H.B. 356 Drug Distribution Amendments: transcript

Thank you. Thank you. Thank you Mr. Chair and committee. Um, the main goal of this bill is pretty straightforward and I'll, I'll be quick. Um, we want to ensure that continued access to discounted prescription drugs under the Federal three 40 B program by clearing definitions and aligning state statute. This bill does not create new policy. It provides technical and conforming changes so that Utah law is clear, consistent, and legally sound. Um, these clarifications matter, especially for rural Utah. The three 40 B program was, was set up to serve rural areas. And, and, and in my district, I represent a very rural district. Um, making sure that we can provide these prices to ensure that programs can, can stay thriving and provide services to people that desperately need them is important. I would probably just leave it at that unless you have questions.

Yes, sir. Thank you. We have lots

Thank you. Good morning, Mr. Chair and members of the committee. My name is Kaitlyn Ello. I'm here today on behalf of Pharma in Opposition to House Bill 3 56. Pharma is currently challenging the law underlying this bill, and we continue to believe that the law undermines guardrails in the federal three 40 B statute. The modifications that are proposed by this particular bill do not def fix those deficiencies in the underlying law, and they instead make them worse. And it is in part because the bill clarifies that manufacturers are prohibited from requiring contract pharmacies to provide claims data without access to that claims data. Manufacturers have little way of knowing if three 40 B transactions violate the three 40 B statute or other federal requirements like duplicate discounts and diversion. Uh, in 13 years, hrsa, the regulatory agency for three 40 B has only done 14 audits of three 40 B providers in Utah. And of those 50% identified instances of duplicate discounting, the hospitals have tried to derail a model supported by this administration at the federal level that expressly permits manufacturers to review claims data in advance of providing discounts to ensure compliance with federal law. So because the bill does not fix issues with underlying law and further creates conflicts with the federal law, we would respectfully ask for your no vote on this bill today. Thank you very much for your time.

Hi, my name is Dave Gessel. I'm the Executive Vice President of the Utah Hospital Association. We are in strong and support of this bill and, uh, essentially disagree with everything that was just said. Uh, just understand that, uh, about 10 states have, uh, passed very similar bills to this. And almost everyone except I think, one to my knowledge, the courts have upheld already at the district level and at least two circuit court levels. So, uh, I do believe this will help the state of Utah and the patients in the hospitals here to get, uh, the services they deserve, the price they deserve. Thank you.

Um, thank you Mr. Chair. Make a motion that we favorably recommend, um, drug HB 3 56 drug distribution amendments to the, to the floor. And that's in order so I Speak to it. Yeah, I, you know, this, I, I know this is a complex issue and we've had multiple years discussing this. I, I think this is addressing a piece that needs to be fixed and moves us in the right direction. So thank you for the bill.

I waive back to the make motion.

All right. Thank you Madam Chair and Committee, and I grabbed the wrong bill, so I'm gonna come grab the right. Alright, sorry about that. So I have, um, to present to you today, house Bill 3 56. Um, the main goal of this bill is, is pretty straightforward, um, to ensure that continued access to discontinue or discounted prescription drugs under the Federal three 40 B program by clarifying definitions and Ian statute, this bill does not create a new policy. It provides technical and conforming changes. So Utah law is clear, consistent, and legally sound. Um, it provides Utah with clear enforceable rules, cleanup, language, and some clarification With the, the bill that we worked on last year, it honestly is pretty simple and straightforward. In short, the the bill stays within the lane by defining terms, clarifying roles, filling gaps without claiming a federal authority. In short, the bill provides clarity, protects access, respects federal law, and ensures that Utah statute both is common understanding and follows recent guidance. You'll see in the bill that there's some definition changes. Um, it defines a three 40 B covered entity, and a three 40 B eligible drug clarifies the prohibited actions under the three 40 B Drug Discount program and, and makes a few com, um, technical and conforming changes. And I'd be happy to answer any questions if there are any. That concludes my presentation. Yeah, Mike does that concludes your presentation?

