California state capitol
A bill in the California Senate would bar PBMs from employing practices that 340B covered entities view as discriminatory.

Calif. Senate Committee to Hold Hearing on 340B Anti-Discrimination Bill Tomorrow

A California Senate health committee has scheduled a hearing for tomorrow on a bill to prohibit pharmacy benefit managers from employing practices that 340B covered entities view as discriminatory.

SB-786 would prohibit PBMs from imposing conditions and exclusions that would prevent  providers “from retaining the benefit of discounted pricing because of their 340B status,” according to the California Hospital Association, which recently endorsed the legislation.  In their letter of support for the bill, CHA said the legislation would prohibit PBMs from requiring covered entities to identify 340B prescriptions and then reimbursing them at lower rates simply because they were purchased under the 340B program. “This is antithetical to the intent of the 340B program and threatens the health of millions of low-income and rural Californians who rely on it for their medication,” said CHA.

In addition, payers would be prevented from retaliating against or refusing to contract with entities because of their 340B status.

The bill was introduced by Democratic Senator Anthony Portantino, a long-time southern California lawmaker who chairs the Senate appropriations committee.  The bill must be passed by August to be sent to the governor’s desk for approval or veto.

Protections Against Manufacturer Restrictions Not in This Year’s Bill

A more comprehensive Senate bill that would have protected 340B entities from both PBM discrimination and drug manufacturer contract pharmacy restrictions died at the last moment during last year’s legislative session.  After the bill passed the Senate 24-9, the lead author and then state Senate Health Committee Chair Richard Pan (D) asked the state Assembly Health Committee to cancel the hearing on the bill effectively killing the legislation.

Elizabeth Oseguera, assistant director of policy for the California Primary Care Association, said she is hopeful this year’s bill will have a better chance of approval now that the drug industry provisions were removed.  She said that the pharmaceutical industry strongly opposed Pan’s bill since manufacturers wouldn’t have been able to place restrictions on 340B discounts in the contract pharmacy setting.

Peggy Tighe, legislative counsel to the national group Ryan White Clinics for 340B Access, praised California 340B advocates for pushing for the legislation. However, she is concerned that SB-786 does not have enough “teeth” for enforcement. Meaning, if PBMs get caught violating terms of the bill, there is “not a real hammer to the PBM” like monetary penalties.

Tighe has worked with a number of states to enact similar anti-discrimination bills.

“I’m a little surprised with how progressive as California is, they hadn’t done this sooner,” Tighe said. “When somebody is infiltrating a system and undermining safety net providers, it should have come to a stop a long time ago. I’m glad to see California is moving in this direction.”