A California Senate health committee yesterday unanimously approved a bill to stop PBM discrimination against 340B providers.

California Senate Committee Approves Bill to Protect 340B Providers from Alleged PBM Discrimination

A California Senate health committee yesterday unanimously approved a bill to prohibit pharmacy benefit managers from employing practices that 340B covered entities view as discriminatory. On Wednesday, California’s SB-786 was approved by the Senate Health Committee and now goes to the Senate floor for a vote.

The author of the bill Senator Anthony J. Portantino, a senior Democrat from southern California, introduced it on the committee floor.  A number of stakeholders testified on the bill including representatives from provider groups, the insurance and the drug industry.

SB-786 would prohibit PBMs from imposing conditions and exclusions that would prevent covered entities from receiving the full 340B benefits of discounted drug prices. PBMs would no longer be allowed to impose payment terms and conditions that are designed to make 340B reimbursements less favorable.

A more comprehensive anti-discrimination bill that would have also prevented drug manufacturers from placing restrictions on 340B discounts in the contract pharmacy setting almost was enacted last year in the state legislature. However, 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 a hearing on the bill effectively killing it. Drug manufacturers aggressively lobbied against the bill.

This year’s scaled back bill not only has widespread support from 340B provider groups but it has experienced just limited resistance from the PBM and pharmaceutical industry.

“CHA is pleased to see SB-786 move forward,” said David Simon, senior vice president of communications of the California Hospital Association. “The 340B program generates valuable savings that enable eligible hospitals to reinvest in programs that provide free care for uninsured patients, free vaccinations, services in mental health clinics, chronic disease management, and community health. Today’s action is an important step toward protecting the health of the millions of low-income and rural Californians who rely on the 340B program.”

Elizabeth Oseguera, assistant director of policy for the California Primary Care Association, spoke in support of the bill on Wednesday. Oseguera said she is confident the bill will move to the Senate floor. She pointed out that there  is no cost affiliated with the bill so it would skip appropriations process and go straight to the floor.

The few groups that spoke in opposition of the bill at the Wednesday hearing had quibbles over semantics and minor provisions in the bill. They, and Portantino, informed the committee they are meeting to work on addressing these issues.

While further discussions between the author and involved parties will need to occur, Oseguera said she is “hopeful that we will be able to speak with the pharmaceutical industry and address their concerns.”

Austin Heyworth, a contracted lobbyist who spoke on behalf of PhRMA at the hearing, said while the group has not yet come to an official position on 786, they are working with Portantino on amendment language that would clarify the definition of a specified pharmacy, and ensure that drug manufacturers can continue to receive information on whether a drug was purchased through the 340B program.

The Pharmaceutical Care Management Association, which represents PBMs, expressed neutrality on the bill beyond a technical suggestion.

“Despite some of the disparaging remarks, we’re actually neutral on this bill,” said Bill Head, the assistant vice president of state affairs for PCMA in reference to negative comments made about PBMs during witness testimony. “We are absolutely neutral.”

Oseguera said she found it both positive and pleasantly surprising that PBMs are neutral on this bill.

The Biotechnology Innovation Organization expressed opposition to the bill in its current form but said it is working with the bill’s author and its sponsors to resolve the matter. Jennifer Snyder, a contracted lobbyist who represented BIO at the hearing, told the lawmakers that “our concerns center around one small provision of the bill which has to do with tracking of covered drugs, and 340B drugs and how they’re dispensed. We hope and are continuing discussions to see how we can find solutions as to how you can possibly track those 340B covered drugs, how they’re dispensed, maybe after point of sale. We look forward to continuing to work with the author and think he’s committed to that.”   

“California needs to protect patients and health care providers to ensure that they are able to offer and receive affordable prescription drugs,” Sen. Portantino told 340B Report. “SB 786 creates health care equity and ensures that all patients who need treatment are able to receive it.”

Several bills intended to protect 340B providers from alleged anti-discrimination practices by PBMs have been introduced in various states this year.  23 states have already enacted this type of legislation. 

Elin Johnson
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