A Connecticut state health agency under Gov. Ned Lamont (D) proposed legislation to implement certain 340B provider reporting requirements.

Connecticut’s Democratic Governor Wants Hospitals to Report 340B Earnings and Manufacturers to Resume 340B Pricing

Connecticut’s Democratic governor wants his state’s 340B hospitals to start filing annual reports disclosing their 340B drug revenues and summarizing how they use the money to benefit their communities. Health centers and other 340B grantee covered entities would be exempt from the reporting.

Gov. Ned Lamont included the 340B hospital reporting requirement in a health care cost-containment bill he submitted to lawmakers last week in connection with his fiscal year 2024-2025 budget proposal. Connecticut lets its governors draft and introduce bills that accompany the governor’s budget. Lamont’s bill, HB 6669, was referred to the House Public Health Committee. Because it is a governor’s bill, it is all but guaranteed a hearing.

In addition to its 340B hospital reporting requirements, HB 6669 would bar drug manufacturers from limiting use of contract pharmacies and imposing other conditions on 340B drug sales. The bill also would prohibit multiple types of pharmacy benefit manager discrimination against 340B entities.

Outside of the 340B program, Lamont’s bill would:

  • eliminate hospital outpatient facility fees charged at free-standing offices and clinics
  • have Connecticut join a multistate bulk purchasing consortium to negotiate drug discounts that all state residents would access through a discount card
  • publish an annual list of drugs with major price spikes
  • “rein in aggressive marketing practices by pharmaceutical representatives.”

This is at least the second time this year that a Democratic state official has filed 340B hospital transparency legislation. A Virginia House subcommittee last month tabled a bill that its Democratic sponsor said effectively would have required Virginia 340B hospitals to abide by the American Hospital Association’s voluntary 340B Hospital Commitment to Good Stewardship Principles. State Del. Kathy Tran (D) said she offered it in response to a The New York Times’ investigation of alleged 340B program misuse involving a Richmond, Va., hospital.

Hospital reporting requirement

Under the Connecticut governor’s bill, no later than Jan. 15, 2024, and every year thereafter, 340B hospitals would have to file with the state:

  • a list of manufacturers from whom the hospital bought drugs through 340B
  • a list of such drugs categorized by quantity, actual purchase price, and 340B ceiling price
  • the reimbursement amount by each payer categorized by manufacturer, quantity, actual purchase price, and ceiling price
  • “the difference in cost for each covered outpatient drug, identified by such drug’s National Drug Code number, due to the difference in the ceiling price or actual price paid, and the actual price paid by any patient or payer”
  • “a summary providing how the difference in cost” as described in the preceding bulleted item “was applied for the benefit of the community.”

“The governor’s proposal will ensure discounted drugs purchased through the federal

340B program benefit the low-income consumers and communities the program was designed

to help,” a fact sheet about HB 6669 says.

Manufacturer provisions

The Connecticut bill would require drug manufacturers to comply with 340B statutory requirements when selling 340B drugs in the state and “not impose any preconditions, limitations, delays or other barriers” to drug purchases that are not required by the 340B statute. Forbidden practices would include:

  • restricting the number or type of locations through which covered drugs may be dispensed by or on behalf of a 340B covered entity
  • conditioning 340B drug sales on enrollment with third-party vendors or on the sharing of claims information or other data
  • charging above 340B ceiling price and making entities request rebates in lieu of discounts
  • interfering with an individual’s choice to receive a covered drug from an entity or a contract pharmacy
  • delaying shipment of 340B drugs
  • retaliating against covered entities or pharmacies for exercising their rights under the legislation.

PBM provisions

HB 6669 would bar a variety of discriminatory PBM practices against entities or their contract pharmacies encompassing:

  • payment terms and reimbursement methodologies
  • pharmacy and provider network participation
  • audits
  • identifying drugs’ 340B status or cost
  • retaliation for exercising rights under the legislation
  • interfering with an individual’s choice to receive a covered drug from an entity or a contract pharmacy.

Injunctive relief

The Connecticut bill would let covered entities or the state attorney general “seek a temporary or permanent injunction and such other relief as may be appropriate to enjoin a pharmacy benefits manager or drug manufacturer from continuing to enforce contract provisions that violate” the legislation.

“Any appeal taken from any permanent injunction granted” against a drug manufacturer under the legislation would remain in place “unless the court is of the opinion that great and irreparable injury will be done by not staying the operation of such injunction.”

Provider groups’ reactions

The Community Health Center Association of Connecticut said it “is thrilled” with and supports the bill’s 340B manufacturer, PBM, and injunctive relief sections.

These sections “protect health centers from discriminatory contracting by pharmacy benefits managers and ensure that health center patients will be able to continue accessing drugs through contract pharmacies,” CHCAC Government Relations and Public Policy Director Sara LeMaster said.

“This will benefit Connecticut’s health centers by protecting the 340B program, which benefits both health centers and their patients,” LeMaster said. “Health center patients greatly benefit from the 340B program because it helps them access low-cost prescription drugs. Under federal law, health centers are required to reinvest their 340B savings into programming, which health centers in Connecticut use to cover the costs of a range of services that improve access to care including mobile dental vans, dental services, care coordination, and much more.”

The Connecticut Hospital Association acknowledged a request for comment but could not be reached in time for this article.

It said in a statement last week, CHA said that some of Lamont’s hospital-focused legislative proposals would destabilize hospitals. “We remain eager to find solutions that deliver more affordable healthcare in our state while expanding access to care,” the group said. “Unfortunately, these proposals will further weaken the hospitals that Connecticut residents rely on for life-saving care.”

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