Montana Gov. Greg Gianforte (R) signed a bill last week forbidding PBMs from reimibursing 340B covered entities and their contract pharmacies less for drugs than other pharmacies.

Montana Enacts Expansive Bill Intended to Protect 340B Providers

Montana has passed a law barring pharmacy benefit managers (PBMs) from excluding 340B contract pharmacies from participating in their networks.

SB 395, known as the Montana Pharmacy Benefit Manager Oversight Act, was signed into law last week by Gov. Greg Gianforte (R), a supporter of the 340B program while serving in Congress.

The law also outlaws paying 340B covered entities or their contract pharmacies different rates than other pharmacies; requiring the use of 340B-related modifiers in non-Medicaid claims; and restricting patients from choosing to receive 340B drugs from covered entities or their contract pharmacies, or charging them more if they do.

Although the entire law won’t be enforced until Jan. 1 of next year, the 340B provisions became effective immediately. That was the handiwork of Sen. Greg Hertz, a Republican who represents the northwestern region of the state. He introduced an amendment late last month to the bill ensuring the 340B provisions would be swiftly enacted. “It’s a good amendment,” he said. However, the provision barring the use of modifiers for 340B claims would expire on June 1, 2023.

Aside from the 340B-related restrictions, PBMs would also be required to disclose the aggregate wholesale acquisition costs for each therapeutic category of prescription drugs to insurers within 45 days of a request by an insurer do so, as well as any rebates or fees they receive from drug manufacturers.

Pharmacists are also allowed to disclose the process PBMs use for authorizing or denying coverage, as well as other components of contracts they enter into with such entities. PBMs are barred from retaliating against such disclosures. 

The law also requires PBMs to be licensed by the Office of the State Auditor, Commissioner of Securities and Insurance, disclose who owns and manages them, and release data on how many enrollees each manages. PBMs would have to pay $1,000 to obtain a license, which would cost $500 annually to renew. That state office may also fine PBMs for violating the law.

SB 395 passed the House of Representatives by a 98-2 vote, and in the Senate unanimously.

“Prescription drugs are the fastest-growing expense in patient care costs,” said Troy Downing, Montana’s Commissioner of Securities and Insurance. “So, we think that this is going to be meaningful.”

Gianforte was among 243 members of Congress who sent a letter to then Health and Human Services Secretary Alex Azar last September asking that safety net providers continue to receive 340B discounts after drug manufacturers began cutting contract pharmacies out of the program. Gianforte, who had served as Montana’s at-large member of the House of Representatives from July 2017 to early this year, was elected governor of the Big Sky State last November.

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