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Committee approves bill restricting manufacturer limits on 340B contract pharmacies after split testimony
Summary
House Bill 1242, which would limit drug manufacturers’ ability to restrict 340B contract‑pharmacy arrangements and curb excessive data demands, cleared the Insurance Committee 16-1-1 following testimony from pharmaceutical industry and safety‑net provider representatives.
The House Insurance Committee on March 25 voted 16-1 with one present-not-voting to advance House Bill 1242 to the Finance, Ways and Means Committee. The bill would protect 340B covered entities by barring pharmaceutical manufacturers from interfering with contract pharmacy arrangements and from trying to shift the program from upfront discounts to post‑sale rebate models, measures proponents say preserve access and financial stability for safety‑net providers.
Madam Chair Liddy and other committee leaders described the bill as clarifying and protective of safety‑net access. The bill’s sponsor explained the amended measure by referencing the federal 340B drug discount program, enacted in 1992 to allow eligible providers to purchase outpatient drugs at discounted rates to stretch federal resources and serve low‑income, underinsured and uninsured patients.
Industry witness Sarah Balog, identified as senior director of state policy with a pharmaceutical trade association, testified in opposition. “We are concerned that the program has gone off the tracks with a lack of transparency and a lack of oversight, which has led to abuse of the program,” Balog said, describing manufacturer concerns about contract pharmacy practices, program opacity and a fiscal ripple effect on employers and state plans. She told members a fiscal note estimated a state contract-pharmacy mandate could increase costs for the Tennessee state health plan by roughly $7 million per year.
Safety‑net providers and hospital representatives testified in favor. Dr. Shannon Berger, CEO of Simpa Community Care (a federally qualified health center), and Steve Pate, deputy chief pharmacy officer at St. Jude Children’s Research Hospital, said the 340B program is critical to care for vulnerable patients and rural communities. “For more than 30 years, the drug pricing program has provided vital support to eligible safety net providers who serve Tennessee’s most vulnerable populations,” Pate said. Dr. Berger said recent manufacturer restrictions on contract pharmacies have created new access problems for patients in rural and underserved areas.
Committee members questioned witnesses on the program’s growth, transparency and whether federal reform is needed. Witnesses differed on whether the statute or federal agency guidance had created current practices such as unlimited contract pharmacies.
After testimony and questions, the committee voted to advance the bill to Finance, Ways and Means.
Votes at a glance House Bill 1242 — Outcome: advanced to Finance, Ways and Means. Vote tally: 16 yes, 1 no, 1 present not voting.
