Prescription drugs: 340B discount drug purchasing program.

Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services, and under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing federal law requires the United States Secretary of Health and Human Services to enter into an agreement with each manufacturer of covered drugs that are not subject to a rebate under an agreement between the state Medicaid program and the manufacturer under which the amount required to be paid to the manufacturer for covered drugs purchased by a covered entity does not exceed an amount equal to the average manufacturer price for the drug under the federal Medicaid program in the preceding calendar quarter, reduced by the rebate received pursuant to the Medicaid agreement. This program is commonly referred to as the 340B Drug Pricing program or 340B program. Existing state law requires a covered entity to dispense only the above-described drugs to Medi-Cal beneficiaries, authorizes a covered entity that is unable to purchase the above-described drugs to dispense a drug purchased at regular drug wholesale rates to a Medi-Cal beneficiary if the covered entity maintains documentation of their inability to obtain the drugs, and requires a not-for-profit hospital that participates in the drug discount program established under federal law to enter into an agreement with the department that includes specified terms, including that the not-for-profit hospital continues its historic commitment to the provision of charity care. This bill would define a "designated entity" as a nonprofit organization, including any subsidiary of that organization, that individually or collectively with one or more of its subsidiaries meets specified requirements, including that the designated entity is a licensed managed care organization that has previously contracted with the department as a primary care case management organization, contracts with the federal Centers for Medicare and Medicaid Services to provide services in the Medicare Program as a Medicare special needs plan, and participates in the 340B program. The bill would prohibit a designated entity from using any revenue from a contract with the department, a contract with the federal Centers for Medicare and Medicaid Services, and from the 340B program on specified activity, such as funding litigation under the California Environmental Quality Act. The bill would require a designated entity, and any subsidiary of that entity, to annually report on its internet website specified information, including the amount of gross revenue generated from a contract with the department, a contract with the federal Centers for Medicare and Medicaid Services, and from the 340B program for the previous year, and would condition the implementation of these provisions to the extent that federal financial participation is available and federal approvals are obtained.