Nebraska Becomes a Leader in Protecting 340B Contract Pharmacies

In a major win for safety-net providers, the state of Nebraska just made a bold move to defend the integrity of the 340B Drug Pricing Program. On April 3, the Nebraska Legislature passed LB168—known officially as the 340B Contract Pharmacy Protection Act—with an overwhelming 42-5 vote. While many states have taken a wait-and-see approach amid increasing restrictions from drug manufacturers, Nebraska made it clear: access to affordable medications for low-income and rural patients is non-negotiable.

But why does this matter? And why now?

A Quick Refresher: What’s at Stake

The 340B Drug Pricing Program requires drug manufacturers to provide outpatient drugs at significantly reduced prices to eligible health care organizations—often those serving underinsured or uninsured populations. In recent years, many of these covered entities have relied on contract pharmacies—pharmacies not owned by the hospital or clinic—to help distribute 340B drugs across a wider geographic footprint.

Unfortunately, since 2020, more than 20 pharmaceutical companies have implemented restrictions on the use of these contract pharmacies. These policies limit how many pharmacies a 340B-covered entity can partner with—or require data submission hoops that many rural or smaller facilities simply can’t meet. These restrictions have led to significant financial strain and service disruptions, especially in medically underserved areas.

Nebraska's Answer: LB168

Nebraska’s new law addresses this head-on by preventing manufacturers from denying or limiting access to 340B discounts based on how a hospital chooses to dispense medications. In other words, if a covered entity wants to use contract pharmacies to get discounted meds into the hands of patients, the manufacturer can’t stand in the way—at least within the state.

Advocates argue that this law restores balance to a program that has been steadily chipped away by industry pressure. Importantly, Nebraska’s approach adds weight to the growing movement of state-level protections for 340B, stepping in where federal enforcement has stalled.

The Rural Angle: More Than Policy—It’s About Survival

The implications of LB168 are especially significant for rural hospitals and community health centers, many of which rely on contract pharmacies simply because they lack the resources to operate their own in-house systems. For them, 340B isn’t a “nice to have”—it’s a lifeline that keeps doors open and patients cared for.

"Without our ability to partner with contract pharmacies, we would have to make impossible decisions—either cut staff or cut services," said a Nebraska hospital administrator who testified in support of the bill. "This law gives us back the tools we need to serve our patients."

What This Means Moving Forward

While the bill doesn’t have jurisdiction over federal enforcement, it does send a strong message—and sets a precedent for other states considering similar legislation. States like California, Illinois, and Georgia have all introduced or debated their own versions of 340B protections, and Nebraska’s success may push those efforts forward.

Still, challenges remain. Drugmakers may pursue legal action arguing that the state is overstepping into federal regulatory territory. But for now, Nebraska hospitals and clinics can breathe a little easier knowing they have legislative backing to keep their 340B partnerships alive.

The Bottom Line

The 340B program was created to stretch scarce resources and support providers that serve the most vulnerable. When those providers are stripped of their ability to partner with local pharmacies, it's the patients who lose the most.

Nebraska’s LB168 is more than a political win—it's a reminder that local action can still drive meaningful change in healthcare. Whether this sparks a wave of similar protections in other states remains to be seen. But one thing is clear: the fight to preserve the 340B program’s original mission isn’t over.