IL bill would hope to reduce drug prices by regulating 340B contracts

SPRINGFIELD, Ill. (WAND) — Under a initiative led by state Senate Democrats, Illinois could look to reduce drug prices by regulating 340B contracts.

The 340B federal program was started during the tail end of the Bush Senior administration. It created "340B entities" that are healthcare organizations that have at least 11.75% of its serving population as impoverished. If they meet or go above that benchmark, the hospital or clinic will receive lower drug prices.

The program does not require taxpayer money with the cost falling on pharmaceutical companies. 340B hospitals and clinics receive the profit from their 340B medication.

Throughout the programs history, the goal has been to support low income communities and vulnerable populations by providing discounted medication.

However, advocates said that the 340B program is no longer working as intended. Healthcare organizations and hospitals under 340B have been limited to only one pharmaceutical contract.

A J Wilhelmi from the Illinois Health and Hospital Association saying "big pharma" have been abusing this contract limitation.

"All we're asking from the General Assembly is to get this program back to where it was before big pharma made this unilateral changes to restrict the program and pad their profits," Wilhelmi said.

So, lawmakers have crafted a bill that would hope to regulate some of these contracts. The plan would stop any person or company setting any restrictions or limitations in a 340B contract, unless that restriction is required by state or federal law.

This would allow all those under a 340B program in Illinois to be under more than one pharmaceutical contract.

State Sen. Dave Koehler (D-Peoria) is the lead sponsor of the bill in the Senate. He said two of the biggest hospitals in his district home of Peoria, OSF St. Francis and Carle Health Methodist Hospitals, are 340B entities.

"This is a service for hospitals to be able to service the poor and this is going to make a big difference in our communities," Koehler said.

While over the past couple of years while the idea of this bill was negotiated, pharmaceutical companies flagged that hospital weren't being transparent with drug prices.

The proposal would hope to answer the drug makers concerns. I would require 340B entities to make an annual report that lists the costs of drugs taken under the program, number of 340B drug claims and the impact of the 340B program on the community.

Alongside this all 340B entity can only dispense 340B drugs when in connection with an outpatient healthcare service received in the past 18 months.

This provision was added because hospitals had been datamining in their drug prescription history, finding drugs that weren't properly paid for by the pharmaceutical company, then demanding a reimbursement from the drug company.

Still even with these additions, multiple opponents came out against the proposed legislation including the pharmaceuticals. The Illinois Manufacturers’ Association and biotechnology research groups PhRMA and iBIO came out opposed to the bill.

They said in a joint statement that while they support the original intent and goals of 340B, they want increased transparency, not the regulations that could come with this policy.

"The current legislation provides substantial protection for covered entities while obscuring the disclosure of their financial arrangements, making it impossible to see how much benefit is diverted from patients to these intermediaries. This proposal will do nothing to ensure low-income patients see reduced drug prices."

Opposition hope that lawmakers will spend time over the summer to discuss changes to the bill that they could agree on.

On Wednesday the proposal passed out of the Illinois Senate Executive committee unanimously. The proposal now heads to the Senate floor, where lawmakers could vote on it before session ends May 31.

UPDATE: The plan passed out of the Senate floor unanimously on Thursday. It now heads to the House for further debate.