SB 25-071
Fiscal Note
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
SB 25-071: PROHIBIT RESTRICTIONS ON 340B DRUGS
Prime Sponsors:
Sen. Michaelson Jenet; Rich
Rep. Martinez; Taggart
Published for: House Health & Human Services
Drafting number: LLS 25-0361
Fiscal Analyst:
Brendan Fung, 303-866-4781
brendan.fung@coleg.gov
Version: First Revised Note
Date: April 3, 2025
Fiscal note status: This revised fiscal note reflects the reengrossed bill.
Summary Information
Overview. The bill prohibits manufacturers from imposing restrictions on 340B Drug Pricing Program
facilities and requires covered hospitals to include certain information in their annual reports.
Types of impacts. The bill is projected to affect the following areas on an ongoing basis:
State Expenditures
State Revenue
Local Government
Appropriations. For FY 2025-26, the bill requires an appropriation of $49,500 to the Department of
Health Care Policy and Financing.
Table 1
State Fiscal Impacts
Type of Impact
1
Budget Year
FY 2025-26
Out Year
FY 2026-27
State Revenue $0 $0
State Expenditures $49,500 $0
Transferred Funds $0 $0
Change in TABOR Refunds $0 $0
Change in State FTE 0.0 FTE 0.0 FTE
1
Fund sources for these impacts are shown in the tables below. Page 2
April 3, 2025 SB 25-071
Table 1A
State Expenditures
Fund Source
Budget Year
FY 2025-26
Out Year
FY 2026-27
General Fund $0 $0
Cash Funds $24,750 $0
Federal Funds $24,750 $0
Centrally Appropriated $0 $0
Total Expenditures $49,500 $0
Total FTE 0.0 FTE 0.0 FTE
Summary of Legislation
The bill prohibits pharmaceutical manufacturers and other related entities from imposing
limitations or restrictions on covered hospitals, contract pharmacies, federally qualified health
centers, or other facilities participating in the federal 340B Drug Pricing Program. Manufacturers
may not require covered entities or pharmacies to submit health information unless it is directly
related to a claim under a federal health care program.
Additionally, covered hospitals are required to report the following information to the
Department of Health Care Policy Financing (HCPF):
annual 340B savings from participating in the program;
how these savings are utilized;
market rate costs to acquire 340B drugs; and
the total operating costs related to providing charitable care.
The bill also prohibits the use of 340B savings for certain expenses, including administrative
compensation, penalties and fines, advertising, and lobbying, among others.
Noncompliance with these provisions is a deceptive trade practice. Individuals regulated by the
State Board of Pharmacy who violate these provisions may also face disciplinary action.
Background
The 340B Drug Pricing Program is a federal program that requires drug manufacturers
participating in Medicaid to provide outpatient drugs to covered entities at a discount. To
participate in the 340B program, covered entities comply with all program requirements
administered by the federal Health Resources & Services Administration. In Colorado, an
estimated 68 hospitals and 20 federally qualified health centers participate in the 340B program. Page 3
April 3, 2025 SB 25-071
State Revenue
Starting in FY 2025-26, the bill may increase state revenue from civil penalties and court filing
fees by a minimal amount.
Civil Penalties
Under the Colorado Consumer Protection Act, a person committing a deceptive trade practice
may be subject to a civil penalty of up to $20,000 for each violation. Additional penalties may be
imposed for subsequent violations of a court order or injunction. This revenue is classified as a
damage award and not subject to TABOR. Given the uncertainty about the number of cases that
may be pursued by the Attorney General and district attorneys, as well as the wide range in
potential penalty amounts, the fiscal note cannot estimate the potential impact of these civil
penalties.
Filing Fees
The bill may increase revenue to the Judicial Department from an increase in civil case filings.
Revenue from filing fees is subject to TABOR.
State Expenditures
The bill increases state expenditures in the Department of Health Care Policy and Financing by
about $50,000 in FY 2025-26 only, split between the Health Care Affordability and Sustainability
(HAS) Cash Fund and federal funds. Workload will also minimally increase in several other
agencies, as described below.
Department of Health Care Policy and Financing
In FY 2025-26, expenditures in HCPF will increase by $49,500 to contract with a vendor to
update the current hospital report template, data system, and metrics with information required
under the bill. Based on the scope of new reporting requirements, the fiscal note estimates that
a contractor will perform 225 hours of work at a rate of $220 per hour. Actual costs will be
determined through the contracting process. Workload will also minimally increase to review
these hospital reports for the financial benefit of the 340B program, which can be absorbed
within existing appropriations.
Department of Public Health and Environment
Workload in the Department of Public Health and Environment may increase if hospitals fail to
publish certain information and the department investigates complaints about noncompliance.
This workload is expected to be minimal and no change in appropriations is required. Page 4
April 3, 2025 SB 25-071
Department of Regulatory Agencies
The bill minimally increases workload in the Department of Regulatory Agencies to conduct
outreach to individuals regulated by the State Board of Pharmacy. This workload is expected to
be minimal and no change in appropriations is required.
Department of Law
Workload in the Department of Law will minimally increase to the extent that deceptive trade
practice complaints are filed. The department will review complaints under the bill and prioritize
investigations as necessary within the overall number of deceptive trade practice complaints and
available resources.
Judicial Department
The trial courts in the Judicial Department may have an increase in cases filed under the
Colorado Consumer Protection Act from the addition of a new deceptive trade practice. It is
assumed that pharmaceutical manufacturers and covered hospitals will abide by the law and
that any violation of the legislation will result in minimal number of new cases. The fiscal note
assumes that this can be accomplished within existing resources and that no change in
appropriations is required.
Department of Personnel and Administration
In future years, expenditures in the Department of Personnel and Administration may increase if
employees on the state insurance plan access more 340B drugs, state insurers receive fewer
rebates from pharmaceutical manufacturers, and increased costs are passed down to the state.
This impact is dependent on actions taken by state employees, 340B hospitals, contract
pharmacies, and the state insurers. Therefore, costs cannot be estimated but are expected to be
minimal.
Local Government
Similar to the state, to the extent district attorneys receive deceptive trade practice complaints
related to the new deceptive trade practice under the bill, workload will increase to investigate
complaints and seek relief when appropriate. It is assumed most such cases will be handled at
the state level by the Attorney General.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed. Page 5
April 3, 2025 SB 25-071
State Appropriations
For FY 2025-26, the bill requires the following appropriations to the Department of Health Care
Policy and Financing:
$24,750 from the HAS Cash Fund; and
$24,750 from federal funds.
State and Local Government Contacts
Health Care Policy and Financing
Human Services
Judicial
Law
Public Health and Environment
Regulatory Agencies
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.