Update: 340B-Related Action in the States

Editors’ note: Have you read our 13-page special report on the 340B Coalition Winter Conference? We’ve received excellent feedback and think you and your colleagues will find it beneficial. Let us know what you think. Write to us at info@340Breport.com.

Update: 340B-Related Action in the States


Michigan’s state health department had dropped its proposal to transfer Medicaid outpatient prescription drug coverage from Medicaid managed care (MCO) to Medicaid fee for service (FFS).

Instead of saving the state money by shifting the drug benefit from Medicaid MCO to FFS, Gov. Gretchen Whitmer’s (D) Feb. 6 fiscal years 2021-22 budget proposes $182.9 million in Medicaid savings from implementing “a single, statewide Medicaid preferred drug list (PDL). The PDL will help maximize federal rebates and provide [the state Department of Health and Human Services] greater leverage in negotiating lower prices with drug manufacturers. Savings will be used, in part, to increase pharmacy reimbursement rates to further enhance access to provider networks throughout the state.”

340B hospitals and health centers had warned that moving the Medicaid drug benefit to FFS would have resulted in devastating losses of drug reimbursement revenue and cutbacks in patient care. Michigan Medicaid FFS reimburses 340B drugs at no more than the 340B ceiling price and allows dispensing through contract pharmacies only if the covered entity, contract pharmacy, and state health department have an arrangement in place to prevent duplicate discounts.


The Kentucky Senate on Feb. 20 amended and unanimously passed a controversial bill that would have made changes to the state Medicaid drug benefit fiercely opposed by Kentucky 340B entities.

As originally written, SB 50 would have moved the state Medicaid prescription drug benefit from Medicaid MCO to Medicaid FFS, except for Kentucky 340B entities, which would have continued to submit Medicaid claims to Medicaid managed care contractors. 340B entities said that under that scheme it would have been impossible for pharmacies to determine at point of sale whether a claim was or was not 340B-eligible, in order for the pharmacy to correctly submit the claim either to Medicaid MCO or FFS. Consequently, it would have become all but impossible to use 340B drugs for Medicaid beneficiaries.

According to Kentucky 340B stakeholders, the revised bill preserves the Medicaid MCO pharmacy benefit, under management of single, new, state-contracted pharmacy benefit manager (PBM). The number of state-licensed Medicaid MCOs also is expected to shrink from the current five. Stakeholders say 340B entities are grateful the bill wasn’t passed as written. They are worried, however, about uncertainty surrounding the methodology that will be used to reimburse 340B-purchased drugs in managed care.

The bill is now before the state House Appropriations & Revenue Committee.


A Minnesota state task force that has been studying how to lower drug prices recommends optimizing and expanding use of the 340B program in the state—including requiring 340B entities to pass on “a significant portion, if not all,” of their 340B savings directly to patients.

“In Minnesota, not all eligible entities have enrolled in the program,” says Minnesota Attorney General Keith Ellison’s (D) Advisory Task Force on Lowering Pharmaceutical Drugs Prices in its Feb. 19 report. “Entities may not be aware they are eligible, for example, as FQHC Look-Alikes.” The group also says “some eligible entities may choose not to enroll in the 340B Program rather than risk operating in a non-compliant manner. This means some eligible Minnesota entities, and potentially their eligible Minnesota patients, are missing out on significant drug savings by failing to participate in the 340B Program.”

The report makes these recommendations:

“A designated agency should perform and publish an inventory of all health care providers in the state to identify whether they are eligible for—and participating in—the 340B Program.”

“Minnesota should develop and fund strategies to increase the participation of eligible entities in the 340B Program.”

“Minnesota should establish a technical assistance program to assist eligible entities with enrollment, implementation, and compliance with the 340B Program requirements.”

“Regulatory changes should be enacted to require entities sharing in 340B Program drug pricing discounts to pass on a significant portion, if not all, of these savings directly to patients. There are currently no regulations that require participating entities to pass the 340B Program savings on to patients in any particular manner.”

