The legislation prohibits hospital systems and other “covered entities” from obtaining drugs at discounted rates through the federal 340b program, and then selling them to consumers at a markup. The 340b program was created by the federal government to help uninsured and low-income patients get medicine at an affordable cost. Under the program, drug manufacturers are required to sell their products at a steep discount to select “340B covered entity” hospital systems so those savings can be passed on to the patient. However, reports have shown that hospital systems often place steep markups on the drugs for financial gain. SB517 would stop this practice.