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Missouri lawmakers have reintroduced legislation to prohibit drug manufactures from denying 340B covered entities access to manufacturers’ products if the covered entity uses contract pharmacies.

Missouri Lawmakers Try Again to Stop Drug Companies’ 340B Contract Pharmacy Restrictions

Missouri lawmakers have reintroduced legislation to prohibit drug manufactures from denying 340B covered entities access to manufacturers’ products if the covered entity uses contract pharmacies. The language is modeled on the first-of-its kind law passed in Arkansas in 2021.

Missouri Senate Bill 26 says: “A pharmaceutical manufacturer shall not prohibit an entity from contracting or participating with an entity authorized to participate in the 340B pricing program by denying access to drugs that are manufactured by the pharmaceutical manufacturer, or by denying the entity the ability to purchase drugs at the 340B price by substituting a rebate discount.”

A state House bill last year with identical language died in committee. Comparable bills in California, Connecticut, Maine, Mississippi, and Utah also failed.

Jane Drummond, general counsel and senior vice president of government relations at the Missouri Hospital Association, told 340B Report that MHA and other supporters of the bill are optimistic about its chances of passage. “340B is a very complicated issue and it’s not easy to educate legislators on it, so [last year], we did quite a bit of information-spreading and education about … why we feel we need this legislation,” Drummond said. “So we feel like we’ve got a leg up this year, because we already have legislators who are familiar with the issues … and we feel like we have a pretty favorable committee in the Senate.”

Arkansas Act 1103 says pharmaceutical manufacturers shall not:

  • Prohibit a pharmacy from contracting or participating with an entity authorized to participate in 340B drug pricing by denying access to drugs that are manufactured by the pharmaceutical manufacturer; or
  • Deny or prohibit 340B drug pricing for an Arkansas-based community pharmacy that receives drugs purchased under a 340B drug pricing contract pharmacy arrangement with an entity authorized to participate in 340B drug pricing.

Pharmaceutical Research and Manufacturers of America asked a federal district court in September 2021 to declare the law unconstitutional and preempted by federal law and to enjoin the state from enforcing it against PhRMA and its member drug companies. The case is now before the U.S. Eighth Circuit Court of Appeals in St. Louis.

“The 340B provisions being considered by some states pull the states into a live federal dispute and active litigation in several federal courts across the country,” PhRMA said yesterday in a statement to 340B Report. “We appreciate that state legislators are shining a light on one area of concern for 340B covered entities, but state laws have no place in regulating a federal program authorized by a federal law passed by Congress.”

“Not only would the 340B provisions be an overstep by the state government, but they also don’t address fundamental problems in the program,” PhRMA continued. “Government watchdog after government watchdog has found the 340B program is often not helping the vulnerable patients it is intended to help. That’s why we will continue to pursue policies at the federal level that would ensure patients more directly benefit from the tens of billions of dollars in discounts manufacturers provide through 340B.”

Bills Also Target PBMs

Senate Bill 26 also targets practices by pharmacy benefit managers that discriminate against 340B pharmacies. It says a PBM or health carrier shall not discriminate against, lower the reimbursement of, or impose any separate contract terms upon a 340B covered entity. It says a health carrier or PBM shall not limit a patient’s freedom to use an entity that participates in 340B, and that a PBM shall not base drug formulary or drug coverage decisions on the 340B pricing status of a drug.

House Bill 197 and Senate Bill 402, meanwhile, would prohibit PBMs from:

  • Reimbursing a 340B covered entity or contract pharmacy for a 340B-priced drug less than the amount the PBM or health plan would pay to any other similarly situated, non-340B provider or pharmacy based on 340B status.
  • Imposing terms or conditions on covered entities or contract pharmacies that differ from those applied to non-340B entities based on 340B status, including fees, chargebacks, clawbacks, adjustments, or professional dispensing fees; restrictions or requirements regarding network participation, requirements regarding audit frequency or scope or inventory management systems and other policies that interfere with a covered entity’s ability to maximize the value of drug discounts.
  • Interfering with an individual’s choice to receive a 340B drug from a covered entity or contract pharmacy, whether in person or via direct delivery or mail.
  • Requiring a covered entity or contract pharmacy to identify directly or via a third party, 340B drugs.
  • Refusing to contract with a covered entity or contract pharmacy for reasons other than those applied to non-340B entities or pharmacies, or based on 340B status.

Daily Civil Penalties Against PBMs

The two bills would establish civil penalties of up to $5,000 per violation per day against PBMs.

Drummond said payors are already voicing their opposition to those provisions, “[Their] mantra is, somehow hospitals are getting a windfall because they’re getting to keep the difference between what they pay for a drug and what they charge for the drug, and they want to paint us a bad guys for that.”

She added, “Our response is, that’s exactly how the 340B program is supposed to work, so hospitals can utilize this money for other services they wouldn’t ordinarily be able to provide. The insurers keep saying, ‘If we could get our hands on that differential, we could lower premiums for our beneficiaries,’ which may or may not be accurate.”

“We’re interested to see the growth in what we call the 340B non-discrimination bills that are spreading across the county,” Tom Kraus, vice president of government relations at the American Society of Health-System Pharmacists (ASHP). He said the group drafted model legislation that many of the states that have adopted such laws have drawn upon in drafting their own bills.

Kraus noted that House Bill 197 and Senate Bill 402 protect a patient’s freedom of choice in pharmacy, which he said would likely help curb the PBM practice known as “white-bagging,” whereby the PBM designates a prescription drug as a ‘specialty’ drug, then specifies which pharmacy must fill the prescription. Under a provision in the bills, “the payor can’t dictate an alternate pharmacy,” he said.

Other PBM discriminatory practices include requiring that certain modifiers be used for 340B-priced drugs, giving the PBM greater ability to track 340B drug utilization and target the drug for lower reimbursement, or conditioning payment on the use of particular data platforms, Kraus said. He noted that many of the anti-discrimination laws already passed in 20 states address only the lower reimbursement issue, while the bills introduced in the new year target the additional PBM policies.

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