Senate Bill 25-071 Engrossed

A Bill for an Act

• Page 1, Line 101Concerning certain practices by persons participating in the

• Page 1, Line 102supply chain of drugs purchased under the federal 340B

• Page 1, Line 103drug pricing program.

Bill Summary

(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)

Under the federal 340B drug pricing program (340B program), a covered entity, including certain hospitals, programs, and federally qualified health centers (covered entity), that serves patients with low income receives discounted outpatient drugs (340B drugs) from manufacturers that participate in the federal medicaid and medicare programs.

Unless the receipt of 340B drugs is prohibited by the federal department of health and human services, the bill prohibits a manufacturer, wholesaler, third-party logistics provider, or repackager in this state, or an agent, contractor, or affiliate of those entities, including an entity that collects or processes health information, from directly or indirectly denying, restricting, prohibiting, discriminating against, or otherwise limiting the acquisition of a 340B drug by, or delivery of a 340B drug to, a covered entity, a pharmacy contracted with a covered entity, or a location otherwise authorized by a covered entity to receive and dispense 340B drugs.

The bill also prohibits a manufacturer from directly or indirectly requiring a covered entity, a pharmacy contracted with a covered entity, or any other location authorized to receive 340B drugs by a covered entity to submit any health information, claims or utilization data, or other specified data that does not relate to a claim submitted to certain federal health care programs, unless the data is voluntarily furnished or required to be furnished under federal law.

A violation of the prohibitions in the bill is an unfair or deceptive trade practice under the "Colorado Consumer Protection Act" (act), and the violator is subject to the enforcement provisions and penalties contained in that act. The attorney general may investigate and enforce the provisions of the bill, as well as a business harmed by a violation of the provisions of the bill. In addition, a person regulated by the state board of pharmacy (pharmacy board) that violates the provisions of the bill may be subject to discipline by the pharmacy board against the person's license, certification, or registration, as well as other penalties.

The bill requires a covered entity that is a hospital to annually post on its public-facing website information concerning the annual, estimated, aggregate financial benefit to the hospital covered entity resulting from its ability to acquire pharmaceuticals at a discount through the 340B program and a description of how the hospital covered entity uses savings from participation in the 340B program.

• Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:

• Page 2, Line 2SECTION 1.  In Colorado Revised Statutes, 6-1-105, add (1)(iiii) as follows:

• Page 2, Line 36-1-105.  Unfair or deceptive trade practices - definitions.

• Page 2, Line 4(1)  A person engages in a deceptive trade practice when, in the course of

• Page 2, Line 5the person's business, vocation, or occupation, the person:

• (iiii)  Violates article 29 of this title 6.

• Page 3, Line 1SECTION 2.  In Colorado Revised Statutes, add article 29 to title 6 as follows:

• Page 3, Line 2ARTICLE 29

• Colorado 340B Contract Pharmacy Protection Act

• Page 3, Line 36-29-101.  Short title.The short title of this article 29 is the "Colorado 340B Contract Pharmacy Protection Act".

• Page 3, Line 46-29-102.  Legislative declaration. (1)  The general assembly finds and determines that:

• Page 3, Line 5(a)  The 340B drug pricing program requires drug

• Page 3, Line 6manufacturers to provide drug discounts on identified

• Page 3, Line 7outpatient drugs to 340B covered entities as a condition of medicaid and medicare part B covering those drugs;

• Page 3, Line 8(b)  Congress created the 340B program in 1992, stating

• Page 3, Line 9that the program's benefits "enable [covered] entities to stretch

• Page 3, Line 10scarce Federal resources as far as possible, reaching more

• Page 3, Line 11eligible patients and providing more comprehensive services." (H.R. Rep. No.102-384 (II), at 12 (1992)).

• Page 3, Line 12(c)  The 340B program supports Colorado's medically

• Page 3, Line 13vulnerable and underserved populations by providing

• Page 3, Line 14additional resources to 340B covered entities and allowing

• Page 3, Line 15these entities to determine the most effective use of these resources;

• Page 3, Line 16(d)  The 340B program is a critical component of Colorado's safety net infrastructure;

• Page 3, Line 17(e)  Colorado has sixty-eight hospitals statewide that

• Page 3, Line 18participate in the 340B program, with nearly ninety percent of

• Page 4, Line 1these hospitals operating under unsustainable long-term margins;

• Page 4, Line 2(f)  Additionally, Colorado has twenty federally

• Page 4, Line 3qualified health centers, or FQHCs, all of which participate in

• Page 4, Line 4the 340B program and sixty-five percent of which currently operate with negative margins;

