Hospitals, health centers urge lawmakers to limit manufacturer restrictions on 340B contract pharmacies

Hospital systems, community health centers and provider associations testified in strong support of House Bill 712, a measure aimed at limiting pharmaceutical manufacturers’ restrictions on participation in the federal 340B Drug Pricing Program.

Witnesses said recent manufacturer practices are preventing hospitals and federally qualified health centers from using local contract pharmacies to dispense 340B‑priced drugs, cutting revenue that supports services for uninsured and underinsured patients. Michael Robinson of Hawaii Pacific Health and representatives from Queen’s Health Systems and Maui Health described multimillion‑dollar impacts: hospital witnesses estimated statewide losses on the order of $30 million per year; Queen’s cited approximately $10 million annually for its system.

Melissa Bumgardner (testimony spelling varied in the record), director of pharmacy services at Hawaii Island Community Health Center, described patients unable to access insulin at local contract pharmacies because manufacturers will not ship 340B‑priced insulin to those sites. She said the loss of access undermines the mission of community clinics to serve 40,000 patients on Hawaii Island.

Supporters asked the committee to adopt model statutory language used elsewhere that has survived legal challenge. The Health Care Association of Hawaii and nonprofit hospital systems recommended amendments to mirror statutes other states enacted and to place prohibitions against manufacturers’ unilateral restrictions under unfair or deceptive acts and practices statutes.

Pharma representatives opposed the bill in written testimony and a witness noted members are complying with federal 340B requirements. Testimony from the Attorney General’s office and Department of Health suggested placing enforcement under Hawaii’s unfair‑practices enforcement scheme (chapter 481B) and noted the state may need to adopt language that courts have sustained in other states.

Committee action: the committee advanced HB712 with amendments to place the measure under chapter 481B HRS, delete references to wholesale distributors, clarify definitions, and treat violations as unfair or deceptive acts or practices. Chair’s recommendation to pass with amendments was adopted on a recorded vote with all members present voting aye.

Why it matters: Providers say 340B revenue funds services for uninsured and underinsured patients, including critical care and community programs; supporters told lawmakers that state action is needed because federal remedies are not moving quickly enough.