The 340B world notched some important victories in March. A three-judge panel of the U.S. Court of Appeals for the Eighth Circuit upheld Arkansas’ first-in-the-nation state law prohibiting drugmakers from restricting the dispensing of 340B drugs at contract pharmacies.
The judges rejected the arguments from the Pharmaceutical Research and Manufacturers of America (PhRMA) that the 340B statute and Food, Drug, and Cosmetic Act, both federal laws, preempt state law, affirming a lower court ruling from 2022.
Circuit Judge Michael Melloy wrote that Arkansas’ state law, passed in 2021, “does not create an obstacle for pharmaceutical manufacturers to comply with 340B, rather it does the opposite: Act 1103 assists in fulfilling the purpose of 340B. In arguing otherwise, PhRMA presents no evidence of an obstacle.” He added that “Arkansas is simply deterring pharmaceutical manufacturers from interfering with a covered entity’s contract pharmacy arrangements. There is no obstacle for pharmaceutical manufacturers to comply with both Act 1103 and Section 340B.”
Covered entities and their allies celebrated the decision.
“The court’s ruling rightfully affirms the ability for states to bridge regulatory gaps that are not addressed in federal law and states’ ability to regulate drug distribution and the practice of pharmacy,” said Tom Kraus, vice president of government relations for the American Society of Health-System Pharmacists, or ASHP.
Since the ruling, more than a dozen drugmakers have waived their contract pharmacy restrictions in Arkansas, and the state is reportedly planning to resume enforcement measures against several manufacturers. The ruling also turns attention to the similar law in neighboring Louisiana, which is the subject of at least three drug-industry lawsuits before a different court.
The ruling continues the state-federal divide on 340B, and it’s having broader ripple effects:
- West Virginia just became the third state to enact a 340B contract pharmacy protection law after B. 325 sailed through both legislative chambers with a combined one (1) vote in opposition.
- Lawmakers have approved similar protections as part of budget bills in Kansas, but it’s unclear whether the amendments will survive to become law.
- The Mississippi state House and Senate have both passed contract pharmacy protections that also include PBM antidiscrimination measures.
- Per 340B Report, contract pharmacy protection bills have passed at least one legislative chamber in six states, while similar bills have been introduced in at least 15 other states. It seems highly likely we’ll see more state laws protecting 340B contract pharmacies.
Predictably, there’s a backlash. PhRMA has filed a request to rehear its case before the full Eighth Circuit appeals court, and AstraZeneca, which is also suing Louisiana over its law, is asking the U.S. District Court for the Eastern District of Arkansas to block enforcement of the state’s law. Notably, that’s the same lower court that ruled against drugmakers in December 2022.
And just to spoil things for the rest of us, Liquidia and Genentech became the 30th and 31st drugmakers to announce contract pharmacy restrictions.
Meanwhile, U.S. Rep. Doris Matsui (D-Calif.) introduced her long-awaited contract pharmacy protection bill, the 340B PATIENTS Act. It would require manufacturers to honor 340B discounts at contracted retail and specialty pharmacies and bar them from placing other conditions on the transactions, with civil monetary penalties for violators. Her bill reportedly has no Republican co-sponsors, which is problematic for its long-term prospects in the GOP-controlled House.
There’s also been more activity on prohibiting pharmacy benefit managers and health insurers from meddling in 340B:
- South Dakota Kristi Noem signed a law that expands on the state’s existing PBM policy by listing specific practices that will be outlawed starting next year.
- The New Hampshire Senate approved a PBM antidiscrimination bill, sending it to the state
In a reminder that support for 340B doesn’t always fall neatly along party lines, two Democratic lawmakers in Minnesota have introduced bills to expand on state’s new 340B reporting law. The sponsor of one of the bills chairs the committee where it was referred. Data submission in the state is set to start April 1.
New 340B analyses
A new report for the American Hospital Association prepared by Healthsperien finds that the estimated amount of 340B discounts to eligible hospitals represents a small share of pharmaceutical company revenue.
The estimated $46.5 billion in 340B discounts for hospitals in 2022 comprised 3.1% of global revenue for drugmakers and 7% of U.S. revenues, the study found. Further, 340B hospital discounts between 2017 and 2022 grew by $30 billion, compared to drug company revenue growth of $347 billion and the growth of the U.S. market by $331 billion.
Separately, a University of Michigan study published in the journal Cancer found that prostate cancer patients at 340B hospitals showed better adherence to expensive oral medications than patients at non-participating hospitals. “We suspect that 340B hospitals potentially have some resources or mechanisms that are helping these vulnerable patients maintain adherence,” study author Kassem Faraj, MD, said.
Free healthcare for immigrants?
In one of the stranger 340B storylines to emerge in recent memory, activists are trying to link the discount drug program to the hot-button issue of illegal immigration.
A shadowy group calling itself Building America’s Future is running a 30-second ad on social media that alleges 340B is being used “to launder your money and provide free healthcare for illegal immigrants.” Relatedly, several far-right media outlets have run stories citing polling that found majorities of Republican voters oppose strengthening the 340B program, which the poll characterized as fueling growth in immigration.
We’d be inclined to brush this all off as nonsense if it wasn’t directly targeting a 340B contract pharmacy protection bill Virginia lawmakers sent to Gov. Glenn Youngkin. He has until April 8 to sign or veto the bill.
340B potpourri
- Effective April 1, Massachusetts will prohibit Medicaid managed care plans from using 340B discounts on seven GLP-1 diabetes and weight-loss drugs, including Ozempic and Wegovy. The state says it wants to collect rebates on the drugs, which can run $900 or more per month before insurance or rebates.
- April 1 was also the deadline for submitting feedback to the Senate “gang of six” regarding their proposed SUSTAIN 340B Act, and I hope you made your voices heard.
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