State-Mandated 340B Carve‑Out Policies in Medicaid

The 340B Drug Pring Program requires manufacturers participating in Medicaid to provide covered outpatient drugs to certain safety net providers, known as covered entities (CEs), at significantly reduced prices. The 340B statute contains an explicit “duplicate discount prohibition”—state Medicaid programs and their contracted managed care organizations (MCOs) may not invoice manufacturers for Medicaid rebates when a drug is acquired at the discounted 340B price. While the majority of states permit individual 340B CEs to choose whether to “carve in” (CE chooses to purchase drugs for Medicaid patients at 340B prices) or “carve out” (CE chooses to forgo 340B discounts for all Medicaid patients), some states have chosen to instead impose a broad, statewide policy (applicable either to both the state’s Medicaid fee-forservice population, their MCO population, or both). In addition, some recent state policies have specifically targeted retail and specialty pharmacies under contract with CEs (“contract pharmacies”).

This describes 340B carve-out policies across all 50 states and the District of Columbia and is
based on a survey of publicly facing state materials (statutes, regulations, state plan amendments, etc.) conducted during July 2026.