Since Congress enacted Section 340B of the Public Health Service Act in 1992, the 340B Drug Pricing Program (“340B”) has become an important part of the U.S. healthcare system. The program requires participating drug manufacturers to provide certain drugs at steeply discounted prices to healthcare facilities serving vulnerable communities.1 In exchange, drug manufacturers become eligible to participate in Medicare and Medicaid, and those healthcare facilities may seek reimbursement from insurers at the full retail price, retaining the difference (or the “spread”).2 Following the program’s expansion in 2010, the volume of 340B sales has grown exponentially; in 2025, 340B entitles purchased roughly $100 billion of covered drugs.3
As the program has expanded, it has become increasingly controversial. The program has been characterized as a valuable service for low-income and rural communities,4 but some critics have described it as “government grift at its worst.”5 That dispute intensified on September 8, 2025, when the American Hospital Association (“AHA”), whose members include 340B hospitals, penned a letter to the Federal Trade Commission (FTC) and the Department of Justice (DOJ), urging federal antitrust enforcers to investigate alleged collusion among drug manufacturers to restrict access to 340B, emphasizing the program’s necessity to struggling healthcare facilities.6
As 340B has expanded, so too has its prominence in antitrust litigation. Recent litigations have required courts to apply familiar antitrust doctrines to novel questions arising from disputes within 340B. Two recent cases illustrate this trend. First, plaintiffs have challenged an alleged horizontal conspiracy among drug manufacturers that restricted access to 340B discounts. Second, plaintiffs have pursued tying claims against a vertically integrated pharmacy and 340B third-party administrator (“TPA”). Together, these cases demonstrate the complexity of antitrust litigation in this space, as well as highlight the increasingly important role competition law may play in shaping the program’s future. This article provides an overview of the 340B program and its evolution, examines recent antitrust challenges involving both horizontal and vertical theories of liability, and considers the broader implications of those disputes for the future of 340B.
Congress enacted Section 340B of the Public Health Service Act in 1992 to help safety net healthcare providers purchase outpatient drugs at discounted prices and expand access for vulnerable patient populations.7 The statute requires pharmaceutical manufacturers participating in Medicare Part B and Medicaid to offer covered drugs at significantly discounted prices (sometimes “a penny per unit”).8 These “covered entities”—community clinics, disproportionate-share hospitals, and other safety-net providers9—may seek reimbursement from insurers at the full prescription price, generating greater profit from the difference between the entity’s acquisition cost and its reimbursement rate.10
For many years, the program remained limited in scope. But from the program’s creation, “Congress has said nothing about how discounted drugs must be dispensed.”11 Covered entities without in-house pharmacies typically relied on a single contract pharmacy (e.g., Walgreens or CVS) to purchase and dispense discounted medications to their patients.12 But following the enactment of the 2010 Affordable Care Act (ACA), the program’s size and economic significance grew dramatically. In addition to expanding Medicaid eligibility, resulting in more disproportionate-share hospitals,13 the ACA also expanded the categories of qualifying covered entities, while federal guidance permitted covered entities to utilize an unlimited number of contract pharmacies.14 If a covered entity’s patient filled a prescription at one of its contract pharmacies, the prescription could be treated as a 340B purchase and eligible for full reimbursement. By contracting with large pharmacy chains with thousands of locations, covered entities could therefore cast a much wider net and capture significantly more 340B prescriptions.
