340B Drug Pricing Program

Michael Murphy is a retired captain with United Airlines. He and his wife own and operate a B&B in south-central Kansas, along with a small farm/ranch. He enjoys writing and following politics, is the author of the novel Spare Time and is currently the Representative for Kansas 114th District

In 1992, congress passed a law called the 340B Drug Pricing Program, it was signed into law by Bush 41. The law requires drug manufacturers to provide outpatient drugs to covered entities (critical access hospitals and community health centers also known as FQHCs) at significantly reduced prices. The intent of the program is to allow covered entities to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services. Maintaining services and lowering medication costs for patients is consistent with the purpose of the program, which is named for the section authorizing it in the Public Health Service Act (PHSA).

The problem

Drug manufacturers have decided to stop allowing covered entities (critical access hospitals and community health centers) to purchase outpatient drugs at 340B prices and have those drugs shipped to contract pharmacies (pharmacies that covered entities contract with to dispense the drugs to their patients). Drug manufacturers claim that since contract pharmacies are owned and operated by third parties and not the covered entities themselves, they don’t have to allow the delivery and dispensing of 340B drugs at contract pharmacies. They argue that the 340B Program does not expressly permit contract pharmacy arrangements. Because Congress and HRSA have not taken action, states are. States have the absolute right to regulate acquisition and delivery of pharmaceuticals within their states, so they have the authority to require drug manufacturers to comply with covered entity retail contract pharmacy arrangements.

The Solution

A bill was drafted to fix this in Kansas, but it never even received a hearing. A week ago, Sen Doll brought an amendment to the floor of the Senate to protect the 340B pricing to these entities. This is an especially important asset in our rural communities. There was spirited debate, and in the end the amendment was passed by voice vote with no “nays”, becoming part of the Senate budget bill.

This past Monday I received a call asking if I would be willing to carry the same amendment for the House budget and I agreed. I really did not know too much about the program so some study time was in order. What I learned is how important this program is to our rural communities, more on that later.

Each morning before we hear bills on the floor, the person carrying the bill gets a chance to practice their delivery and the rest of the caucus asks questions or makes comments to clarify, and if anyone has an amendment it is made known. This way any issues with the bill or a particular amendment can be worked out and discussed. In the end an amendment is considered “Friendly” or “Unfriendly”. After the bill brief for the budget (HB 2273), I brought up that I was bringing an amendment. After the Senate had passed the amendment with essentially no opposition, I was not exactly prepared for what came next.

The Appropriations Chair curtly stated that if people are going to bring amendments they better vote for the budget or the amendment would be stripped out in conference. The Conference Committee is made up of the Chair, Vice Chair and Ranking member of the respective House and Senate committees who work out differences in similar bills before presenting them to the full body for a vote. Then the Speaker spoke saying this was an ill-conceived amendment, and that if brought on the floor, he would get up and speak against it. Let’s face it, no one wants the Speaker coming out in public against them.

The floor debate on the budget was fairly long, just under 3 hours. Honestly, I weighed my options…was this something I felt strongly enough about to risk the ire of the Speaker? As the debate seemed to be winding down, I pushed my button to speak to the bill. I introduced the amendment and spoke of the advantages it would bring to Kansans and our rural healthcare system. The bill was challenged as to being germane. It was. The Speaker, true to his word said we did not know what we were doing, and we mustn’t vote for this. Then several Representatives, both Republican and Democrat came to “The Well” to speak in favor of the bill. In the end, it passed 77/41.

The fight is not over, it has just begun. Even though it is in both versions of the budget, there will be pressure to remove it in the Conference Committee. A lobby group has emailed all Representatives and Senators about how this should not be done, and they actually lie saying the amendment “Expands the 340B Program”. Not true. The amendment restores the program to its original commitment. It is important to note, drug manufacturers had been honoring the pricing to contract pharmacies from 1992 to 2020 when the first company wrote a letter stating they were changing a policy that had been in effect for 28 years! Now, 22 manufacturers ship to only one contract pharmacy or none at all.

Why it’s important this amendment remains in the budget

The 340B drug program not only helps Kansans gain access to affordable medications, it is a major funding source for critical access hospitals, community health centers and small independent pharmacies. All of these organizations are struggling to survive. They realize net savings from the 340B program which helps keep their doors open to serve their patients and remain an economic engine for their respective small communities.

The amendment does not conflict with Federal Law, in spite of what some may claim. Further, the language addresses that issue in that the manufacturer will be prohibited from interfering in the 340B program, “unless such receipt and dispensing of 340B drugs by such pharmacy is prohibited by the United States Department of Health and Human Services.”

What if the State gets sued?  It may, and so what? A $250,000 lawsuit pales in comparison to the millions of dollars in net savings on drug costs which will help ensure that uninsured/underinsured Kansans have access to affordable medications and that small-town pharmacies, critical access hospitals, and community health centers can survive. Further, Big Pharma already sued the State of Arkansas and lost twice. On Tuesday, March 12th, the U.S. Court of Appeals for the Eighth Circuit ruled against Big Pharma, upholding the Arkansas law that enables 340B drugs to be dispensed at contract pharmacies.

Other states have already passed similar legislation including Louisiana, Arkansas, West Virginia, and Virginia has a veto-proof bill sitting on the governor’s desk ready to be signed into law. There are also 18 other states with 340B legislation in play. Kansas has their head in the sand if they don’t approve 340B legislation.

There is no cost to the state.

It aligns with the House and Senate Leadership’s Better Way Plan. They tout that, in lieu of Medicaid expansion, they are going to provide affordable solutions to help struggling hospitals and community health centers. Passing 340B legislation will help struggling hospitals, community health centers, and independent pharmacies, and it won’t cost the state a penny. Supporting this amendment is a no-brainer.

Both red states and blue states are passing 340B legislation. Both Democrats and Republicans support 340B legislation. By a unanimous voice vote, the Kansas Senate approved amending 340B language onto the Senate version of the state budget. By a margin of 77/41 the House amended their budget.

If legislators oppose this amendment, you have to ask just who do they represent, Kansans, Critical Access Hospitals, Community Health Centers, and independent pharmacies . . . or?

I would ask that you contact both your Representative and Senator and tell them you want this amendment to stay in the budget. It’s amazing with all the push for Medicaid Expansion, this one amendment will net our rural healthcare systems far more than expansion ever would. Please help get this across the finish line. Thank you all!


  1. I just want to add that Article 11 in the U.S. Constitution, as correctly interpreted, does not allow a sovereign State (a country) in our union to be sued. Again, knowledge is power and our elected representatives seem to lack power when it comes to understanding their constitutional jurisdiction within this federal republic. They need to remember that the U.S. general government works for the States in this union, not the other way around. The U.S. Health & Human Resources is another unconstitutional agency that should not exist and it has no power to interfere in the internal affairs of any State in this union. I’m not saying whether or not I support this Bill but our Kansas government should not care if it conflicts with U.S. Law. Again, it’s a State issue and under State control, not federal control or jurisdiction.

  2. Michael, thank you for all your hard work for Kansas as our House Representative here in the 114th.
    I’m sharing this on other social media outlets to help get the word out.

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