wa-law.org > bill > 2025-26 > SB 5981 > Substitute Bill
The legislature finds that the federal 340B drug pricing program is essential for providing health care access to low-income and uninsured populations. The 340B drug pricing program requires drug manufacturers to offer discounts on outpatient medications to eligible providers that serve these populations. They include federally qualified health centers, Ryan White (HIV) clinics, tribal and urban Indian health centers, critical access hospitals, and other safety net hospitals that meet stringent federal criteria.
Congress created the 340B drug pricing program in 1992, stating that the program's benefits enable covered "entities to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services." (H.R. Rep. No. 102-384 (II), at 12 (1992)). The 340B drug pricing program allows certain safety net providers to sustain underfunded services and reinvest savings into essential community benefits, such as financial assistance for low-income patients, no-cost wellness visits, screenings, vaccinations, transportation to appointments, health education classes, case management, medication adherence services, and workforce development programs.
The federal health resources and services administration permits 340B covered entities to contract with pharmacies to enable access to life-saving drugs and drugs that preserve quality of life to eligible patients, including for those who otherwise have limited access.
The 340B drug pricing program and contract pharmacies are crucial to Washington's safety net providers by ensuring patients can access their prescribed medications, while providing additional resources to 340B covered entities to serve vulnerable and underserved populations.
More than 20 other states have recognized the importance of contract pharmacies to the 340B drug pricing program and have taken action to prohibit drug manufacturers from imposing restrictions on 340B covered entities' ability to serve patients through contract pharmacies.
Federal courts, including the fifth and eighth circuit courts of appeals, have upheld states' authority to legislate on the distribution of 340B drugs through contract pharmacies.
The current restrictions imposed by drug manufacturers not only limit a patient's access to affordable medication but also jeopardize the financial savings that safety net providers depend on to reinvest in their operations, expand services, and support underserved communities.
The legislature, therefore, finds that prohibiting drug manufacturers from imposing restrictions on 340B covered entities is necessary to protect Washington's vulnerable patients, their access to medications, and safety net providers' ability to serve their patients.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"340B drug" means a drug that has been subject to an offer for reduced prices by a manufacturer under 42 U.S.C. Sec. 256b and is purchased by a covered entity.
"Covered entity" means an entity authorized to participate in the federal 340B drug pricing program, as defined in 42 U.S.C. Sec. 256b(a)(4) as of the effective date of this section.
"Manufacturer" means a person, corporation, or other entity engaged in the manufacture of drugs or devices. It includes an agent, contractor, or affiliate of a manufacturer.
"Package" has the same meaning as in 21 U.S.C. Sec. 360eee(11)(A) as of the effective date of this section.
"Pharmacy" has the same meaning as in RCW 18.64.011.
"Third-party logistics provider" has the same meaning as in 21 U.S.C. Sec. 360eee(22) as of the effective date of this section.
A manufacturer or a distributor or third-party logistics provider of a manufacturer's drugs may not, directly or indirectly, deny, restrict, or prohibit the acquisition of a 340B drug by, or delivery of a 340B drug to, a covered entity, a pharmacy that is under contract with a covered entity to receive and dispense a 340B drug on behalf of the covered entity, or any location authorized by a covered entity to receive such 340B drug, unless federal law prohibits receipt of the 340B drug.
A manufacturer or a distributor or third-party logistics provider of a manufacturer's drugs may not, directly or indirectly, require a covered entity to submit any claims, utilization, purchasing, or other data as a condition for allowing the acquisition of a 340B drug by, or delivery of a 340B drug to, a covered entity, a pharmacy that is under contract with a covered entity to receive and dispense a 340B drug on behalf of the covered entity, or any location authorized by a covered entity to receive such 340B drug, unless federal law requires such data sharing.
In addition to any other remedy provided by law, a covered entity may file a civil action against a manufacturer, distributor, or third-party logistics provider for a violation of this chapter. If a court finds that the manufacturer, distributor, or third-party logistics provider violated this chapter, the court may enjoin the violation and award a civil penalty of up to $5,000 per day for each violation, as well as reasonable attorneys' fees and costs. Each package of 340B drugs subject to a prohibited act under this chapter constitutes a separate violation.
The attorney general may bring an action in the name of the state, or as parens patriae on behalf of persons residing in the state, to enforce this chapter. For actions brought by the attorney general to enforce the provisions of this chapter, the legislature finds that the practices covered by this chapter are matters vitally affecting the public interest for the purpose of applying the consumer protection act, chapter 19.86 RCW. For actions brought by the attorney general to enforce this chapter, a violation of this chapter is not reasonable in relation to the development and preservation of business and is an unfair or deceptive act in trade or commerce and an unfair method of competition for the purpose of applying the consumer protection act, chapter 19.86 RCW.