Thank you. Uh, Dave Gessel, executive Vice President of Utah Hospital Association. We very much appreciate the representatives for bringing this forward. Uh, uh, we very much support this bill. It, it provides, and it's a vital program to, um, most of our hospitals, particularly in rural Utah, uh, to get this funding. And we're grateful for the efforts to make that happen. And we, and, uh, open-end questions.

I'm Madam Chair, members of the committee. My name is Caitlin Lagello. I live in Denver, Colorado. You need to have you turn on your camera. I see myself on, Is It, can you see me?

Thank you, Madam Chair. Um, I'll reintroduce myself. My name is Caitlin Lagello. I am here representing pharma and coming to you remotely today from Denver, Colorado, um, in opposition to house Bill 3 56. As you've probably heard, pharma is currently challenging the law underlying house Bill 3 56, and we continue to believe that the law undermines guardrails in the Federal three 40 B statute. The modifications proposed to the underlying statute by the bill do not fix the deficiencies in the under underlying law, and instead make them worse. In part because it further clarifies that manufacturers are prohibited from requiring contract pharmacies to provide claims data. The collection of claims data is a check and balance for manufacturers. And without access to that information, we have little way of knowing whether three 40 B transactions violate the federal statute or other federal requirements. Since 2015, hrsa, the regulatory agency for the three 40 B program, has only audited 12 3 40 B providers in Utah. That's 12 since 2015, which is just a fraction of providers in the state. And over half of those audits have found instances of adverse findings in West Virginia, there is a similar claims data prohibition in their law to Utah, and the court found that that provision stands as an obstacle to achieving the federal objective of preventing fraud in the three 40 B program. Um, HO hospitals have also tried to derail a model supported by Trump. Uh, the Trump administration that expressly permits manufacturers to review claims data in advance and ensure discounts provided are compliant with federal law. HB 3 56 is not affix to the underlying issues with the law, and it further obstructs federal safeguards designed to protect transparency in the program. We'd respectfully ask for your no vote on this bill today.

It disappeared. Apologies. It looks like I lost my, uh, presenter abilities there for a second. Okay. You're problem. Uh, thank you Madam Chair, and thank you representative for your question. I mentioned duplicate discounts in my testimony and A three 40 B and Medicaid duplicate discount as something that occurs when a manufacturer provides three 40 B pricing to a covered entity, and then also to the state medica, uh, rebate to the state Medicaid program on the same drug. So those duplicate discounts are expressly prohibited under federal law manufacturers share in the responsibility to make sure that those don't happen. So one day, one way to use that information would be to ensure compliance with the law on duplicate discount. And without claims level data, it is extremely difficult to do that. Uh, is to the second part of your question, manufacturers access to claims data is not about undermining the three 40 B program or covered entities access to discounts. I would say, in fact, it's opposite. It's really about ensuring the integrity of the program, ensuring the long-term solvency of the program, and ensuring that the program is operating as intended for those covered entities that are also, um, doing the same.

Uh, thank you, Madam Chair. Just a, a question follow up question, Caitlyn, to your, uh, last response. Um, I, I know you're not from Utah, but, or based here, but, uh, since Utah carved out of Medicaid years ago for three 40 B, how would duplicate discounts in Utah even be a risk? Yeah, so just because, um, Medicaid carves out duplicate discounts doesn't mean that they're not happening in other areas And Doesn't mean that No, I'm sorry, I, I I, I mean that they carved outta the three 40 program. So they're completely separate in states that haven't, the duplicate discount is a risk, but Utah, that they're, they're not even allowed to submit claims from a Medicaid agency under the three 40 B statute. That all runs through Medicaid. So I'm just wondering how that would be even be a risk in Utah related to that specific issue.

Yeah, thank you for your question. Representative Eliason. I was giving it as kind of an example of ways that manufacturer claims data might be, or claims data might be used to the representative's question, but certainly claims data can be used in manufacturers in other ways, um, in relation to the lawful requirements of the program. And another one of those ways might be to ensure lawful dispensing and to ensure that three 40 B drugs are being dispensed to eligible patients.

Yeah.

