The California State Senate recently passed legislation that would prohibit pharmacy benefit managers (PBMs) from discriminating against entities participating in the 340B Drug Pricing Program (340B covered entities). SB 786 would prohibit PBMs from imposing requirements, conditions, or exclusions that prevent a 340B covered entity from obtaining and retaining the benefit of the discounted drugs available through 340B Drug Pricing Program. According to the author of SB 786, “this bill is needed to protect [340B covered entities] from discriminatory actions by PBMs who are employing actions to interfere with the 340B discounts provided to 340B covered entities.”

Under the bill’s current language, SB 786 would prohibit PBMs from engaging in certain discriminatory practices against 340B covered entities, including the following:

• Establishing payment terms, reimbursement methodologies, or other contract terms and conditions that are designed to distinguish between 340B covered drugs and other drugs and make reimbursement less favorable for 340B covered drugs

• Refusing to contract with, terminating a contract with, or retaliating against a 340B covered entity solely because of its status.

SB 786 would apply to any entity that meets the California definition of a PBM, including wholly and partially owned and controlled entities of a PBM and PBMs that contract with Medicare or Medi-Cal managed care organizations.

SB 786 has been sent to the State Assembly for vote and is currently under the review of the Assembly Health Committee.