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340B Insight provides members and supporters of 340B Health with timely updates and discussions about the 340B drug pricing program. The podcast helps listeners stay current with and learn more about 340B to help them serve their patients and communities and remain compliant. We publish new episodes twice a month, with news reports and in-depth interviews with leading health care practitioners, policy and legal experts, public policymakers, and our expert staff.
Speaker 1 (00:04):
Welcome to 340B Insight from 340B Health.
David Glendinning (00:12):
Hello from Washington DC, and welcome back to 340B Insight, the podcast about the 340B drug pricing program. I'm your host, David Glendenning with 340B Health. Our guest today is Amanda Sellers Smith, legal counsel here at 340B Health. One of many areas that Amanda focuses on for our member hospitals and health systems is keeping track of all the 340B activity at the state level. This has been a big year for state action on 340B so far, and for some states the legislative year isn't over yet, but we have had enough happen so far that we thought it would be a good time to check in with her. If you did not yet listen to our most recent episode with our president and CEO Maureen Testoni, please do so now. She had some of her own updates from the states as well as on several activities happening at the federal level, so there's no need for a news update from us this time.
(01:07):
Now here's my conversation with Amanda. I am here with Amanda Sellers Smith, our very own legal counsel right here at 340B Health. Amanda, I've had you on the show before, so I will say welcome back to 340B Insight.
Amanda Sellers Smith (01:22):
Hi, David. Thank you for having me again. I always enjoy our conversations.
David Glendinning (01:27):
Okay, so today we are here to talk about the states. I think we last had you on the show talking about the states probably just a little bit less than a year ago, and I know we're only about halfway through the year, but we certainly have seen enough state activity going on that we did want to check in with you again about that. We know few of the state legislatures are full-time, but some are part-time and are done with their legislative sessions for the year. Where do we stand as of right now on the state level for 340B so far this year?
Amanda Sellers Smith (02:01):
Well, so far this year, David, we've seen more states enact bans on drug company restrictions on 340B contract pharmacy. You might recall that Arkansas was the very first state in the country to enact this kind of law, followed by Louisiana in 2023 and that 2024, we've seen an additional couple of states enact similar laws. It's been really exciting to watch that. Some of them have been just straight contract pharmacy laws, while some have been paired with the PBM non-discrimination bills we've been seeing over the past few years, as well as some states have implemented 340B reporting measures. A variety of different things happening on the state level, but by far the most exciting are the state contract pharmacy laws and drug companies, drug industry is challenging state's authority to do this kind of law. Lawsuits continue, but so does advocacy. So it's been really exciting.
David Glendinning (02:56):
Great. A lot to cover. Let's start with the bans that you mentioned on drug company contract pharmacy restrictions. What's been happening so far this year on that issue?
Amanda Sellers Smith (03:07):
We had more than 20 states considering similar laws during this 2024 session that they vary between the states, but many of the laws are pretty similar to what we saw out of Arkansas or Louisiana, which were the first two. As of today, we've had additional bills enacted in Kansas, Maryland, Minnesota, Mississippi, and West Virginia. That's adding five states to our list for a total of seven that have enacted this kind of state level law. And then we also have another bill pending that had passed the legislature in Missouri. It's currently with the governor. The governor of Missouri will either have to sign it or veto it. There is some pressure on him to veto it. We're watching it really closely and really hoping that that becomes the law before the end of the year.
David Glendinning (03:57):
Okay. And I will just add as of when we're speaking, that is the current status. As of today, we're up to seven states, possibly eight or more before long. What about the other dozen or so that were considering them?
Amanda Sellers Smith (04:12):
In some of those states, the legislatures just ran out of time. The session ended without the bill passing so provisions did not get through to the governor. We've heard from some hospitals that they would look to try again next year to pass laws in some of those states. There's still a desire to get this done. There just wasn't time in 2024. We did see one law getting vetoed. In Virginia, the General Assembly of Virginia did pass one of these laws that would've only applied to grantees and that it made it to the governor, and the governor decided that he was going to reject that bill. The Virginia bill, even though it passed the legislature, it did not become law. That's unfortunate for the Virginia covered entities that would've been protected under that, but that's the only one so far that has been rejected once it's passed out of the legislature.
