| At the end of the 2021 state legislative session the Tennessee General Assembly passed SB1617/HB1398, a bill that included a variety of Pharmacy Benefit Manager (PBM) reforms directed at patient steering, rebate retention and transparency, along with language to prohibit discriminatory reimbursement in the 340B Drug Pricing Program. Portions of the legislation, including 340 protections, took effect on July 1, 2021 and the remainder took effect on January 1, 2022 as Public Chapter 569. |
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| What is the 340B Program? |
| The 340B Program is a federal program, established in 1992, which allows certain providers, including community health centers to purchase outpatient medications at a discount. As required by the program, health centers must invest savings from the program into patient care. Health centers in Tennessee use 340B savings to provide affordable medications to patients or services such as OB/GYN care, behavioral health, and pediatrics. |
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| What is 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. Discriminatory reimbursement occurs in a variety of forms. Most commonly, third parties may reimburse less for 340B-priced medications. They may also refuse to contract with 340B entities unless certain conditions are met. |
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| How will Public Chapter 569 protect health centers? |
Discriminatory reimbursement practices prevent health centers from fully utilizing savings from the 340B program. Public Chapter 569 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
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| How would federal legislation improve protections? |
| Tennessee is one of several states to pass legislation to address discriminatory reimbursement because the federal 340B statute does not currently prohibit these practices. However, the PROTECT 340B Act of 2021 was introduced in Congress and would expand protections for the 340B program nationwide and apply to more insurance types, including Medicare. The legislation continues to gain momentum in the House of Representatives, but additional co-sponsors are needed to push the legislation forward. Please consider reaching out to your Members of the House and ask them to support the PROTECT 340B Act of 2021. |
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