The results were drastic: the number of covered entities increased, but the use of contract pharmacies “skyrocketed,” increasing twentyfold.”15 Indeed, this development transformed 340B from a relatively modest discount program into a sprawling network between healthcare systems, contract pharmacies, distributors, and third-party administrators. Between 2010 and 2019, the number of participating contract pharmacies increased from roughly 1,300 to more than 23,000.16 During the same period, annual 340B purchases increased from approximately $6.9 billion to more than $24 billion.17
Since the passage of the ACA, two sharply competing narratives on the 340B program have emerged. Supporters argue that 340B provides essential financial support for safety-net providers and enables continued access to care in underserved communities.18 Critics contend, however, that the program has drifted far from its original purpose, allowing large health systems to collect substantial revenues with limited accountability.19 These concerns became particularly acute following a 2022 New York Times investigation examining the financial benefits to Bon Secours Mercy Health, a major nonprofit health system, derived from 340B:
“The secret to its success lies with a federal program that allows clinics in impoverished neighborhoods to buy prescription drugs at steep discounts, charge insurers full price and pocket the difference. The vast majority of Richmond Community’s profits come from the program, said two former executives who were familiar with the hospital’s finances and requested anonymity because they still work in the health care industry.” 20
Recently, 340B’s notoriety has prompted a Congressional investigation.21
In addition to these controversies, 340B-related disputes have made an introduction into complex antitrust litigation. As noted above, on September 8, 2025, the AHA sent a letter to the FTC and DOJ warning of what it described as “concerted conduct” by several of the world’s largest pharmaceutical companies to restrict access to the federal 340B Drug Pricing Program. According to AHA, these companies violated Section 1 of the Sherman Act through the “coordinated imposition” of a new 340B rebate model, which would replace upfront drug discounts with a reimbursement system requiring safety-net hospitals to pay full price initially and later seek rebates—a change the AHA contends would impose significant financial burdens on hospitals and ultimately harm patients and communities.22 The letter specifically cites a recent Second Circuit decision that revived claims alleging that several pharmaceutical manufacturers agreed to restrict access to 340B discounts. Against this backdrop, antitrust litigation has emerged as a central battleground in disputes over the program’s future.
A. Mosaic Health, Inc. v. Sanofi-Aventis U.S., LLC
In Mosaic Health, Inc. v. Sanofi-Aventis U.S., LLC, plaintiffs—two federally funded health centers—filed a putative class action alleging that defendants engaged in a horizontal price-fixing conspiracy in violation of Section 1 of the Sherman Act.23 Defendants Sanofi, Eli Lilly, Novo Nordisk and AstraZeneca are horizontal competitors in overlapping markets for three categories of diabetes drugs, all of which are covered by Medicare and Medicaid.24 Plaintiffs allege that these manufacturers agreed to restrict access to 340B discounts, resulting in significant financial loss to safety-net hospitals and clinics.25
Beginning in 2020, defendants collectively lobbied the federal government to limit the applicability of 340B to diabetes medications through an overlapping set of lobbying firms.26 Plaintiffs allege that Defendants communicated with each other, both directly and indirectly, through these lobbying firms, as well as through PhRMA, a trade association.27 Defendants’ lobbying efforts were unsuccessful. On July 24, 2020, President Trump issued an executive order addressing the use of insulin (i.e., the diabetes medication) and epinephrine within 340B.28
According to plaintiffs, after those lobbying efforts failed, Defendants coordinated with one another in a conspiracy to reduce access to 340B discounts. On July 24, 2020, the same day President Trump issued the executive order, AstraZeneca informed the federal government that it would generally stop providing 340B discounts through contract pharmacies, except that covered entities without an on-site pharmacy could designate a single contract pharmacy.29 AstraZeneca publicly announced the policy in mid-August.30 In rapid succession, Sanofi, Eli Lilly, Novo Nordisk announced their own restrictions to 340B discounts. Sanofi conditioned access to 340B discounts on the submission of prescription-claims data; Eli Lilly generally limited discounts to covered entities without an in-house pharmacy that designated a single contract pharmacy; and Novo Nordisk discontinued contract pharmacy discounts for hospitals while preserving them for other entities, such as clinics.31Although the policies differed in form and scope, Plaintiffs allege that each constrained access to 340B discounts and collectively eliminated the overwhelming majority of Defendants’ contract-pharmacy 340B sales.32
Defendants successfully moved to dismiss plaintiffs’ first amended complaint; plaintiffs sought leave to file a proposed second amended complaint, but the district court denied the motion because plaintiffs still “failed to allege parallel conduct and failed to plausibly allege the requisite factual circumstances giving rise to an inference of conspiracy.”33 Plaintiffs appealed.
