of the departmental reorganization can be done through executive branch authority and how much would require the majority-Republican Congress to write new law. The budget documents, which apply to discretionary spending but not mandatory outlays for entitlement programs such as Medicare and Medicaid, are nominally intended as a request for funding to congressional appropriators.

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