• Page 4, Line 5(g)  Colorado hospitals participating in the 340B program

• Page 4, Line 6utilize program benefits to address their communities' unique

• Page 4, Line 7needs, which include providing direct prescription drug

• Page 4, Line 8discounts, subsidizing uncompensated charity care and medicaid

• Page 4, Line 9underpayments to remain financially operational, supporting

• Page 4, Line 10opioid use disorder treatment, funding mobile health-care and

• Page 4, Line 11immunization clinics, and paying for chemotherapy and infusion centers;

• Page 4, Line 12(h)  Colorado's FQHCs are the primary care medical home

• Page 4, Line 13for one in seven Coloradans, with eighty-nine percent of FQHCs'

• Page 4, Line 14patients in 2023 living with family incomes below two hundred

• Page 4, Line 15percent of the federal poverty guideline and twenty-three percent were uninsured;

• Page 4, Line 16(i)  Colorado's FQHCs utilize 340B program benefits to

• Page 4, Line 17address their communities' unique needs, which include reduced

• Page 4, Line 18drug prices for patients, provider recruitment and retention,

• Page 4, Line 19and expansion of oral health and behavioral health services that the FQHCs would otherwise not be able to offer;

• Page 4, Line 20(j)  Further, Colorado's FQHCs experienced an estimated

• Page 4, Line 21loss of four million three hundred dollars in 340B program

• Page 4, Line 22savings in the last two years;

• Page 5, Line 1(k)  Conversely, in 2023, sixteen of the largest

• Page 5, Line 2pharmaceutical companies reported six hundred eighty-four

• Page 5, Line 3billion dollars in earnings in their annual financial reports, a

• Page 5, Line 4figure that was higher than the gross domestic product of eighty-eight percent of the countries in the world;

• Page 5, Line 5(l)  In addition, the eight largest pharmaceutical

• Page 5, Line 6companies paid a combined two billion dollars in federal taxes

• Page 5, Line 7on two hundred fourteen billion dollars of domestic revenue in 2022, according to their 10-K annual financial reports;

• Page 5, Line 8(m)  In 2022, Colorado hospitals provided two billion one hundred million dollars of community benefit;

• Page 5, Line 9(n)  Starting in 2020, pharmaceutical manufacturers began

• Page 5, Line 10to unlawfully place restrictions on 340B covered entities using

• Page 5, Line 11contract pharmacies to dispense drugs to patients, unilaterally limiting the 340B program's benefits; and

• Page 5, Line 12(o)  In a letter dated July 28, 2023, from William Tong,

• Page 5, Line 13attorney general of Connecticut, to the United States senate

• Page 5, Line 14340B working group, and signed by twenty-two other bipartisan

• Page 5, Line 15attorneys general, the attorneys general declared that

• Page 5, Line 16"outpatient pharmacies are a key mechanism for the delivery of

• Page 5, Line 17life-saving drugs to eligible patients, including those who have

• Page 5, Line 18limited access to transportation, live in remote or rural areas,

• Page 5, Line 19or are confined to their homes and rely on mail-order pharmacies."

• Page 5, Line 20(2)  Therefore, the general assembly declares that this

• Page 5, Line 21article 29 prohibiting pharmaceutical manufacturers from

• Page 5, Line 22imposing limitations or placing restrictive conditions on 340B

• Page 6, Line 1covered entities is necessary to protect Colorado's vulnerable

• Page 6, Line 2patients and safety net providers and to ensure that

• Page 6, Line 3much-needed financial resources generated by the 340B program remain in Colorado for the benefit of the public.

• Page 6, Line 46-29-103.  Definitions.As used in this article 29, unless the context otherwise requires:

• Page 6, Line 5(1)  "340B covered entity" or "covered entity" has the

• Page 6, Line 6meaning set forth in section 340B (a)(4) of the federal "Public Health Service Act", 42 U.S.C. sec. 256b (a)(4).

• Page 6, Line 7(2)  "340B drug" means a drug that:

• Page 6, Line 8(a)  Is a covered outpatient drug within the meaning set forth in 42 U.S.C. sec. 256b;

• Page 6, Line 9(b)  Has been subject to any offer for reduced prices by a manufacturer pursuant to 42 U.S.C. sec. 256b (a)(1); and

• Page 6, Line 10(c)  Is purchased by a covered entity. As used in this

• Page 6, Line 11subsection (2)(c), a drug is considered "purchased" if it would

• Page 6, Line 12have been purchased but for the restriction or limitation described in section 6-29-105.

• Page 6, Line 13(3)  "340B drug pricing program" or "340B program" means the program described in 42 U.S.C. sec. 256b (a)(1).

• Page 6, Line 14(4)  "340B savings" means the difference between the

• Page 6, Line 15aggregated market rate costs and the aggregated acquisition costs for 340B drugs.

• Page 6, Line 16(5)  "Board" means the state board of pharmacy created in section 12-280-104.

