Michigan Joins The Fight Against Discriminatory PBM Conduct Targeting 340B Contract Pharmacies and Covered Entities

On February 23, 2022, Michigan Governor Gretchen Whitmer signed into law House Bills 4348, 4351, and 4352, each tailored to address Pharmacy Benefit Managers’ (PBMs) discriminatory treatment of 340B entities. The signing of these Bills comes less than a week after the Federal Trade Commission deadlocked in its vote (2-2) on whether to investigate PBM abuses., Michigan joins the wave of state legislation targeting abusive PBM practices.

Specifically, Michigan’s House Bills 4348 and 4351 prevent PBMs or carriers from prohibiting 340B programs or pharmacies contracting with 340B programs from participating in PBM or carrier networks solely because they are 340B program entities. In addition, PBMs may not reimburse 340B entities or pharmacies under contract with a 340B program differently than other similarly situated pharmacies not affiliated with the 340B program. Furthermore, HB 4352 prohibits pharmacies or pharmacists from contracting with PBMs that prevent or interfere with a patient’s choice to obtain their prescription drugs from 340B entities. These requirements complement HB 4348’s remaining provisions regulating PBM activities including, but not limited to, spread pricing, charging pharmacies dispensing fees, charging DIR fees, and the use of maximum allowable cost (MAC) pricing – as previously discussed by Frier Levitt.

Since the new year, other states have enacted similar laws addressing the relationship between PBMs and 340B entities. Nebraska (Legislative Bill 767) and Virginia (HB 1162) now: (1) require PBMs to offer 340B entities the same terms and conditions offered to non-340B entities; (2) prohibit PBMs from imposing clawbacks on 340B entities because of their status as 340B entities; and (3) prevent PBMs from engaging in any form of discrimination that interferes with patient choice of providers. In addition, Colorado, Arizona, California, Illinois, Maine, Maryland, Missouri, Rhode Island, Utah, Vermont, and West Virginia have introduced similar laws that, as a general matter, prohibit insurers and PBMs from:

• Refusing to reimburse 340B entities for dispensing 340B drugs or offering lower reimbursements for drugs purchased under the 340B pricing program;
• Imposing requirements on 340B entities that are not imposed on similarly situated pharmacies not participating in the 340B program;
• Restricting 340B entities’ ability to access third party networks simply because they participate in the 340B program; or
• Imposing additional charges on patients who obtain prescriptions from 340B entities.

Though each of these states’ laws are unique in their own way, all share a common theme: PBMs may not treat 340B entities or pharmacies contracted with 340B entities differently than similarly situated, non-340B pharmacies.

How Frier Levitt Can Help

Frier Levitt has extensive knowledge on the issues surrounding the contractual relationship between 340B contracted pharmacies, covered entities, and PBMs, as well as related issues pertaining to audits, network access, and reimbursement. Frier Levitt attorneys also have experience drafting letters to lawmakers to effectuate change at the legislative level. Contact us today to speak with an attorney.