Lawmakers work to protect 340B entities from PBM practices


Eli Kirshbaum


Supporters of a bipartisan initiative in Colorado to restrict discriminatory pharmacy benefit manager (PBM) practices say the contracting practices of PBMs and other third-party payers is reducing medication access for 340B-covered patients.

House Bill 1122, sponsored by Rep. Perry Will (R – New Castle), would prohibit PBMs from reimbursing a pharmacy for a prescription drug at an amount lower than that drug’s average national acquisition cost. This would address low medication reimbursement rates that numerous community health centers across Colorado are experiencing. The House Health and Insurance Committee discussed the bill on Wednesday, with a committee vote still pending. 


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Dr. Ky Davis, a pharmacist at Harris Pharmacy, said during his committee testimony that he frequently dispenses prescriptions at prices that are below the medication’s acquisition cost, often spending up to $80 more on a drug than his facility is reimbursed for. “It is, unfortunately, a standard that we have become somewhat used to,” he said.

A key part of the legislation would create the Colorado 340B Prescription Drug Program Anti-discrimination Act. This specific provision aims to protect 340B-covered entities from discriminatory practices of PBMs, health plans, and other third-party carriers.

Established in 1992 through the Public Health Service Act, the 340B program allows covered health facilities serving low-income patients to dispense outpatient prescription drugs at reduced cost. 

This act would protect 340B-covered entities by preventing third-party payers from refusing to reimburse them, reimbursing them at lower rates, and imposing additional requirements on reimbursements. It would also prevent these payers from assessing additional fees on covered entities, restricting them from accessing the payer’s pharmacy network, and requiring them to contract with a specific pharmacy or health plan in order to access the network.

Bill proponents like Alice Steiner, senior policy advisor and advocacy manager at the Colorado Community Health Network, say the impacts of PBMs’ business practices are causing pharmacies that contract with 340B entities to stop participating in the program.

“Over the past few years, the 340B program has been under attack at all levels,” Steiner told the committee. “We have seen a noticeable increase in discriminatory contracting practices from the carriers and PBMs, efforts that have led to pickpocketing of the savings that Congress intended to go to 340B-covered entities.”

She explained that PBMs have increasingly placed administrative burdens on 340-covered facilities, such as requiring modifiers on all 340B claims at either the point of sale or through claims adjudication. This impacts both the 340B entity and its contracted pharmacies. These pharmacies, Steiner said, often can’t comply with these administrative burdens and opt out of the contract, which decreases medication access for individuals who use those pharmacies.

Steiner noted that 340B entities are not legally required to comply with price changes resulting from rebates that PBMs have negotiated with manufacturers.

“Doing so is not only administratively burdensome and costly, but is ultimately leading to narrower networks, the loss of 340B savings, and decreased access to affordable prescription drugs for our most vulnerable populations.”

The bill remains in committee awaiting a vote.