New Mexico state capitol building
New Mexico lawmakers passed a bill to stop pharmacy benefit managers from discriminating against 340B providers, but stripped it of language that would have outlawed drug manufacturers’ conditions on 340B sales when entities use contract pharmacies.

New Mexico Passes 340B Anti-Discrimination Bill, After Dropping 340B Contract Pharmacy Provisions

With just minutes to go in this year’s session, New Mexico lawmakers recently passed a bill to stop pharmacy benefit managers from discriminating against 340B providers including reimbursing them at a lower rate than other providers. Gov. Michelle Lujan Grisham (D) has until Friday to sign or veto it.

The legislation however excluded language from the original House version that would have outlawed drug manufacturers’ conditions on 340B sales when entities use contract pharmacies.

The House health committee passed the bill, including its 340B contract pharmacy language, on March 8. The House judiciary committee removed the language on March 14. On March 17, the next-to-last day of the 2023 session, the full House passed a different PBM-related bill that the Senate had already passed. The full House attached the House Judiciary Committee version of the 340B bill to the Senate PBM bill, sending it back to the Senate floor for a vote on the amendments. The Senate concurred with the changes on March 18 with only about two minutes left in the session, sending the final bill to Lujan Grisham.

“It was a nail-biter, for sure,” a 340B provider stakeholder who lobbied for the bill said.

Opposition to the language about manufacturers’ 340B contract pharmacy restrictions “was overwhelming,” the source said. “Not only did they mobilize within the committees, but they were very clearly mobilizing outside of the committees very effectively. So [the provision] was pulled out just to get it passed.”

Also, there was hesitancy to include 340B contract pharmacy protections pending the outcome of the drug industry’s federal lawsuit challenging Arkansas’s first-of-its kind law on the subject, the source said.  

The original House bill’s 340B contract pharmacy language said:

  • A drug manufacturer shall not prohibit a pharmacy from contracting with a covered entity by denying the pharmacy access to 340B drugs that it manufactures.
  • A covered entity may arrange for distribution of 340B drugs, including the ordering, shipment, receipt and storage, by a pharmacy on the covered entity’s behalf.
  • A PBM, drug manufacturer, wholesaler, supplier or other entity shall not encumber the distribution of 340B drugs to a pharmacy contracting with a covered entity.

The final version bill bans certain PBM policies including:

  • Reimbursing a 340B covered entity at a rate lower than that paid for the same drug to pharmacies, similar in prescription volume, that are non-340B entities.
  • Assessing a fee, chargeback or other adjustment to a covered entity not assessed to non-340B entities.
  • Imposing a provision that prevents or interferes with a person’s choice to receive 340B drugs from a covered entity.
  • Imposing terms or conditions that differ from those imposed on a non-covered entity, including:                      
  • Restricting or requiring participation in a pharmacy network.
  • Requiring more frequent or broader scope of audits for inventory management systems using generally accepted accounting principles.
  • Requiring a covered entity to reverse, resubmit or clarify a claim after the initial adjudication, unless these actions are in the normal course of pharmacy business and not related to the 340B program.
  • Charging an additional fee or provision that prevents or interferes with an individual’s choice to receive a 340B drug from a covered entity.

More than 20 other states have passed comparable laws. Other states this year with legislation addressing discriminatory PBM practices involving the 340B program include Connecticut, Iowa, Mississippi, Missouri, Montana, Oregon, Rhode Island, and Texas.

Bills to address manufacturers’ 340B contract pharmacy actions were also introduced in Connecticut, Kansas, Mississippi, and Missouri but only the Connecticut bill appears to have gained enough traction that it might pass.

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