Yeah. Madam Chair, can you hear me? I'm ha it seems like I'm having connectivity issues, so

Okay. All right. Let's let, let's see. Five. This, let's lemme see if this works. There you go. Yep. Okay. Alright. Alright. Great. So I'm having quickly, but you know, just in case it does fade away, uh, PRI Castro with the Biotechnology Innovation Organization in opposition, uh, you know, to this bill, uh, pretty much for all the, for all the reasons stated by

Uh, Individual Cal. Sorry, California. Okay. Thank you. Los Angeles, California.

Uh, thank you, Madam Chair. I make a motion that we pass out HB 3 56 with a Fable recommendation.

I think the sponsor's done a good job of explaining that it's a cleanup bill to legislation that was, had strong support yesterday. I, I did hear from the Senate sponsor that, um, since the passage of HR one, the passage of the bill last year was especially critical for our rural hospitals who'll be taking a large hit financially due to some of the changes in HR one. So I think this is a common sense step to resolve some of the definitional questions.

Yeah, I mean, I would just finish with I, so my district is, is very rural, so I represent, um, district 69, San Juan, grand Emery, Garfield Wayne, and Cain counties. Um, the intent of, of three 40 B fits my district in a way that we would not be able to provide the services that, that are provided in rural Utah with, without this program. Um, so, so the intent of cleaning this up is, is simply to clean this up to make sure that we are in a good position to provide this, to be able to keep our rural, um, pharmacies dispensing at a, at a, in a way that, that makes things affordable. Um, like mentioned the, the one big beautiful bill is, is important in this, um, lots of things will be coming out, but I really appreciate the support. I I so appreciate the, um, time to present and I'm happy that we're moving this direction. So thank you.

I'm also Jake. That's okay. Um, if the sponsor's amenable, I would move to place, uh, house Bill 3 56 on the consent agenda. Um, I think there's no fiscal, um, I don't, what's the, uh, order of operations on that?

Thank you Mr. Speaker. This bill is a cleanup bill from last year that was supported across, um, the body. The main goal of this bill is straightforward. It is to ensure that continued access to discounted prescription drugs under the under the Federal three 40 B program, um, remains in place. It clarifies definitions that align with state, the the current state statute. This bill does not create a new policy. It provides technical and conforming changes. So Utah law is clear, consistent, and legally sound. It provides Utah with clear enforceable rules, cleanup language, not policy expansion resolves, ambi, ambi ambiguity, and definitional, definitional terms such as the word pharmacy. Without clarity, the program could be narrowed or disrupted. Um, and, and probably most importantly, the bill stays within the lane of defining terms, clarifying roles, and filling gaps without claiming federal authority. In short, the bill provides clarity, protects access to care, respects federal law, and ensures that Utah statutes remain both common understanding and, and follow recent guidance. Thank you Mr. Speaker.

so we're trying to clear that up. It really, there is no new policy. This is not any change to the policy that we passed last year. It further clarifies that the role of contract pharmacies to dispense drugs not to purchase or require them for their own use. And it prevents the program from being too limited in Utah's assistance, Utah assisting hospitals, clinics, and others, and rural entities. Uh, it does not regulate drug distribution, but instead overseas manufacture conduct related to three 40 B. So with that, uh, I, I'm open to any questions

Thank mr. President pro tem. I would waive summation to move the house.

Senator Vickers Baldy Lewin Aye. Frommer fuss. Aye. Fillmore es. Camilla Fillmore Aye. Grover Aye. Harper Aye. Kinins Aye. Pson Aye. Johnson Juab McKay Mikel Milner a Musselman Owens pitcher Lum Ye rebe Sandal Stevenson Stratton. Yes. Vickers Aye. Weiler Aye. Wilson. Aye. Winterton, president Adams

Thank you Mr. President Proin. Um, this bill is recommended by the Law Enforcement Criminal Justice Interim Committee.

of legislation we did last year concerning three 40 B drugs. It does not change that policy in any way. It's just, uh, it clears up some definitional ambiguity, uh, further clarifies, you know, the role of the contract pharmacies. And so, and it does not regulate the drug distribution, but instead overseas manufacturer conduct related to three 40 B. But like I say, this is a follow up to the piece we did last year and just clarifies primarily there were some, found some ambiguity in the definitions and it clears that up.

that house. Bill 3 56 pass.