(05:01):
And then we also saw some action in Kansas where a bill was enacted and then there was pressure to almost immediately reverse the enactment and that did not succeed. That was exciting. We can continue to see some efforts to enact laws next year or we can see some special sessions through the end of the year. But I think a lot of what happened in those states where these bills did not become law, it really just ran out of time. So we'll see if there's momentum to get something done next year.
David Glendinning (05:31):
Okay. There's always next year, I suppose. When we spoke with Maureen on the last episode, she spoke a little bit about just some of the pressure that's going into the states on some of this legislation, including what may be a first for 340B, which is a dark money ad that was urging multiple legislatures not to pass that law. Certainly exciting things going on there. I know a lot of our focus lately has been on that contract pharmacy issue and those bills and laws, but you mentioned states also continue to make moves on PBM non-discrimination. Can you tell us a little bit about that?
Amanda Sellers Smith (06:09):
Of course. These are laws that we've seen trickle it over the last couple of years, and their state level laws that ban PBMs and insurers from paying less or imposing fees just on 340B entities. So basically taking discriminatory action against a pharmacy or provider based on this 340B participation. Unfortunately, there's nothing in the federal statute that protects against this kind of action. We've seen states really taking the lead here to offer protection where they can. And more than half of states now have this type of wall in the books. We continue to see a few more added to the list every year. And some states also go back to the drawing board and add some additional protections through the legislative session that maybe previously weren't included in the initial package that passed. Some states we see this combined with the contract pharmacy laws, some states it's standalone, but it's a really positive state level development that had been occurring that continues to show some momentum so that's great.
David Glendinning (07:14):
Okay. Let's talk about the flip side that you had mentioned. We've seen also some additional states considering 340B reporting requirements for covered entities. How has that played out so far this year?
Amanda Sellers Smith (07:25):
Unfortunately, I've seen several states that considered requiring data from 340B hospitals on their savings and how they use savings. We did see last year, so 2023, a few states enact for the very first time 340B reporting laws at the state level. That was Maine, Minnesota, and Washington. So far this year we haven't had any additional reporting packages pass out of state legislatures, but we did see Minnesota amend its existing reporting requirements to add some additional requirements for hospitals. That's unfortunate, but Minnesota also at the same time enacted one of the contract pharmacy laws. It's not all negative even out of some of the states that are looking at doing reporting requirements. And really our concern here is just the burden that it could put on reporting for entities. You know this, David, at 340B Health, we always encourage people to share how they're using savings and how that benefits the hospital or the patient. So it's not the sharing of information necessarily, but the burden of adding additional requirements to safety net providers and then what would that information be used for down the road?
David Glendinning (08:35):
We also are very interested in how all of these legislative moves affect covered entities, especially hospitals. Getting back to the contract pharmacy protections we've spoken about, how have those affected covered entities in the states that have enacted them?
Amanda Sellers Smith (08:52):
A lot of drug companies have lifted restrictions in those states, so they are legally challenging the laws in almost every state that has one to try to reverse these laws to the courts. But at the same time, drug companies have lifted the restrictions. So that itself has just an immediate impact because it's restoring the 340B benefit in states based on these state laws. Arkansas had a head start on everybody as the first. You have nearly every drug company with restrictions lifting them in Arkansas. You see a smaller, but still a good chunk of drug companies lifting restrictions for Louisiana, which was the second to take effect. And then even just today, David, before this conversation with you, we had several other drug companies announced lifting restrictions in different states with 340B contract pharmacy laws. Although the restrictions are patchwork, it is clear that these state prohibitions are having an effect at least on some of the drug companies and their restriction policies.
David Glendinning (09:50):
Okay, so positive effect there. But you did also say the court fights continue for these state contract pharmacy laws even in states where we are starting to see these drug maker policy changes. Maureen spoke a bit about this in the most recent episode as well, but can you give us a lay of the land on that litigation?
Amanda Sellers Smith (10:14):
Pharma, which is the national drug lobby, they're challenging laws in several states starting with Arkansas. And then we also have some individual drug companies challenging the laws on their own. There's a range of legal arguments attempting to overturn these laws, largely focusing on the constitutionality of them. So really that they say 340B is a federal law. As a federal law, the states don't have a role to play here. That's the main argument. There's some other ones that different parties are throwing out there in the different states and they vary across the states. But we're starting to see kind of a circling of the wagons here with some of the arguments and that we're not seeing new arguments popping up. We're just seeing new states and new litigants.
