Louisiana lawmakers are getting close to enacting legislation prohibiting drug manufacturer contract pharmacy restrictions. It would be the second state in the nation to enact such a law.

Two States Move Closer to Enacting Laws Banning 340B Contract Pharmacy Restrictions

A Louisiana Senate health committee yesterday passed a bill that will stop drug manufacturer interference with 340B contract pharmacy arrangements, rejecting an amendment that would have stripped the language from the measure.

HB 548, which also would prohibit pharmacy benefit manager and payor practices that lower reimbursement for 340B-purchased drugs, is now before the Senate floor for final action. The state House passed it 97-2 on April 26.

HB 548 says “a manufacturer or distributor shall not deny, restrict, prohibit, or otherwise interfere with, either directly or indirectly, the acquisition of a 340B drug by, or delivery of a 340B drug to, a pharmacy that is under contract with a 340B entity and is authorized under such contract to receive and dispense 340B drugs on behalf of the covered entity,” unless the federal government prohibits such receipt. Nor shall a manufacturer or distributor “interfere with a pharmacy contracted with a 340B entity,” it says.

Limiting distribution of a potentially dangerous drug under a U.S. Food and Drug Administration Risk Evaluation and Mitigation Strategy “would not be construed as a violation,” the bill says.

Prohibited actions would violate the state unfair trade practices and consumer protection law. The Health and Welfare Committee amended the bill to clarify that covered entities and contract pharmacies would have no right to sue to manufacturers or distributors under the law.

If Louisiana passes the contract pharmacy law, it will become just the second state in the country to successfully enact this type of legislation. Drug manufacturers have aggressively lobbied to block other states from passing similar laws. The state of Arkansas, which passed its own law in May 2021, is currently being sued by the trade group PhRMA and the case is under review in a federal appeals court in St. Louis. The state has not been able to enforce the law while the case is pending.

HB 548 also would prohibit practices by pharmacy benefit managers, health insurance issuers, or other third-party payors that would indirectly lower covered entities’ reimbursement for 340B-purchased drugs.

PBMs and others could not:

  • reimburse 340B covered entities at a lower rate than non-entities or lower reimbursement for 340B drugs
  • impose discriminatory fees, charges, clawbacks, or other adjustments or assessments on 340B covered entities
  • discriminate regarding participation in pharmacy networks, frequency of scope of audits, or patient choice where to receive drugs.

The bill says PBMs and others may not require covered entities to include modifiers on claims indicating that a drug is a 340B drug unless the U.S. Centers for Medicare & Medicaid Services or the state health department requires such identification for state Medicaid program purposes. Another passage says PBMs and others may not “require a 340B 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 340B drug pricing.” Yet another passage says nothing in the bill “applies to the Louisiana Medicaid program as payor when Medicaid provides reimbursement for covered outpatient drugs.”

In other state 340B-related news:

Connecticut

Connecticut Gov. Ned Lamont’s (D) wide-ranging drug pricing bill that would require hospital reporting on 340B revenue, prohibit drug maker restrictions on 340B contract pharmacy use, and prohibit pharmacy benefit manager discrimination against 340B entities and pharmacies continues to make progress in the state legislature.

The legislature’s Joint Committee on Public Health approved it on March 21. It went next to the House Appropriations Committee, which approved it on May 1. It is now before the House Committee on General Law.

Lamont’s bill would require Connecticut 340B hospitals to start filing annual reports disclosing their 340B drug revenues and summarizing how they use the money to benefit their communities. Health centers and other 340B grantee covered entities would be exempt from the reporting.

HB 6669 also would bar drug manufacturers from limiting use of contract pharmacies and imposing other conditions on 340B drug sales. It also would prohibit multiple types of pharmacy benefit manager discrimination against 340B entities.

Outside of the 340B program, Lamont’s bill would:

  • eliminate hospital outpatient facility fees charged at free-standing offices and clinics
  • have Connecticut join a multistate bulk purchasing consortium to negotiate drug discounts that all state residents would access through a discount card
  • publish an annual list of drugs with major price spikes
  • “rein in aggressive marketing practices by pharmaceutical representatives.”

New York

New York state lawmakers on May 2 approved fiscal year 2023-2024 budget legislation that excluded language health care providers sought to reverse the state’s April 1 transfer of Medicaid managed care pharmacy benefits to Medicaid fee for service.

Under Medicaid FFS, providers can only bill for 340B-priced drugs at acquisition cost, while under the managed care system, 340B providers can bill plans at negotiated rates above their purchase costs.

According to a May 2 General Assembly summary of the budget, lawmakers redirected $210 million in projected savings from the transfer to assist providers hurt financially by the change: $30 million for Ryan White clinics, $125 million for federal qualified health centers and certain related free-standing clinics, and $45 million “in flexible funding to ensure providers are made whole with the loss of 340B revenue.”

Lawmakers in April passed a short-term funding bill with $9 million in supplemental aid only for Ryan White clinics that are losing 340B revenue due to the April 1 transfer.

New York safety-net health care providers say the $210 million in the budget is nowhere near the estimated $705 million they say needed to make them whole, nor is funding guaranteed beyond this fiscal year.

State Senate Health Committee Chair Gustavo Rivera issued a statement May 3 saying he was dismayed that Gov. Kathy Hochul (D) decided to move forward with the pharmacy carve out and refused to explore my proposed compromise bill that would have safeguarded our 340B safety-net providers and their vulnerable patients.”

Two New York health centers are suing in state court to enjoin the state from continuing to implement the drug benefit transfer.

Iowa

Iowa Gov. Kim Reynolds (R) signed legislation on April 28 making Iowa the 25th state to ban banning pharmacy benefit manager and payor discrimination against 340B covered entities and their contract pharmacies.

The state House passed HF 423 on March 7 and the state Senate on April 20.

Editor at Large | Website | + posts