Kansas Senate committee hears split testimony on bill to protect 340B contract pharmacies

A Kansas Senate committee heard hours of sharply divided testimony on Senate Bill 284, a measure proponents say would protect access to discounted medicines under the federal 340B drug-pricing program and opponents say would increase costs for employers and state health plans.

The bill, described to the committee by legislative revisor Eileen (last name not specified in the record) as the “Defense of Drug Delivery Act,” would prohibit manufacturers and their agents from denying, restricting or otherwise limiting delivery of a “340B drug” to a covered entity or an authorized pharmacy location, unless state or federal law prohibits it. The revisor also told senators the bill would authorize the Kansas attorney general to adopt rules, issue subpoenas, impose civil penalties and establish a “Defense of Drug Delivery Fund” to administer enforcement; the bill would give the Kansas Board of Pharmacy authority to investigate complaints and discipline licensees and would become effective July 1 if enacted.

The measure drew extensive proponent testimony from safety-net providers and rural hospitals who said manufacturer limits on contract pharmacies have reduced patients’ access to affordable medicines and strained local providers. Senator Michael Murphy, who described bringing related language to the Legislature last year, urged support and said a similar law had been upheld in the Eighth Circuit. "This is something that I felt like was important for us to have," Murphy said, noting the prior amendment passed the Senate floor with 77 votes.

Aaron Dunkel, vice president for regulatory and external affairs at the Community Care Network of Kansas, said the bill would (1) prevent manufacturers from restricting which contract pharmacies covered entities can use and (2) limit manufacturers’ requests for data to the information already required under the federal 340B program. "We should be able to contract with who we need to contract with in order to get medications in folks' hands," Dunkel said, adding that manufacturers’ additional data demands have created administrative burden.

Carrie Lutz, chief executive officer of Holton Community Hospital, said 340B savings underwrite services at her small critical-access hospital and help patients afford medications. She told the committee the program helped fund programs such as an outpatient therapy program for older adults and said manufacturer restrictions that force covered entities to pick a single contract pharmacy can limit timely local access. "These changes often have real consequences for our residents," Lutz said.

Pharmacists and hospital pharmacy leaders recounted patient-level examples. Derek Peel, chief pharmacy officer at Salina Family Healthcare Center, described a local uninsured patient diagnosed with cancer who received medicines and care made possible by 340B pricing. "340B made the care she received possible," Peel told the committee. Isaac Boone, who oversees 340B programs for dozens of Kansas critical-access hospitals and recently purchased a local pharmacy, said loss of contract-pharmacy access has forced some patients to travel 30 miles each way for prescriptions and contributed to pharmacy closures; he told senators 10 Kansas pharmacies closed last year for reasons he attributed to reduced 340B access.

Supporters asked senators to preserve what they described as a fragile rural safety net and to allow state enforcement when manufacturers limit contract pharmacies.

Opponents included representatives of pharmaceutical manufacturers, wholesalers, life-sciences trade groups and the Kansas Chamber of Commerce, who warned the bill would expand contract-pharmacy access in ways that raise program costs for employers, state employee plans and other payers and undercut federal oversight. Caitlin Lucarello, deputy vice president of state policy for Pharmaceutical Research and Manufacturers of America (PhRMA) in the Rocky Mountain region, said federal auditors have found problems and that the program has grown far beyond its original scope. "We respectfully disagree that this legislation will indeed continue to serve that purpose," Lucarello told the committee, citing HRSA audit figures presented during her testimony.

Other opponents pointed to state fiscal-modeling and audits in other states. The Healthcare Distribution Alliance (wholesale distributors) asked that distributors be removed from the bill to avoid conflicts with federal distributor obligations; Ad Astra Bio and BioKansas, and the Kansas Chamber raised concerns about increased costs for employers and state health plans. Witnesses cited analyses showing forgone rebates and higher outpatient oncology markups when 340B-priced drugs are dispensed by certain providers, and urged federal reform instead of the state-level mandate.

Senators asked detailed questions about which medicines are covered by 340B, how savings are shared between patients and hospitals, and how program oversight works. Carrie Lutz said her hospital previously saw about $1 million annually in gross savings under 340B before manufacturer restrictions and about $500,000 after limitations forced pharmacy selection, and she said she would provide more precise split data if the committee requested it. Opponents pointed to HRSA audit statistics discussed during testimony—about 200 federal audits a year across roughly 55,000 covered entities—and to state-level fiscal estimates that the bill could increase costs for Kansas employers and government plans.

The committee did not take a final vote on SB 284 during the hearing; Chair Dietrich closed the public hearing after questions and testimony and reminded senators the panel would meet the next day on multiple bills.

Why it matters: Supporters say the bill is aimed at preserving rural access to affordable medicine by keeping covered-entity choices open for contract pharmacies; opponents say the measure would expand contract-pharmacy arrangements, increase costs for self-insured employers and state plans and circumvent federal program rules. The testimony highlighted competing policy priorities—access in rural communities versus program integrity and drug-cost impacts on larger payers—and pointed senators toward federal and state fiscal analyses and audits as the next steps for evaluation.

Votes, formal actions and next steps: No vote on SB 284 was recorded in the hearing. Senators heard extensive written and oral testimony and the committee indicated follow-up work would continue as the panel considers the bill.

Sources and excerpts in the hearing record: Eileen (reviser of the bill), Senator Michael Murphy (bill sponsor), Aaron Dunkel (Community Care Network of Kansas), Carrie Lutz (CEO, Holton Community Hospital), Derek Peel (Chief Pharmacy Officer, Salina Family Healthcare Center), Isaac Boone (340B program manager and Eureka Pharmacy owner), Caitlin Lucarello (PhRMA), Brian Hannon (Healthcare Distribution Alliance), Kevin Mills (Ad Astra Bio/BioKansas), William Wilkes (Kansas Chamber of Commerce), Chair Dietrich and multiple committee members.