David Glendinning (10:59):
Pending litigation. I think that's a two word phrase that we've used a lot around here and probably will continue to for some time, especially knowing how long the legal process has taken and can take. How have the courts responded to these challenges so far?
Amanda Sellers Smith (11:16):
Only two courts have given us any answers. A district court in Arkansas, which allowed the Arkansas law to remain in effect, and then pharma. Pharma was the party in that lawsuit. They appealed that to the circuit court and the eighth circuit agreed with the district court, and it said this law is permissible, that even though 340B is a federal law, the statute is silence on delivery. We've seen that argument come up against providers in some federal courts, but in this case it actually seems to work in favor of these state laws. That silence means states do have room to weigh in here. As of today, I don't want to jinx us, but none of the state laws have been blocked by the courts. Hopefully that remains true when this episode goes live because several of the lawsuits that are pending in lower courts are asking for immediate injunction. We could get at least initial answers from courts really quickly just on those requests. Hopefully the courts continue to side with providers and the state here.
David Glendinning (12:23):
And of course if we do have any big updates from the courts, we will be letting our members know either through alerts or the next time they open their weekly bulletin. Let's talk a little bit about some of the advocacy on these issues. What has 340B Health specifically been doing to engage on these state issues?
Amanda Sellers Smith (12:42):
Yeah. At 340B Health, we are not state lobbyists, so I have not been going to state capitals and directly lobbying on any of these state laws. What we are are the 340B experts. So we're able to share information with folks that are actively advocating for these kinds of laws in their own states. Whether that's kind of what language was used in different states that enacted these laws, what kind of pushback did advocates receive in those conversations with their own state lawmakers and being really able to kind of prepare folks for what they might face if they decide to go this route themselves in their own states. But another form of advocacy that I think sometimes is overlooked is the legal advocacy. We're not a litigant in any of these lawsuits.
(13:33):
We're not the direct party that's countering drug companies and pharma in these lawsuits, but we do file amicus briefs or friend of the court briefs with the American Hospital Association and State Hospital Associations and other state organizations in support of these laws to help share information with the courts that even though we're not a party, we think are helpful for them to know as they're considering whether or not to allow these laws to remain in effect.
(14:01):
Our briefs are in support of the contract pharmacy laws. Obviously, we would not be a great hospital association if we were going for the other team on this one, but it's something that we're really hoping that judges appreciate the information and agree with us that these laws should be able to remain in effect and deny the drug makers asks to overturn these laws. We'll continue to work with member hospitals to support their advocacy efforts in whatever ways we can during this legislative session and the next legislative session, and then also how we can strategically help to protect these laws once they go into effect. We do have a state policy and advocacy resource center that has a lot of member only resources for members to use their advocacy efforts in support of these laws. And then we also get the time to talk with people directly about kind of what we've seen in different states, what we've heard and what they could potentially expect once they start their own advocacy efforts.
David Glendinning (15:01):
Well, thank you for all that work. I know there is a lot going on, and because of that, I will go ahead and let you go. Those amicus briefs aren't going to write themselves, I suppose, so we'll have to let you get back to it at this point. Amanda, thank you so much for your time. It was very nice having you back on the program as always, and we'll check back with you when we have more to tell people on the state front.
Amanda Sellers Smith (15:24):
Thanks, David. Happy to be here.
David Glendinning (15:26):
Our thanks again to Amanda Sellers Smith for giving us the rundown of all the legislative and legal developments affecting 340B hospitals at the state level. Please do reach out to Amanda if you have a question about any of these actions or if you have some state insights to share with us. And if you are listening to this the day it comes out and are attending the 340B Coalition Summer Conference, we will be discussing the contract pharmacy issue and state legislation in several sessions. Be sure to check your conference agenda and attend those sessions if you're interested in learning more. We will be back in a few weeks with our next episode. As always, thanks for listening and be well.
Speaker 1 (16:13):
Thanks for listening to 340B Insight. Subscribe and rate us on Apple Podcasts, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website at 340Bpodcast.org. You can also follow us on Twitter at 340B Health and submit a question or idea to the show by emailing us at podcast@340Bhealth.org.