January 29, 2024
Action on 340B Contract Pharmacies Turns to the States
By Ted Slafsky
As we approach the 16-month mark since we had pivotal arguments over the 340B contract pharmacy program in two federal appellate courts and Congress continues to offer no relief, a growing number of 340B providers are turning to state legislatures for help. In just the past few months, more bills have been introduced to require drug manufacturers to offer 340B discounts in the contract pharmacy setting than the entire two-year period before.
At publication time, eleven states: Arizona, Florida, Iowa, Kentucky, Massachusetts, Michigan, Missouri, Nebraska, Oklahoma, Virginia and West Virginia have introduced bills to restore access to drug discounts in the contract pharmacy setting. They follow the trailblazers of Arkansas and Louisiana who enacted 340B pharmacy protection laws in 2021 and 2023 respectively. Massachusetts is the furthest along with its state senate unanimously passing a bill in late November that that would protect 340B grantees and certain safety net hospitals from manufacturer restrictions on 340B contract pharmacy arrangements. It is awaiting action in the State House.
The other ten bills that have recently been introduced would provide protections to all 340B covered entities, unlike the Massachusetts Senate’s version. I anticipate that the bill will be amended in the House to add the other 340B hospitals in the state.
Reasons for Sudden Pick Up
There are two primary reasons for the sudden surge in state 340B protection bills. The first is that providers have simply suffered too long with the restrictions, which are costing them and their patients precious 340B savings needed to provide affordable and much needed health care. Services are being cut, health care workers are getting let go and patients are suffering. The other reason is that that most state legislatures have recently started their new legislative sessions. We can expect many other states to introduce similar bills in the coming the weeks.
Real Pain
After conferring with a number of national leaders advising states on their contract pharmacy protection bills, it is clear that the 340B provider community has reached a breaking point.
“Despite being broadly recognized as good stewards of the 340B program, CHCs are being hit very hard by contract pharmacy restrictions, which are directly reducing their ability to care for their underserved patients,” says Colleen Meiman, national policy advisor for State & Regional Associations of Community Health Centers.
“I hear every week about CHCs that are downsizing services or staff due to these restrictions. CHCs and their patients can’t afford to wait any longer for Congress to act, so they’re turning to the one path that has provided relief to some of their colleagues – state legislation,” she added.
Hospitals, which are facing wide-ranging restrictions from 29 drug manufacturers, were able to convince the state of Arkansas to resume enforcement of its law even though its legality is still being debated in a federal appeals court in St. Louis. In August, the state announced it would resume enforcement “in light of the indeterminate time period for full completion of federal appellate review and the immediate need of hospitals to have enforcement.”
Arkansas has made progress in its efforts convincing nine drug manufacturers to restore the discounts as the debate over the legality of the law slowly winds its way through the federal court system. In Louisiana, 7 drug manufacturers have restored the discounts even before the state begins its upcoming enforcement of the law.
Words of Advice
While 340B advocates have had trouble getting a Republican to co-sponsor a contract pharmacy protection bill that U.S. Rep. Doris Matsui (D-CA) has drafted, and the Senate continues to move slowly on its bill, the political dynamics are very different in state legislatures. The two laws that have been enacted so far have occurred in ruby red states with broad bipartisan support and most the bills introduced so far in state capitols in this session have either been introduced solely by Republicans or high-ranking lawmakers from both parties.
While several contract pharmacy protection bills were introduced in the previous state legislative session, all but one died as result of an aggressive lobbying effort by the drug industry. PhRMA and other drug company interest groups are trying again to stem the tide and it won’t be easy for 340B providers to cross the finish line. Those involved in the successful efforts in Arkansas and Louisiana emphasize the importance of building a broad coalition that not only includes state provider groups that represent hospitals and health centers but also the state’s independent pharmacists.
Experts also recommend that the bills be carefully written. “Those crafting legislation must be careful to ensure that the laws are precise, fully enforceable, and based on states’ traditional right both to regulate the distribution of drugs and to protect the health and welfare of their citizens.” says Peggy Tighe, a principal at Powers Law and counsel to Ryan White Clinics for 340B Access. Her firm is representing providers in Arkansas and Louisiana that have intervened on the side of the states in the litigation battle between the drug industry and the state governments over whether the laws are legal.
The flurry of activity in state capitols will only grow in the coming months. While it is too early to tell how many of the state contract pharmacy bills will become law this year, early signs are very promising.