Nothing in this chapter is to be construed or applied to conflict with federal law and related regulations, including 21 U.S.C. Sec. 355-1, or other laws of this state, if the state law is compatible with applicable federal law.
Before April 1st of each year, a covered entity shall report the following information to the department concerning the covered entity's participation in the 340B program for the previous calendar year:
The following information for the covered entity:
Name;
Service address;
340B program identification number; and
Designation of entity type, as specified in 42 U.S.C. Sec. 256b(a)(4);
The aggregate acquisition cost for all 340B drugs obtained under the 340B program and dispensed or administered to patients;
The aggregate payment amount received for all 340B drugs obtained under the 340B program and dispensed or administered to patients;
The aggregate payment made to pharmacies that are under contract with the covered entity to receive and dispense 340B drugs on behalf of the covered entity;
The number of claims for prescription drugs described in (c) of this subsection;
How the covered entity uses any savings from participating in the 340B program, including the amount of savings used for the provision of charity care, community benefits, or a similar program of providing unreimbursed or subsidized health care;
The aggregate payments made to any other entity that is not a covered entity and is not a contract pharmacy as described in (d) of this subsection for managing any aspect of the covered entity's 340B program;
The aggregate payment made for any other administering expense for the 340B program;
The percentage of the covered entity's claims that were for prescription drugs obtained under the 340B program; and
The number and percentage of low-income patients of the covered entity that were served by a sliding fee scale for a prescription drug dispensed or administered under the 340B program.
The information required to be reported under subsection (1) of this section must be reported by payer type, including the following:
Commercial;
Medicaid;
Medicare; and
Uninsured.
The department shall prepare a template reporting form for covered entities to use to fulfill the reporting requirements of this section.
The data submitted in the reports required under this section is confidential and is not available for public inspection.
The department may share the information received under this section with the health care authority under a data-sharing agreement.
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Before November 15th of each year, the department shall submit a report to the legislature that aggregates the data submitted under this section.
The department shall also make the report available on the department's website.
The department may issue a fine, in accordance with RCW 43.70.095, of $1,000 per day for a covered entity that fails to provide the information required by this section by the date required.
The department may adopt rules necessary to implement this section.
The authority shall compile and analyze the data submitted by health carriers, pharmacy benefit managers, manufacturers, and pharmacy services administrative organizations pursuant to this chapter and prepare an annual report for the public and the legislature synthesizing the data to demonstrate the overall impact that drug costs, rebates, and other discounts have on health care premiums. The authority shall include all manufacturer data specific to discounts provided as part of the federal 340B drug pricing program, as established in 42 U.S.C. Sec. 256b.
Except for manufacturer data specific to discounts provided as part of the federal 340B drug pricing program, the data in the report must be aggregated and must not reveal information specific to individual health carriers, pharmacy benefit managers, pharmacy services administrative organizations, individual prescription drugs, individual classes of prescription drugs, individual manufacturers, or discount amounts paid in connection with individual prescription drugs.
Beginning January 1, 2021, and by each January 1st thereafter, the authority must publish the report on its website.
Except for the report, and as provided in subsection (5) of this section, the authority shall keep confidential all data submitted pursuant to RCW 43.71C.020 through 43.71C.080.
For purposes of public policy, upon request of a legislator, the authority must provide all data provided pursuant to RCW 43.71C.020 through 43.71C.080 and any analysis prepared by the authority. Any information provided pursuant to this subsection must be kept confidential within the legislature and may not be publicly released.
For the purpose of reviewing drug prices and conducting affordability reviews, the prescription drug affordability board, as established in chapter 70.405 RCW, and the health care cost transparency board, established in chapter 70.390 RCW, may access all data collected pursuant to RCW 43.71C.020 through 43.71C.080 and any analysis prepared by the authority.
(a) Except as provided in (b) of this subsection, the data collected pursuant to this chapter is not subject to public disclosure under chapter 42.56 RCW. Any information provided pursuant to this section must be kept confidential and may not be publicly released. Recipients of data under subsection (6) of this section shall:
i. Follow all rules adopted by the authority regarding appropriate data use and protection; and
ii. Acknowledge that the recipient is responsible for any liability arising from misuse of the data and that the recipient does not have any conflicts under the ethics in public service act that would prevent the recipient from accessing or using the data.
If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.