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House passes bill strengthening 340B drug plan, boosting funding for rural hospitals

Sunday, May 19, 2024

SAINT PAUL, Minn. – Saturday, the Minnesota House approved legislation authored by Rep. Dave Lislegard (DFL – Aurora) prohibiting discriminatory practices harmful to hospitals and other health care providers participating in the federal 340B Drug Pricing Program – giving rural hospitals a much needed boost. The federal program allows certain health care providers to obtain discounts on covered outpatient drugs. 340B ensures safety-net providers have access to discounted drugs and a way to offer more comprehensive health care services to the most vulnerable patients and communities, especially in rural Minnesota. 

Rep. Lislegard’s proposal – included in the conference committee report on the Commerce Budget Bill – prohibits drugmakers from restricting, prohibiting, or interfering with the delivery of covered outpatient drugs to pharmacies under contracts with covered 340B entities.

“This bill helps hospitals in places like Virginia, Aurora, Cook and Hibbing.  I’ll put the needs of our rural hospitals ahead of the profits of drug companies every day of the week, and this bill is a big win for the providers who rely on the savings under 340B to care for Minnesotans,” Rep. Lislegard said. “Safety net providers provide care around the clock, but they’re hanging on by a thread to keep their doors open. It’s unconscionable for drug companies to steal these savings to pad their own pockets. Prevailing over Big Pharma and all their powerful influence at the Capitol isn’t an easy task, but I’m proud we stood together to take them on and get this lifeline for hospitals – especially those in Greater Minnesota – across the finish line.”

The 340B program – enacted by Congress in 1992 – empowers health care providers to stretch scarce federal resources as far as possible to ensure underserved communities have access to emergency room care, intensive care, mental and behavioral health services. 

In order to sell their drugs to the Medicaid and Medicare program, drug companies are required to participate in the 340B Program and sell covered drugs to certain hospitals and other health care providers. However, in 2020, drug manufacturers began denying 340B discounts to entities if they partnered with community pharmacies, including local independent pharmacies, Thrifty White, and Walgreens. There are currently more than 30 drug companies illegally denying 304B pricing. In 2021, manufacturer restrictions topped $8 billion. Instead of going to support critical safety net institutions, this money went to drugmakers’ bottom lines.

Bipartisan legislation has been introduced in the United States Congress to prohibit contract pharmacy price discrimination – known as the Sustain 340B bill – but given the relative unlikelihood of timely congressional action, state legislatures are pursuing action against abusive pricing practices. Last week, the 8th Circuit Court of Appeals, which has jurisdiction over Minnesota, upheld a similar Arkansas law.

Under the conference committee agreement, the provisions under Rep. Lislegard’s bill would expire July 1, 2027. The Senate has also passed the report which now goes to Governor Walz for his anticipated signature.

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