Aerial view of Kansas state Capitol building
A bill in Kansas would prohibit drug manufacturers from denying 340B covered entities access to a manufacturers’ products if the entities use contract pharmacies.

Kansas Bill Targets 340B Contract Pharmacy Limits, Rhode Island Bill Targets PBM Policies

Kansas lawmakers have introduced a bill to prohibit drug manufacturers from denying 340B covered entities access to a manufacturers’ products if the entities use contract pharmacies.

The legislation, like bills recently rolled out in other states, is modeled on the groundbreaking 340B contract pharmacy law passed in Arkansas in 2021.

Kansas is one of only a handful of states this year considering bills with provisions aimed at drug manufacturers’ 340B contract pharmacy policies. Missouri and Mississippi last month reintroduced bills that failed to advance last year.

Other states are waiting to see how the Arkansas law weathers an ongoing federal court challenge, observers say.

Kansas Bill’s Provisions

Kansas Senate Bill 236 provides that a drug manufacturer cannot:

  • Prohibit a pharmacy from contracting or participating with a covered entity by denying access to the manufacturer’s drug products.
  • Deny or prohibit 340B drug pricing for a community pharmacy that receives drugs purchased under a contract arrangement with a 340B covered entity.

SB 236 also targets discriminatory practices by pharmacy benefit managers and prohibits PBM contract terms that:

  • Transfer the benefits of 340B drug pricing savings from one entity, including hospitals, federally qualified health centers or covered entities and their underserved patients, to another entity, including PBMs, private insurers and managed care organizations.
  • Offer a lower reimbursement for a drug purchased under the 340B program than for a non-340B drug.
  • Refuse to cover drugs purchased under the 340B program.
  • Exclude 340B pharmacies from networks.
  • Charge more than fair market value or seek profit sharing in exchange for services involving 340B drug pricing.

SB 236, mirroring legislation in other states, also protects patient choice, including requirements that third party payors inform patients that they are not required to use a mail-order pharmacy, obtain a patient waiver before allowing the use of a mail-order pharmacy, and allowing a patient to choose any pharmacy or provider regardless of 340B participation.

Rhode Island Bill

Bills banning PBM discrimination against 340B covered entities also have been introduced in Rhode Island. 

Senate Bill 0106 and House Bill 5078 would authorize the state attorney general to “undertake appropriate civil and criminal investigations of and actions against PBMs and affiliates” that offer 340B entities lower reimbursement rates than those offered to non-340B entities.

The bills also would bar PBMs from reimbursing their affiliated pharmacies more than non-affiliated pharmacies for the same drugs or charging patients higher co-pays for drugs from a non-affiliated pharmacy.

Wait and See

Colleen Meiman, a policy advisor for state and regional primary care associations, said other states are waiting to see what happens in court with the Arkansas 340B contract pharmacy law before deciding whether to pursue legislation.

“That’s what I’m hearing from some states,” Meiman said. “They’re going to let this play out. If there’s a victory for Arkansas, then they will fight [contract pharmacy restrictions]. But at this point, they’re going to wait and see.”

Pharmaceutical Research and Manufacturers of America last month asked a federal appeals court to overturn a district court’s ruling that Arkansas’s law is not preempted by the 340B statute nor by the U.S. Food and Drug Administration’s Risk Evaluation and Mitigation Strategies requirements. PhRMA has a Feb. 22 deadline to file its brief with the U.S. Eighth Circuit Court of Appeals.

PhRMA also argues that the law violates the U.S. Constitution’s Commerce Clause. This part of the case has been stayed pending a forthcoming U.S. Supreme Court decision about the clause.

Community Care Network of Kansas, the state’s primary care association, doubts that the legislature will pass SB 236. It is focusing instead on getting federal legislation passed.

“The way our legislature is aligned, and especially with the leadership we have, the probability of this moving forward is still pretty low,” Community Care Policy Director Scott Anglemyer said. “We are going to spend a lot more time with our limited resources working on federal instead of state [legislation].”

“Our members tell us that the PBM restrictions are real and are digging into their savings, and the manufacturers and their restrictions on contract pharmacies are as big a problem and tends to be the one that’s growing and threatening to get totally out of hand,” he said. “Ultimately, the thing that we need to have happen, even if state legislation passes, is congressional action on 340B.”