Louisiana state capitol
Louisiana Gov. John Bel Edwards (D) is expected to sign a bill prohibiting drug company limits on 340B contract pharmacy relationships and pharmacy benefit manager encroachment on health care providers’ 340B program revenue.

Louisiana Is Poised to be Second State to Enact 340B Contract Pharmacy Law

The Louisiana Senate voted unanimously Sunday to pass and send to Gov. John Bel Edwards (D) a bill prohibiting drug manufacturer limits on 340B contract pharmacy relationships and pharmacy benefit manager encroachment on health care providers’ 340B program revenues.

Edwards is expected to sign the bill, HB 548, a Louisiana 340B covered entity representative said. The Senate passed it 38-0 on June 4. The House passed it 97-2 on April 26. The legislature’s 2023 regular session ends Thursday.

Louisiana is poised to become just the second state with a law addressing manufacturer conditions on deliveries of 340B-acquired drugs to contract pharmacies. Its neighbor Arkansas was the first. Pharmaceutical Research and Manufacturers of America is suing to have Arkansas’s law declared unconstitutional. Its case is before the U.S. Eighth Circuit Court of Appeals in St. Louis. PhRMA has aggressively lobbied state legislatures in an effort to block similar bills. Until now, it had turned back efforts in other states to enact laws like Arkansas’s.

Twenty-two manufacturers have imposed conditions on 340B pricing when providers use more than one contract pharmacy. Organon was the latest. The policy it announced last week takes affect July 1. More companies are expected to follow suit.

If Edwards signs the Louisiana bill, PhRMA probably will sue in an attempt to derail it. A federal appeals court in Philadelphia ruled 3-0 in late January that the 340B statute does not force manufacturers to deliver 340B drugs to an unlimited number of contract pharmacies. The federal government decided not to appeal the decision to the U.S. Supreme Court. It let an April 30 deadline pass without filing an appeal or asking for an extension. Federal appeals courts in Washington, D.C., and Chicago are expected to hand down decisions in companion lawsuits at any time and the government may be hoping for a better outcome.

PhRMA, which testified against HB 548 during a state House hearing, said yesterday that the bill “contradict[s] federal law, which does not require delivery of 340B medicines to an unlimited number of contract pharmacies. We recognize contract pharmacies may play a role in helping some 340B providers located in medically underserved or otherwise rural areas reach patients in need, but it is not appropriate for a state government to insert itself into this comprehensive federal program.”

About a month ago, U.S. Rep. Doris Matsui (D-Calif.) reportedly was working on federal legislation to prohibit manufacturer restrictions on 340B covered entities’ use of contract pharmacies. It hasn’t been filed and little has been said about it since.

The Louisiana bill prohibits actions by a drug manufacturer or distributor that would deny, restrict, prohibit, or otherwise interfere with the acquisition of a 340B discounted drug to a pharmacy that is under contract with a 340B entity.

It also prohibits practices by a health insurance issuer, pharmacy benefit manager, or other
third-party payor that would limit or impose conditions that would indirectly lower the amount of reimbursement for 340B drug dispensed by a 340B entity or its contract pharmacies. Roughly half of the states have passed one or more laws since 2019 addressing discriminatory 340B drug reimbursement.

Louisiana Hospital Association President and CEO Paul Salles said it “would like to thank the Louisiana Legislature for recognizing that providers participating in the 340B program need protection against the growing discriminatory policies of drug companies, health plans, and PBMs.”

“The passage of HB 548 is a big win for Louisiana, which has the second-highest poverty rate in the nation,” said Elizabeth Davis, Director of Pharmacy and 340B Compliance & Audit at Tulane University School of Medicine. “Patients at Tulane’s five 340B clinics, which include two Ryan White clinics and the state’s only Hemophilia Treatment Center, will benefit from this legislation, as will patients throughout the state.” The Louisiana Primary Care Association did not respond in time for this article to a request for comment.