“As necessary and appropriate, legislation should be developed and enacted to facilitate and support the participation of Minnesota government and non-governmental entities in the 340B Program.”


The Ohio House Health Committee held a Feb. 13 hearing on bipartisan legislation to stop health plans, Medicaid MCOs, and their PBMs  from imposing extra fees on or reducing drug reimbursement for 340B entities. Reimbursement could not be lower than National Average Drug Acquisition Cost (or wholesale acquisition cost if NADAC is unavailable), and payers could not impose fees on 340B entities that are not imposed on other providers or that are higher than those imposed on others.

“We are seeing a trend in Ohio that health insurance companies and their contracted Pharmacy Benefit Managers (PBMs) are not providing access to 340B programs either by excluding 340B covered entities from health plan coverage or by implementing additional fees or lowered reimbursements for 340B providers,” state Rep. Randi Clites, H.B. 482’s Democratic sponsor, said at the hearing. “We cannot stand by and allow money intended to provide care for the underserved be diverted through discriminatory contracts.”

“PBMs are reducing reimbursements or imposing fees through discriminatory contracts against 340B providers to absorb all or part of their savings,” said state Rep. Susan Manchester, the bill’s GOP sponsor. “House Bill 482 prohibits this practice, ensuring the savings are going to the 340B providers as intended so they are able to offer access to affordable and comprehensive care. We cannot allow PBMs to continue discriminating against them just because of their status as a 340B provider.”

The Ohio Senate Finance Committee held a Feb. 25 hearing on companion legislation in the chamber (S.B. 263). “This legislation does not change the 340B program, it simply protects the savings meant to remove barriers and increase access to quality health care for Ohioans,” said that bill’s sponsor, state Sen. Bob Hackett (D).


Bills in the Vermont House and Senate (H. 787 and  S. 247) to require hospitals to report how much money they save through the 340B program and how they use the saving “are up in the air,” according to the Senate version’s sponsor, a Vermont news organization reports. The bills also would require the state health department to recommend to the legislature by Nov. 15 how best to modify Vermont Medicaid’s 340B drug pricing policies “to improve the efficiency, accountability, and cost effectiveness of the program.”

According to Feb. 16 story in VTDigger, state Sen. Chris Pearson (D) said it was “disturbing” that 340B hospitals are “pocketing” savings that are “supposed to make prescriptions affordable.” According to the news website, Pearson said, “Sharing and limiting hospital revenue from the program makes sense at the University of Vermont Medical Center. But it could undermine the financial stability of a smaller hospital. There’s a lot at play here.”

North Carolina

North Carolina lawmakers say state officials need to speed up prison health-care reform, including implementing a 2018 state law directing the state health and public safety departments to partner with 340B entities to reduce drug costs and improve care for the state inmate population, according to a Feb. 24 story in The (Waynesville, N.C.) Mountaineer. (Powers Law, a 340B Report sponsor, wrote a report that led to the bill’s introduction and enactment.) According to the newspaper article, state officials said, “a lack of funds and a tedious federal paperwork process has delayed the 340B rollout.”

Four Key Takeaways from the 340B Coalition Winter Conference

One of the big takeaway messages from this month’s 340B Coalition winter conference is that 340B entities should feel empowered to challenge federal 340B program compliance audit findings they find unfair or contrary to law, 340B Report Publisher and CEO Ted Slafsky says in his latest column for Pharmaceutical Strategies Group. With the Health Resources and Services Administration (HRSA) acknowledging the limits of its 340B enforcement powers, “340B providers should use their appeal rights when they think they have been wronged,” Slafsky says, citing remarks at the conference by Powers Law attorney William von Oehsen.

