Connecticut state capitol dome
Connecticut lawmakers heard testimony yesterday on Gov. Ned Lamont’s (D) bill addressing hospitals' 340B revenue, pharma restrictions on 340B contract pharmacy use, and PBM discrimination against 340B entities.

340B Stakeholders Testify on Conn. Governor’s First-of-Its-Kind Multi-Pronged 340B Legislation

Connecticut 340B stakeholders testified at a state legislative hearing Monday on Gov. Ned Lamont’s (D) comprehensive bill to require hospital reporting on 340B revenue, prohibit drug maker restrictions on 340B contract pharmacy use, and prohibit pharmacy benefit manager discrimination against 340B entities and pharmacies.

Stakeholder positions followed usual patterns. Hospitals and health systems spoke against the  

reporting provisions that would apply to them and in favor of the contract pharmacy provisions that would apply to manufacturers. Manufacturer representatives opposed the contract pharmacy provisions. Health centers spoke in favor the contract pharmacy and PBM provisions.

Lamont introduced HB 6669 last month in connection with his fiscal year 2024-2025 budget proposal. Connecticut lets its governors draft and introduce bills that accompany the governor’s budget. The legislature’s joint Public Health Committee heard testimony about the bill but did not vote on the legislation. A committee hearing to vote on it has not yet been scheduled.

“These [bill] provisions are about transparency and about protecting the 340B program through the federally qualified health centers,” said Deidre Gifford, executive director of the state government’s Office of Health Strategy.

While 340B providers get prescription drugs at a steep discount, she said, “They are not obligated to pass that discounted price in all cases to individuals. We’re simply trying to get some transparency into the program…. We aren’t doing anything more than shining some light on the flow of drugs and the flow of funds through this program.”

“Without [the 340B] program, many patients would not be able to access affordable drugs and would have to make the difficult choice between accessing medication and buying groceries.” Sara LeMaster, director of government relations and public policy for the Community Health Center Association of Connecticut, testified.

She said the 340B-priced drugs are commonly used to treat chronic conditions including diabetes and hypertension.

“The restrictions that were placed on contract pharmacies starting in 2020 by the pharmaceutical industry have severely limited patient access” to 340B pricing on drugs commonly used to treat chronic conditions including diabetes and hypertension, LeMaster said.

In written comments, Eric Arlia, vice president of pharmacy services at hospital system Hartford Healthcare, noted, “Many covered entities have limited or no ability to recoup 340B drug savings for eligible prescriptions without utilizing contract pharmacies.” Drug companies’ imposing limits on their number “limits the ability of covered entities to obtain the intended financial relief of the program.”

Drug companies say that 340B providers’ use of contract pharmacies increases the risk of duplicate discounts, but Arlia countered, “There are already mechanisms in place through the 340B statute that allow manufactures to ensure they are not paying duplicate discounts …”

Kelly Ryan, deputy vice president for state policy for the Pharmaceutical Research and Manufacturers of America, told the committee, “We are opposed to [the bill] because it further distorts the 340B program, which is … a safety net program, but has become the second largest federal prescription drug program without any guarantee that manufactures [are helping] 340B patients.”

Ryan invoked the trade group’s argument asserted in ongoing lawsuits that the Connecticut bill’s contract pharmacy protections run counter to the 340B program’s intent, as the statute is silent on contract pharmacies.

“In some cases, contract pharmacies have become revenue generators for profit-motivated covered entities,” she said. “Such legislative provisions directly conflict with the federal 340B program’s rules and enforcement.”

Biotechnology Innovation Organization (BIO) told the committee in written comments it opposed the bill’s ban on claims modifiers used to identify 340B-priced drugs, “The U.S. Government Accountability Office notes that contract pharmacies are a significant source of diversion and duplicate discounts, in part due to the fact that they often do not identify patients as 340B-eligible until after the prescription has been dispensed,” BIO said.

340B hospital representatives spoke in opposition to the bill’s reporting requirements that includes disclosing 340B drug revenues, the difference between their acquisition costs and reimbursements, and how they use the money to benefit their communities.

They said the legislation would add onerous new regulations that further strain scarce resources while adding little to benefit patients.

Jennifer Schneider, senior vice president and chief financial officer of Trinity Health of New England, testified at the hearing, “The 340B program is narrowly tailored to reach only hospitals that provide a high level of services to low-income individuals,” including trauma centers, health screening, and nutrition programs.

“Unfortunately, this section of the legislation adds costly and unnecessary state reporting requirements to a federally regulated program with no benefit to hospitals or the patients we serve,” she said.

In its written comments, the Connecticut Hospital Association called the bill’s 340B reporting rules, “unnecessary and unworkable. It creates a significant risk that hospitals will use the program less because the administrative burdens will outweigh the benefits of participation.”

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