• Page 6, Line 17(6)  "Federal health care program" has the meaning set

• Page 6, Line 18forth in section 42 U.S.C. sec. 1320a-7b (f).

• Page 7, Line 1(7)  "Health information" means information, including

• Page 7, Line 2demographic information collected from an individual or a group of individuals that:

• Page 7, Line 3(a)  Is created or received by a health-care provider,

• Page 7, Line 4pharmacy, health benefit plan, employer, or health-care clearinghouse; and

• Page 7, Line 5(b)  Relates to the past, present, or future physical or

• Page 7, Line 6mental health or condition of an individual, the provision of

• Page 7, Line 7health care to an individual, or the past, present, or future payment for the provision of health care to an individual.

• Page 7, Line 8(8)  "Manufacturer" has the meaning set forth in section 12-280-103 (27).

• Page 7, Line 9(9)  "Package" has the meaning set forth in 21 U.S.C. sec. 360eee (11)(A).

• Page 7, Line 10(10)  "Pharmacy" has the meaning set forth in section 12-280-103 (43).

• Page 7, Line 11(11)  "Repackager" has the meaning set forth in section 12-280-103 (46).

• Page 7, Line 12(12)  "Third-party logistics provider" has the meaning set forth in section 12-280-103 (52.5).

• Page 7, Line 146-29-104.  Applicability.This article 29 applies to a

• Page 7, Line 15manufacturer, third-party logistics provider, or repackager

• Page 7, Line 16of a manufacturer's drugs doing business in this state and

• Page 7, Line 17engaged in the production, manufacture, distribution, or sale of a 340B drug in this state.

• Page 7, Line 186-29-105.  Acquisition of 340B drugs - prohibited acts - use of

• Page 8, Line 1savings - enforcement - penalties - nonpreemption - data exclusions.

• Page 8, Line 2(1)  Prohibited acts.On and after the effective date of this article 29:

• Page 8, Line 3(a)  Unless the receipt of the 340B drugs is prohibited by

• Page 8, Line 4the federal department of health and human services, a

• Page 8, Line 5manufacturer, third-party logistics provider, or repackager,

• Page 8, Line 6or an agent, contractor, or affiliate of a manufacturer,

• Page 8, Line 7third-party logistics provider, or repackager, including an

• Page 8, Line 8entity that collects or processes health information, shall not,

• Page 8, Line 9directly or indirectly, deny, restrict, prohibit, discriminate

• Page 8, Line 10against, or otherwise limit the acquisition of a 340B drug by, or

• Page 8, Line 11delivery of a 340B drug to, a 340B covered entity, a pharmacy

• Page 8, Line 12contracted with a 340B covered entity, or a location otherwise

• Page 8, Line 13authorized by a 340B covered entity to receive and dispense 340B drugs; and

• Page 8, Line 14(b)  A manufacturer shall not directly or indirectly

• Page 8, Line 15require, including as a condition, a 340B covered entity, a

• Page 8, Line 16pharmacy contracted with a 340B covered entity, or any other

• Page 8, Line 17location authorized to receive 340B drugs by a 340B covered

• Page 8, Line 18entity to submit any health information, claims or utilization

• Page 8, Line 19data, purchasing data, payment data, or other data that does

• Page 8, Line 20not relate to a claim submitted to a federal health care

• Page 8, Line 21program, unless such data is voluntarily furnished by such

• Page 8, Line 22covered entity or otherwise required to be furnished under applicable federal law.

• Page 8, Line 23(2)  A covered entity that is a reporting hospital, as

• Page 8, Line 24defined in section 25.5-1-701, shall not use 340B savings for the following purposes:

• Page 9, Line 1(a)  More than thirty-five percent of total annual

• Page 9, Line 2compensation or expense reimbursement for the hospital's board of directors;

• Page 9, Line 3(b)  Tax penalties or fines issued against the hospital;

• Page 9, Line 4(c)  Expenses related to advertising and public relations

• Page 9, Line 5that promote the hospital's image, services, or proposals, not

• Page 9, Line 6including communications required by law or that are essential for patient safety and patient information;

• Page 9, Line 7(d)  Lobbying expenses and other costs intended to

• Page 9, Line 8influence legislation or ballot measures at the local, state, or federal level;

• Page 9, Line 9(e)  Travel, lodging, food, or beverage expenses for the hospital's board of directors and officers; and

• Page 9, Line 10(f)  Gifts or entertainment expenses.

• Page 9, Line 11(3)  Enforcement - penalties. (a)  The attorney general may

• Page 9, Line 12investigate a complaint concerning a violation of this article

• Page 9, Line 1329. A person that violates this article 29 risks the public's

• Page 9, Line 14health and engages in an unfair or deceptive trade practice

• Page 9, Line 15pursuant to section 6-1-105 (1)(iiii) and is subject to the

• Page 9, Line 16enforcement provisions, civil penalties, and damages set forth in article 1 of this title 6.

