Today's Law As Amended


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AB-1938 Prescription drugs: 340B discount drug purchasing program.(2019-2020)



As Amends the Law Today


SECTION 1.
 (a)  The Legislature hereby finds and declares all of the following:
(1) California’s health care system faces several challenges, including, but not limited to, rising health care costs, workforce shortages, and policy changes at the federal level. As a result of those challenges, the state needs to be very smart on how public health care dollars are used within its borders.
(2) The COVID-19 pandemic has stretched the state’s health care system to its limits, making it even more imperative for public health care dollars in the state to be spent on health care and not on unrelated lobbying efforts or unrelated litigation.
(3) Unfortunately, there are entities that are using those funds for reasons unrelated to health care and in ways that are completely counterproductive to improved health care.
(4) According to the legislative history of the 340B program, revenue from the 340B program should be used to reach more patients and provide more comprehensive coverage, but there is evidence that funds from that program are not expended for that purpose.
(5) In addition to the strain on the health care system, there is a widely acknowledged housing shortage in the state. Some entities have been using their public health care dollars to exacerbate that shortage.
(b) It is the intent of the Legislature to apply limitations on the use of state health care dollars to entities with a unique role in the state’s health care system that are more likely to abuse that role and spend precious public dollars on lobbying and litigation unrelated to health care.

SEC. 2.

 Section 14105.465 is added to the Welfare and Institutions Code, immediately following Section 14105.46, to read:

14105.465.
 (a) The following definitions apply for purposes of this section:
(1) “Designated entity” means a nonprofit organization, including any subsidiary of that organization, that individually or collectively with one or more of its subsidiaries meets all of the following requirements:
(A) Is a managed care organization licensed under Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code that has previously contracted with the department as a primary care case management organization pursuant to Article 2.9 (commencing with Section 14088).
(B) Contracts with the federal Centers for Medicare and Medicaid Services to provide services in the Medicare Program as a Medicare special needs plan.
(C) Participates in the 340B program.
(D) Has one or more licenses to operate as a pharmacy pursuant to Chapter 9 (commencing with Section 4000) of Division 2 of the Business and Professions Code.
(2) “Influence any ballot measure action” means promoting, supporting, influencing, modifying, opposing, or delaying any ballot measure by any means, including, but not limited to, the provision or use of information, statistics, studies, or analyses. The term does not include testifying or making other appropriate communication if that activity is performed under either of the following circumstances:
(A) Upon the formal request of a legislative body, committee, or a member thereof.
(B) In connection with any ballot measure action that directly affects the activities of the designated entity.
(3) “Ballot measure action” means the drafting, introduction, consideration, modification, enactment, or defeat of any state or local ballot measure.
(4) “Person” means any natural person, partnership, corporation, limited liability company, company, trust, association, or other entity, however organized.
(5) “340B program” means the discount drug purchasing program described in Section 256b of Title 42 of the United States Code.
(b) (1) A designated entity shall not use any revenue from a contract with the department, a contract with the federal Centers for Medicare and Medicaid Services, and from the 340B program to do any of the following:
(A) Fund litigation under the California Environmental Quality Act.
(B) Influence any ballot measure action relating to housing.
(C) Fund any efforts to influence any ballot measure action relating to housing.
(2) The revenue described in paragraph (1) shall not be diverted through any means to any person for use for any of the purposes specified in subparagraph (A), (B), or (C) of paragraph (1).
(3) For purposes of this section, revenue from the 340B program includes, but is not limited to, any savings generated from that program.
(c) (1) A designated entity, and any subsidiary of that entity, shall annually report on its internet website, in a publicly accessible manner, both of the following:
(A) The amount of gross revenue described in paragraph (1) of subdivision (b) that was generated for the previous year.
(B) A description on how the revenue described in paragraph (1) of subdivision (b) was spent during that year.
(2) Any unspent revenues shall be reflected in the reports for subsequent years until expended.
(d) The director shall seek any necessary federal approvals to implement this section. This section shall not be implemented until the necessary federal approval is obtained, and only to the extent federal financial participation is available.