In 2023, Arkansas became the first state to move to enforce a 340B contract pharmacy law as manufacturer restrictions continued to increase.

PhRMA Challenges First State Law Protecting 340B Contract Pharmacy Program

Arkansas has temporarily suspended enforcement of the nation’s first state law to address pharmaceutical manufacturer denials of 340B pricing on drugs when they are dispensed by contract pharmacies.

State Insurance Commissioner Alan McClain ordered the 90-day suspension on July 29. The new law’s 340B provisions were slated to take effect on July 28. In his order, McClain said Pharmaceutical Research and Manufacturers of America (PhRMA) asked him on July 29 to rule on whether the law’s 340B provisions violate the U.S. Constitution.

The law, Act 1103 of 2021, says that 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.

The law’s main thrust is to prohibit discriminatory contracting by commercial payers and pharmacy benefit managers (PBMs) as it relates to the 340B program. Arkansas is one of 16 states have passed laws since 2019 addressing PBM discrimination against 340B covered entities.

McClain said PhRMA asserts that Act 1103’s 340B-related provisions “are preempted by the Supremacy Clause of the U.S. Constitution because they conflict with the requirements, purposes and objectives of the federal 340B program statute and program.” He said the drug industry group also says the law “appears to violate the Commerce Clause of the U.S. Constitution.” PhRMA, he said, also said “key issues of federal law are being decided in federal litigation over transfers of drugs at 340B prices to contract pharmacies at the request of covered entities.”

McClain said, due to the number of potentially affected parties and the magnitude of the issue, he would hold a public administrative hearing on PhRMA’s petition on a date to be determined. He issued a bulletin on July 29 notifying pharmacy benefit managers (PBMs), pharmacy providers, health care providers, and others of their right under state law “to intervene in this proceeding.” Interested parties have until Aug. 30 to submit their requests to intervene to the state Insurance Department.

At the federal level, U.S. Reps. David McKinley (R-W.Va.) and Abigail Spanberger (D-Va.) have introduced legislation to prohibit insurers and PBMs from discriminating against 340B providers or their contract pharmacies by imposing different rules or reimbursement terms than are imposed on other providers or pharmacies. H.R. 4390 also calls for a new independent national drug claims clearinghouse to ensure that states do not get duplicate Medicaid rebates on 340B-purchased drugs. As of yesterday, the bill had 25 sponsors—16 Democrats and 9 Republicans.

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