Slafsky also gleaned these big takeaway messages from the conference:

  • It is more important than ever for 340B stakeholders to be proactive at the state level. “As state governments become more entangled in 340B policy, you need to be actively engaged with your state legislators, governor and Medicaid agency from day one,” he wrote.
  • Coalition building is crucial . . . even with strange bedfellows. “Covered entities at the state and local level are realizing that they need to forge alliances — not only with other types of 340B providers, but also with other parties that are influential in the state,” Slafsky said.
  • Despite state victories, some matters need to be addressed nationally. Some PBMs are thumbing their noses at state laws to protect 340B entities from discriminatory drug reimbursement, saying those laws are preempted by federal statutes, Slafsky observed. “340B providers may need to redouble their efforts in Washington, D.C.to gain protection from this growing threat.”

Drug Maker Bausch Posts Alternative Distribution Plan Notice on OPA Website

Bausch Health is moving distribution of three generic products “for 3408 covered entities, 340B contract pharmacies, and retailers purchasing at non-340B prices to a direct distribution structure,” the company said this week in a notice to 340B entities on the Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) website. It says the company is using R&S Solutions “to accept orders and provide logistics, invoicing, and customer support” on Bausch’s behalf for:

  • Bexarotene Capsules 75mg 100ct (NOC 68682-0003-10)
  • Metformin Hydrochloride ER Tablets, 500mg (NOC 68682-0021-50)
  • Metformin ER Tablets, 1000mg (NOC 68682-0018-90)

Tweets of Note

@DrugChannels: More #FacesOf340B shame: Nashville General Hospital (DSH440111), which purports to be a safety-net facility, outsources its ER to a firm that aggressively sues uninsured patients https://drugch.nl/3bZjfnz @flakebarmer @NPR @KHNews Another story of amazing #340B abuse

@TedOkonCOA: The #340B abuses keep coming as Congress does absolutely nothing to fix this out-of-control money-making-machine for “nonprofit” hospitals that anything but!

@HedgeyeEEvans: (Responding to @DrugChannels) We do not have a 340B program at [Nashville] General. Looked at it but not sufficient patient flow to justify compliance.

@340BMatters: Big Pharma execs pulling down $30M+ mega-salaries while their industry works to kill #340B program providing lower-cost meds to safety-net healthcare providers. https://bit.ly/390WpKi #Protect340B

@TSlafsky: I think you will enjoy the column.  It provides a nice summary of the 4 biggest takeways from #340Bconf.  All #340B stakeholders should benefit from the piece.  Enjoy! https://t.co/Wci9gLZeS0?amp=1

@JournalofCP: Latest #OutspokenOncology episode welcomed Dr @saynikpay @VUmedicine who spoke w @chadinabhan about truths and myths of the #340B program— its origins, evolution & where it’s headed. Full episode >> https://buff.ly/38UESnf #oncology #valuebasedcare #patientcare @VUMChealth

@340BHealth: Thanks to #340B, patients with #diabetes are receiving free or heavily discounted #insulin as well as critical services that are helping them lower their A1C levels. https://bit.ly/37DVzD3  #Protect340B

@340BHealth: Safety-net hospitals in rural communities throughout the U.S. are using #340B savings to provide vital services such as diabetes treatment and oncology care. Read some of these hospitals’ stories here: https://bit.ly/2YghHyo  #Protect340B #RuralHealth

@HRSAgov: #TODAY: @Surgeon_General promoted the Director of #HRSA’s Office of Pharmacy Affairs, Krista Pedley, to Rear Admiral. Her promotion is to one of the highest ranks that one can achieve in the U.S. #PublicHealth Service Commissioned Corps.

@TedOkonCOA: Very insightful @nytimes Opinion pice by MD @danielleofri. What is missing is the increasing money made by these large “nonprofits” from the #340B drug discount program, which along w/ tax benefits dramatically increases the bottom line. https://t.co/3ZfBsngXdu?amp=1

@AIR340B: Patients should always be the number one priority, but aggressive bill collection practices at some hospitals indicates that may not always be the case. Take Joshua Bates, a patient at a nonprofit #340B hospital in North Carolina. https://t.co/hBxKKuGXbv?amp=1

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