Present law generally prohibits a health insurance issuer, managed health insurance issuer, pharmacy benefits manager, or other third-party payer from: (1) Reimbursing a 340B entity for pharmacy-dispensed drugs at a rate lower than the rate paid for the same drug by national drug code number to pharmacies that are not 340B entities; (2) Assessing a fee, chargeback, or adjustment upon a 340B entity that is not equally assessed on non-340B entities; (3) Excluding 340B entities from its network of participating pharmacies based on criteria that is not applied to non-340B entities; or (4) Requiring a claim for a drug by national drug code number to include a modifier to identify that the drug is a 340B drug. Present law defines "340B entity" to mean a covered entity participating in the federal 340B drug discount program, including the entity's pharmacy or pharmacies, or any pharmacy or pharmacies under contract with the 340B covered entity to dispense drugs on behalf of the 340B covered entity. This bill prohibits a drug manufacturer or their agent or affiliate, from: (1) Denying, restricting, prohibiting, discriminating against, or otherwise limiting the acquisition of a 340B drug by, or delivery of a 340B drug to, a 340B entity or other location that is under contract with, or otherwise authorized by, a 340B entity to receive 340B drugs on behalf of the 340B entity unless such receipt is prohibited by the U.S. department of health and human services or state law; (2) Imposing additional requirements or limitations on a 340B entity, including requiring the submission of data as a condition for allowing the acquisition of a 340B drug by, or delivery of a 340B drug to, a 340B entity or other location that is under contract with or otherwise authorized by a 340B entity to receive 340B drugs on behalf of the 340B entity unless such data submission is explicitly required by the U.S. department of health and human services or state law; (3) Requiring a 340B entity to reverse, resubmit, or clarify a claim after the initial adjudication unless these actions are in the normal course of business and not related to the 340B program; (4) Imposing any requirements relating to the number of 340B entities or their contract pharmacies or inventory management systems of 340B drugs, unless such requirement is required by the U.S. department of health and human services or state law; (5) Imposing any requirement relating to the frequency, duration, or scope of audits that are not imposed on pharmacies or providers that are not 340B entities; (6) Imposing requirements relating to accreditation, recertification, credentialing, or recredentialing that are not imposed on pharmacies or providers that are not 340B entities; or (7) Imposing any requirement determined by the commissioner to interfere with the ability of a 340B entity to access discounts provided under the 340B program. A violation under (1) – (7) constitutes an unfair trade practice in the business of insurance and an unfair or deceptive act under the Consumer Protection Act of 1977; provided, that a $50,000 civil penalty may be assessed per violation. Each package of 340B drugs applicable to a violation under (1) – (7) constitutes a separate violation. This bill requires a person or entity that contracts with a 340B entity to dispense 340B drugs or to administer, or otherwise to consult for the purposes of facilitating, a 340B entity's participation in the 340B program to do the following: (1) Not interfere with, prohibit, restrict, or limit a 340B entity's contracts or prospective business relationships with another person or entity; (2) Not deny, restrict, prohibit, or otherwise interfere with a 340B entity's choice of 340B drugs acquired, delivered, or otherwise distributed under subsection (b); or (3) Exclude claims from 340B entities which would result in a net loss to the covered entity. This bill defines "340B drug" to mean a drug that is a covered outpatient drug within the meaning of the federal 340B program; is eligible for any offer for reduced prices by a manufacturer under the federal 340B program; and is purchased by a 340B entity or would have been purchased by a 340B entity but for certain restrictions or limitations imposed by a pharmacy benefits manager, or third party that makes payment for those drugs.

Statutes affected:
Introduced: 56-7-3119, 56-8-104, 47-18-104(b), 47-18-104