The California Senate has unanimously passed a bill to stop pharmacy benefit managers from discriminating against 340B covered entities and their pharmacies.
The Senate voted 35-0 on May 22 to pass SB-786, sponsored by Sen. Anthony Portantino (D). A state Assembly health committee hearing on the bill is set for July 11.
If it becomes law, California will join 27 other states that have protected 340B entities from PBM discrimination.
The legislation would ban PBMs from imposing on 340B entities any terms or conditions that either discriminate against 340B entities and/or their specified pharmacies in connection with dispensing 340B-priced drugs, or that prevent a covered entity from retaining the benefit of the discount pricing.
Specific policies forbidden by the legislation include:
- Payment terms, reimbursement methods or other terms and conditions that distinguish between 340B-priced drugs and other drugs, that account for the availability of 340B discounts in determining reimbursement, or are less favorable than those for non-340B entities.
- Terms or conditions applied to covered entities or specified pharmacies based on 340B status, including required participation in specialty, standard, or preferred pharmacy networks, or requirements related to frequency or scope of audits.
- Refusing to contract with or terminating a contract with a covered entity or specified pharmacy, or otherwise excluding the covered entity or pharmacy from a specialty, standard, or preferred network, on the basis of 340B status, or for reasons not applied equally to non-340B entities.
Other provisions in the bill protect a patient’s right to receive a drug through a covered entity or specified pharmacy, and prohibit PBMs from retaliating against covered entities for exercising their rights set forth in the legislation.
The state Senate last year passed a bill that would have both protected 340B entities from PBM discrimination and stopped drug manufacturers from imposing conditions on 340B entities that use contract pharmacies. Its Senate sponsor withdrew it before the state Assembly was due to hold a hearing on the bill. Drug manufacturers opposed it vigorously.
Louisiana this month became the second state to enact a law prohibiting drug manufacturers from imposing conditions on sales of 340B drugs shipped to contract pharmacies. Arkansas was the first in 2021. The trade group PhRMA currently is challenging that law in federal appeals court.
