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Urge Your Lawmakers to Support Essential Health System Designation

Michigan Enacts 340B Nondiscrimination Laws

Abigail Painchaud
March 8, 2022

Michigan in February 2022 passed three laws that prohibit pharmacy benefit managers (PBMs) and insurance companies from discriminating against 340B Drug Pricing Program contract pharmacies and covered entities, including hospitals.

Covered entities dispense covered outpatient drugs purchased through the 340B program at in-house pharmacies and contract pharmacies. Hospitals use contract pharmacies as a key means to expand access to lifesaving drugs by giving patients a way to fill prescriptions closer to where they live.

In recent years, certain insurers and PBMs have engaged in discriminatory practices against 340B covered entities and their contract pharmacies. These practices included reducing reimbursement, charging fees, excluding covered entities and their contract pharmacies from networks, and imposing administrative requirements, such as claims modifiers.

These discriminatory practices have prompted states, including Michigan, to take action.

Under H.B. 4348, PBMs and insurance companies cannot prohibit covered entities or contract pharmacies from participating in their provider networks based on their 340B status. The law also says that PBMs and insurance companies cannot reimburse covered entities and contract pharmacies differently than other similar pharmacies.

Similarly, H.B. 4351 includes the same nondiscrimination language as H.B. 4348 and adds that PBMs, insurers, and third party administrators cannot require drug claims to include a modifier or indicate that a drug is a 340B drug unless the claim is for payment, directly or indirectly, by the Medicaid program.

H.B. 4352 prevents pharmacies and pharmacists from signing contracts with PBMs that violate the new nondiscrimination provisions or with PBMs that would interfere with patient choice in choosing 340B-eligible drugs.

In addition to Michigan, several other states have active legislation focused on the discrimination of 340B pharmacies by PBMs and insurers. America’s Essential Hospitals is closely watching state legislation in this space and will provide updates when appropriate.

Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.

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