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Get to Know 340B: 340B State Legislation Wrap-Up

Last week, the Tennessee General Assembly passed a bill to protect the 340B drug pricing program. Read this week's blog to more about the need for this legislation and why it will preserve access to care for health center patients. 
 
 
On Tuesday, May 4, the Tennessee General Assembly passed legislation to protect the 340B drug pricing program, a critical step in protecting investments in patient care.

The 340B Drug Pricing Program is a federal program, established in 1992, which allows certain providers, including Federally Qualified Health Centers (FQHCs) also known as community health centers, to purchase outpatient medications at a discount. 

As a requirement of participating in the program, all of the savings generated from the program are reinvested back into patient care. Health centers use the savings to meet the unique health care needs of their communities by providing access to affordable medications or services such as OB/GYN care, behavioral health, and pediatrics.  
 
In recent years, health centers are other providers are finding it increasingly difficult to retain savings from the program due to practices known as ‘discriminatory reimbursement.'  

Discriminatory reimbursement occurs when third parties such as Pharmacy Benefit Managers, insurers, and contract pharmacies keep savings from the 340B program even though they are intended for health centers.  

One of the most common ways third parties engage in this practice is by providing lower reimbursement for 340B priced medications. Third parties may also refuse to contract with health centers unless they charge a certain price for medications and other fees or allow the third party to keep a portion of the savings. 

Practices such as these undermine the purpose of the 340B program, and without the ability to retain these savings, health centers will find it difficult to provide patients with affordable medications and critical services. 

Despite the harm caused by discriminatory reimbursement, the 340B statute does not prohibit the practice. Without federal action, many states have stepped in to pass legislation to protect the 340B program. The Tennessee legislature followed suit on May 4, 2021 by passing legislation that contained a variety of Pharmacy Benefit Manager (PBM) reforms directed at patient steering, rebate retention and transparency, along with language to prohibit discriminatory reimbursement.
 
The legislation, SB1617/HB1398, sponsored by Senator Reeves and Representative Helton prohibits PBMs and other third-party payers from: 
  • Reimbursing a 340B entity less for drugs than a non-340B entity  
  • Assessing fees on 340B entities that are not also applied to non-340B entities 
  • Excluding 340B entities from networks of pharmacies based on criteria that is not also applied to non-340B entities  
Each of the discriminatory reimbursement provisions were also contained in SB1205/HB1348, sponsored by Senator Briggs and Representative Helton, which passed the House.  

SB1617/HB1398 will now head to Governor Lee for signature. Once signed into law, Tennessee will become the latest state to implement safeguards for the 340B drug pricing program and ensure health centers can continue to meet the needs of their patients.