Nebraska lawmakers consider bill to strengthen federal drug discount program

A federal drug discount program could be protected in Nebraska under a bill from Sen. Brian Hardin.

The Banking, Commerce and Insurance Committee heard testimony on LB168, also known as the 340B Contract Pharmacy Protection Act, Tuesday afternoon.

The 340B program was created by Congress in 1992 to allow hospitals with vulnerable patient populations to purchase drugs at a discounted price. In 2010, the program expanded to include additional rural hospitals.

Drug manufacturers are required to provide the 340B discount to eligible entities in exchange for their participation in Medicaid and Medicare. No federal or state tax dollars are used for the program.

During the pandemic, several pharmaceutical companies began restricting access to medications at 340B discounted prices.

“In 2020, many PhRMA (Pharmaceutical Research and Manufacturers of America) members broke with decades of precedent and began to restrict contract pharmacy access, ignoring federal law and selfishly pocketing additional billions of dollars each year while hurting the nation's safety net,” Hardin said.

Hardin’s bill would keep companies from denying or restricting the acquisition or delivery of a 340B drug to a hospital, clinic or contract pharmacy in Nebraska.

It also prohibits drug companies from requiring health care providers to submit any type of data as a condition for receiving discounted drugs.

Hardin introduced a similar bill in the Nebraska Legislature, LB984, in 2024. It failed to make it out of the Banking, Commerce and Insurance Committee and was indefinitely postponed.

In 2021, Arkansas became the first state to pass legislation protecting the 340B program.

PhRMA filed a case against the state over the legislation, but the 8th Circuit Court ruled in favor of the state law and the Supreme Court later upheld the circuit court’s ruling.

In recent years, a handful of other states, including Kansas and Missouri, have passed 340B protection legislation.

During Tuesday’s hearing, LB168 drew a lot of support from Nebraska hospital representatives.

Dr. Dan Defreece, who serves as the president of CHI Health St. Mary’s in Nebraska City, said protecting the 340B program would help rural hospitals stay open. He said more than half of rural hospitals in the state report cuts to 340B that could force them to close.

“Patients bear the biggest brunt of this, and meanwhile, the pharmaceutical manufacturers are posting these exorbitant profits,” he said.

Elizabeth Boal-Shively, a pharmacist at a rural hospital in Henderson, Nebraska, said her hospital’s savings from the 340B program had dropped by nearly 40% in the last year due to manufacturer restrictions.

“The current reality is that without LB168, manufacturers are going to continue to limit access to 340B pricing for contract pharmacies,” she said. “The data submission requirements are tedious at best and impossible at worst, and the rising administrative burden is making the program really not viable for a lot of critical access hospitals like mine.”

The 340B program has faced scrutiny from several organizations across the country.

A pro-Trump nonprofit called “Building America’s Future” has been running ads opposing the 340B program in states considering related legislation this year, including Nebraska.

The ad alleges that hospitals are using the money they save from the 340B Program on health care for immigrants living in the country illegally and gender-affirming care for minors.

Jeremy Nordquist, the president of the Nebraska Hospital Association, denied the claims in the ads.

“What that ad is doing is coming in, from an industry that's headquartered in New Jersey and California, largely, and telling Nebraskans, hundreds of Nebraskans who sit on the boards of their local hospitals, implying they're doing something nefarious with these dollars," he said. "That’s ridiculous.”

Some senators and testifiers had concerns that the bill could enable abuse of the 340B program by pharmacy benefit managers and other stakeholders.

Sen. Merv Riepe expressed concern over the section of the bill prohibiting data requirements, calling it a "total avoidance of transparency."

“All we hear in government from the public is ‘We want transparency. We want transparency’ over and over and over. If we don't give it to them, then we are part of the problem,” Riepe said.

Katelin Lucariello, who represented PhRMA, also highlighted the transparency concerns in her testimony.

“There has been considerably weak oversight in the program since its inception, which has led to a diversion of 340B funds away from patients and caused the program to expand well beyond its original intent,” she said. “Instead, the program has become a profit generator for large chain pharmacies, PBMs (pharmacy benefit managers) and other middle men.”

She cited a Minnesota Department of Health report that showed nearly one in every six dollars in 340B revenue went to contract pharmacies and third-party administrators.

In addition to the in-person testimony, the bill received 47 proponent letters and five opponent letters.

The Banking, Commerce and Insurance Committee will later determine whether to send the bill to the Unicameral floor for further debate.