• Page 9, Line 17(b)  Each package of a 340B drug that constitutes a

• Page 9, Line 18prohibited act under this article 29 constitutes a separate violation of subsection (1) of this section.

• Page 9, Line 19(c)  Limited distribution of a drug required under 21 U.S.C.

• Page 9, Line 20sec. 355-1 does not constitute a violation of this article 29.

• Page 10, Line 1(d)  A person regulated by the state board of pharmacy

• Page 10, Line 2created in section 12-280-104 may be subject to discipline

• Page 10, Line 3pursuant to section 12-280-108 (1)(c), (1)(d), or (1)(i) for violating this article 29.

• Page 10, Line 4(4)  Nonpreemption.Nothing in this article 29 shall be

• Page 10, Line 5construed or applied to be less restrictive than any federal law

• Page 10, Line 6applying to persons regulated by this section. Nothing in this

• Page 10, Line 7section shall be construed or applied to be in conflict with any of the following:

• Page 10, Line 8(a)  Applicable federal law and related regulations; or

• Page 10, Line 9(b)  Other laws of this state, if the laws are compatible with applicable federal law.

• Page 10, Line 10(5)  Data exclusions.Subsection (1) of this section does not

• Page 10, Line 11prohibit a manufacturer from requiring health information or

• Page 10, Line 12other data that a covered entity is required to furnish to the

• Page 10, Line 13manufacturer under applicable federal law, including data

• Page 10, Line 14relating to an audit in accordance with procedures established

• Page 10, Line 15by the federal department of health and human services under 42 U.S.C. sec. 256b (a)(5)(C).

• Page 10, Line 16SECTION 3.  In Colorado Revised Statutes, add 25-3-132 as follows:

• Page 10, Line 1725-3-132.  340B drug pricing program transparency - definitions. (1)  As used in this section:

• Page 10, Line 18(a)  "340B drug pricing program" or "340B program" means the program described in 42 U.S.C. sec. 256b (a)(1).

• Page 10, Line 19(b)  "340B savings" means the difference between the

• Page 10, Line 20aggregated market rate costs and the aggregated acquisition costs for 340B drugs.

• Page 11, Line 1(c)  "Hospital covered entity" means a hospital licensed or

• Page 11, Line 2certified by the department pursuant to the department's

• Page 11, Line 3authority under section 25-1.5-103 (1)(a) and that is a "covered entity" as defined in 42 U.S.C. sec. 256b (a)(4).

• Page 11, Line 4(2)  Except as provided in subsection (3) of this section,

• Page 11, Line 5each hospital covered entity that is a reporting hospital, as

• Page 11, Line 6defined in section 25.5-1-701, shall include the following

• Page 11, Line 7information in the annual report submitted pursuant to section 25.5-1-703 (3):

• Page 11, Line 8(a)  The annual, reported 340B savings to the hospital

• Page 11, Line 9covered entity resulting from its ability to acquire

• Page 11, Line 10pharmaceuticals at a discount through the 340B drug pricing program;

• Page 11, Line 11(b)  A description of how the hospital covered entity uses savings from participation in the 340B program;

• Page 11, Line 12(c)  The aggregated market rate costs and the aggregated

• Page 11, Line 13acquisition costs for 340B drugs used to calculate 340B savings; and

• Page 11, Line 14(d)  The total operating costs of the hospital covered entity and costs relating to providing charity care.

• Page 11, Line 15(3)  Nothing in this section requires the public disclosure

• Page 11, Line 16of records that are public records under the "Colorado Open

• Page 11, Line 17Records Act", part 2 of article 72 of title 24, but that are exempted from disclosure under that act.

• Page 11, Line 18SECTION 4.  Severability. If any provision of this act or the

• Page 11, Line 19application thereof to any person or circumstance is held invalid, such

• Page 12, Line 1invalidity does not affect other provisions or applications of the act that

• Page 12, Line 2can be given effect without the invalid provision or application, and to this end the provisions of this act are declared to be severable.

• Page 12, Line 3SECTION 5.  Act subject to petition - effective date. This act

• Page 12, Line 4takes effect at 12:01 a.m. on the day following the expiration of the

• Page 12, Line 5ninety-day period after final adjournment of the general assembly; except

• Page 12, Line 6that, if a referendum petition is filed pursuant to section 1 (3) of article V

• Page 12, Line 7of the state constitution against this act or an item, section, or part of this

• Page 12, Line 8act within such period, then the act, item, section, or part will not take

• Page 12, Line 9effect unless approved by the people at the general election to be held in

• Page 12, Line 10November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.