Relates to establishing the "340B prescription drug anti-discrimination act"; prohibits pharmaceutical manufacturers and pharmacy benefit managers from discriminating against covered entities and New York state pharmacies based on participation in the drug discount program authorized by section 340B of the federal public health service act.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7789
SPONSOR: Paulin TITLE OF BILL:
An act to amend the public health law, in relation to establishing the
340B prescription drug anti-discrimination act
PURPOSE:
To protect health care providers serving vulnerable populations from
high pharmaceutical prices
SUMMARY OF PROVISIONS:
Section 1 provides the short title.
Section 2 provides a declaration of purpose.
Section 3 creates a new section 280-d of the public health law. This new
section would:
*Provide definitions of entities that participate in the drug discount
program authorized by section 340B of the federal public health services
act.
*Prohibit certain acts by entities including pharmaceutical manufactur-
ers and pharmacy benefit managers, that limit, restrict or impose addi-
tional conditions that discriminate against providers or pharmacies that
participate in the federal 340B program.
*Provides for enforcement options including authorizing the Commissioner
of Health to impose civil monetary penalties for violations of this
section.
Section 4 sets the effective date.
JUSTIFICATION:
Congress created the 340B program in 1992 to support providers who serve
the most vulnerable patients. For more than 25 years, the 340B program
has reduced the cost of many outpatient drugs to clinics, hospitals and
health systems that serve large numbers of low- income, rural, under-
served, and medically vulnerable patients. By requiring drug manufactur-
ers to discount their prices for safety-net providers, this program
allows these providers to stretch scare resources as far as possible,
reaching more eligible patients and providing more comprehensive
services. The pharmaceuticals purchased through the 340B program contin-
ues to be a small share of the overall drug market, but it is vitally
important to safety-net providers. It allows them to purchase
prescription drugs at significant discounts from drug companies.
On April 1st of this year, the State began implementing the Medicaid
pharmacy carve-out, which will result in hundreds of millions of dollars
in lost savings for 340B providers. However, many 340B providers contin-
ue to utilize the program to save on pharmaceutical purchases related to
other payers, such as commercial health insurers and Medicare. For some
providers, the loss of revenue from the additional payers can be as much
or more than the impact of the Medicaid carve out.
Both the pharmaceuti6l industry and pharmacy benefit managers have
sought to weaken what remains of the 340B program by imposing arbitrary
limitations and requirements designed to enhance their bottom lines.
These abusive practices include denying required discounts to hospitals
and their affiliated contract pharmacies for 340B drugs, requiring
labor-intensive "tagging" of 340B drugs, and refusing to distribute 340B
drugs to hospital and contract pharmacies.
These actions transfer savings that have been used by safety net insti-
tutions to serve vulnerable communities directly into the profit margins
of these corporations. Unlike the Medicaid carve out, there are no
savings or fiscal impact to the State. This bill would prohibit these
abusive practices and other attempts to discriminate against 340B
providers and ensure that the savings from the 340B program continue to
be available to the safety net health care providers in New York State.
PRIOR LEGISLATIVE HISTORY:
New Bill
FISCAL IMPLICATIONS:
No fiscal impact
EFFECTIVE DATE:
This act shall take effect immediately
STATE OF NEW YORK
________________________________________________________________________
7789
2023-2024 Regular Sessions
IN ASSEMBLY
June 15, 2023
___________
Introduced by M. of A. PAULIN -- read once and referred to the Committee
on Health
AN ACT to amend the public health law, in relation to establishing the
340B prescription drug anti-discrimination act
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "340B prescription drug anti-discrimination act".
3 § 2. Declaration of purpose. Section 340B of the federal public health
4 service act requires pharmaceutical manufacturers, as a condition of
5 participation in Medicare and Medicaid, to provide discounts on outpa-
6 tient drugs to certain providers that serve a high number of Medicaid
7 patients. These cost savings enable safety-net providers to stretch
8 scarce resources as far as possible in providing more comprehensive
9 services to their communities.
10 In recent years, some pharmaceutical companies and pharmacy benefit
11 managers have imposed certain requirements and limitations on New York
12 340B covered entities, thus depriving such entities of much-needed cost
13 savings. These practices discriminate against 340B covered entities and
14 their pharmacy partners, and by extension the patients they serve. These
15 discriminatory practices have the effect of limiting those covered enti-
16 ties' ability to care for their communities fully and comprehensively.
17 There is a need for the state to prevent erosion of our 340B covered
18 entities' 340B cost savings, with its concomitant impacts on patient
19 access to health care services. This act is intended to achieve that
20 goal by prohibiting pharmaceutical companies, among other entities, from
21 engaging in practices that discriminate against 340B covered entities
22 and their pharmacy partners.
23 § 3. The public health law is amended by adding a new section 280-d to
24 read as follows:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11664-01-3
A. 7789 2
1 § 280-d. Prescription drug discrimination prohibited. 1. Definitions.
2 (a) "340B program" shall mean the drug discount program authorized by
3 section 340B of the federal public health service act (42 U.S.C. §
4 256b).
5 (b) "Covered entity" shall:
6 (i) have the same meaning as is set forth in section 340B(a)(4) of the
7 federal public health service act (42 U.S.C. § 256b);
8 (ii) mean an entity authorized to participate in the 340B program; and
9 (iii) include New York state pharmacies that receive drugs purchased
10 under a contract pharmacy arrangement with a covered entity.
11 (c) "Dispensing" shall include a pharmacy's entire distribution proc-
12 ess, including the ordering, purchasing, delivering, receipt, and sale
13 of drugs, and any other aspect of such distribution process that an
14 entity may seek to deny, prohibit, condition, or otherwise limit.
15 (d) "Pharmacy" shall have the same meaning as is set forth in section
16 sixty-eight hundred two of the education law.
17 2. Prohibition of discriminatory practice. No entity, including but
18 not limited to a pharmaceutical manufacturer or pharmacy benefit manag-
19 er, shall:
20 (a) deny, prohibit, condition, or otherwise limit the dispensing of
21 drugs from a covered entity;
22 (b) deny access to drugs manufactured by a pharmaceutical manufacturer
23 to a covered entity based on such covered entity's participation in the
24 340B program;
25 (c) impose requirements, exclusions, reimbursement terms, fees,
26 audits, claim identification, or other conditions on a covered entity
27 that differ from the requirements, exclusions, reimbursement terms,
28 fees, audits, claim identification, or other conditions applied to enti-
29 ties that do not participate in the 340B program.
30 3. Enforcement. (a) Any provision of a contract that is contrary to
31 this act shall be void and unenforceable.
32 (b) The commissioner shall have the authority to impose a civil mone-
33 tary penalty pursuant to section twelve of this chapter on any entity
34 that violates the provisions of this act.
35 (c) The commissioner shall refer any matters in which a civil monetary
36 penalty is being imposed to the education department and the office of
37 the attorney general for review.
38 § 4. This act shall take effect immediately.
