Pharma companies seek to block state expansion of discount drug program (via The Center Square) – Multiple drug makers in Illinois are challenging a state law that expands the scope of a federal program under Medicare, arguing Illinois doesn’t have the authority to make changes to the program.
The federal 340B program allows drug manufacturers that take part in Medicaid to provide discounts to participating clinics and hospitals, often rural, who in-turn are supposed to use savings to reduce costs for patients, provide charity healthcare and more.
State Rep. Anna Moeller, D-Elgin, sponsored the legislation and in May explained her reasoning.
“Since 2020, changes in how the program operates have created significant challenges for providers across Illinois. Federally qualified health centers in Illinois have lost at least $60 million because of restrictions,” Moeller said.
North Chicago-based Abbvie led a group of drug makers in a lawsuit filed earlier this month in federal court in the Northern District of Illinois.
The lawsuit contends the Illinois law conflicts with what Congress intended for the program to be by loosening restrictions and requiring drug companies to sell their drugs at the statutorily reduced price to safety-net hospitals, clinics, and their chosen contract pharmacies with no restrictions.
Moeller explained the law differently than how manufacturers presented in the lawsuit.
“The pharmaceutical industry restricted the number of contract pharmacies that 340B covered entities could contract with to dispense 340B medications. This bill would lift that restriction,” Moeller said.
In May when the legislation was being considered, Illinois’ Central Management Services raised concern the program’s expansion could increase costs for commercial and state employee health insurance due to lost rebates and high drug markups imposed by manufacturers to offset the expansion.
CMS released a memo that detailed costs of the program to Illinois employers, including the state for its employee insurance benefits.
Rep. Patrick Windhorst, R-Metropolis, questioned the law before it was passed, on the grounds of increased insurance rates for state employees.
Moeller said the CMS memo was presented to the agency by the pharmaceutical industry and the situation could be different.
“It outlined the potential impacts to the state group health insurance program. I think there is some dispute and discussion as to the veracity and integrity of that report,” Moeller said.
In a statement when the law was signed, Will May, the senior director of public affairs for Pharmaceutical Research and Manufacturers of America said the 340B program is driving costs up for Illinoisans, and PhRMA intends to work with lawmakers to find a better solution.
The group of drug manufacturers are seeking to block the law from taking effect until a judge rules on its constitutionality. Otherwise, the law came into effect upon the governor’s signing.
Pharma companies seek to block state expansion of discount drug program