The Second Circuit vacated the district court’s decision.34 The court emphasized that parallel conduct need not be identical to be sufficiently plead, finding that defendants’ actions need only be similar in “substance, timing, or effect.”35 Plaintiffs thus adequately alleged parallel conduct where multiple manufacturers imposed restrictions on 340B discounts within a short time frame, resulting in a substantial reduction in discounted drug availability.36 The Second Circuit also found that plaintiffs set forth sufficient “plus factors,”37 including (1) a common motive, (2) conduct purportedly against economic self-interest,38 and (3) a high level of interfirm communications.39 Importantly, the court rejected the notion that plaintiffs must disprove all non-conspiratorial explanations at the pleading stage. Rather, it is enough to allege a plausible inference of agreement. Defendants’ petition for certiorari is currently pending with the Supreme Court.40 Meanwhile, the case was not stayed and, pursuant to the Second Circuit’s mandate, plaintiffs filed their second amended complaint and defendants’ jointly filed another motion to dismiss. The district court recently ruled on that motion. 41 The court permitted nearly all of plaintiffs’ state antitrust claims to proceed while dismissing Plaintiffs’ unjust enrichment claims in their entirety.
B. Brandywine Hosp. LLC, v. CVS Health Corp.
As discussed above, covered entities purchase 340B drugs at a discounted prices yet seek reimbursement at full prescription cost, retaining the resulting spread. 42 To obtain full reimbursement, however, the prescription must be filled through a pharmacy participating in the covered entity’s contract pharmacy arrangement. If a patient instead fills a prescription at a non-contract pharmacy, the covered entity cannot capture that margin and, instead, the pharmacy cannot treat the prescription as having been dispensed from inventory purchased at the 340B price.
In Brandywine Hosp., LLC v. CVS Health Corp., CVS—a major 340B contract pharmacy—acquired Wellpartner, a 340B third-party administration (“TPA”) and subsequently required covered entities to use Wellpartner as their TPA in order to access CVS’s 340B contract pharmacy services. 43 Plaintiffs, two hospitals, allege that CVS violated Sections 1 and 2 of the Sherman Act for illegal tying. CVS’s contract pharmacy services were allegedly conditioned on the purchase of TPA services, the tied product. 44 The court’s decision turned on whether a single-product market was appropriate in the 340B context, particularly whether other TPA services were reasonably interchangeable to covered entities. 45
The court reasoned that “not all tying arrangements violate the antitrust laws,” just arrangements where the seller can “exploit its power in the market for the tying product to force buyers to purchase the tied product when they otherwise would not[.]”46On these facts, the court found that a single-brand market centered on CVS’s contract-pharmacy services was unwarranted because covered entities remained free to contract with an unlimited number of competing contract pharmacies. Indeed, the court emphasized that the ACA expansion of the 340B program—which permitted covered entities to utilize unlimited contract pharmacies—meant that reasonably interchangeable alternatives remained available. As a result, the court found that plaintiffs had improperly attempted to define the market around CVS alone while excluding competing pharmacies and other available TPA services. Because the prosed market failed to account for these substitutes, the court held that plaintiffs had not plausibly alleged market power or a cognizable relevant market and dismissed the tying claims.47
The recent antitrust disputes involving the 340B program reflect the increasingly complex role the program occupies within the modern healthcare system. What began as a relatively narrow statutory discount program has evolved into a multi-billion-dollar network involving manufacturers, hospitals, contract pharmacies, insurers, and TPAs, creating new opportunities for competition-related disputes. Mosaic Health and Brandywine illustrate this evolution from opposite directions: the former demonstrates how plaintiffs may challenge alleged coordination among pharmaceutical manufacturers under traditional Section 1 conspiracy principles, while the latter highlights the difficulties plaintiffs face in applying tying doctrine to contractual arrangements within 340B. As disputes related to 340B proliferate, antitrust litigation may remain as a central battleground in the ongoing debate over the program’s future.
