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State ef J etvnessee
PUBLIC CHAPTER NO. 404
• SENATE BILL NO. 1414
By Briggs, Yager, Crowe, Bowling, Campbell
Substituted for: House Bill No. 1242
By Helton-Haynes, Rudder, Moon, Renea Jones, Sherrell, Behn, Scarbrough, Gillespie, Hakeem,
Sparks, Littleton, Brock Martin, Raper, Freeman, Hale, Mitchell, Hemmer, Kumar, Eldridge, Love,
Vital, Greg Martin, Hawk, Russell, Alexander, Howell
AN ACT to amend Tennessee Code Annotated, Title 47, Chapter 18 and Title 56, relative to 3408
entities.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 47, Chapter 18, Part 1, is amended by adding
the following new section:
47-18-136.
(a) On or after July 1, 2025, a drug manufacturer or their agent or affiliate, shall not,
either directly or indirectly:
(1) Impose additional requirements or limitations on a 3408 entity, including
requiring the submission of any health information, claims or utilization data,
purchasing data, payment data, or other data as a condition for allowing the acquisition
of a 3408 drug by, or delivery of a 3408 drug to, a 3408 entity unless such data
submission is explicitly required by the United States department of health and human
services or applicable state law;
(2) Require a 3408 entity to reverse, resubmit, or clarify a claim after the initial
adjudication unless these actions are in the normal course of business and not related
to the 3408 program;
(3) Impose any requirements relating to inventory management systems of
3408 drugs, unless such requirement is required by the United States department of
health and human services or applicable state law;
(4) Impose any requirement relating to the frequency, duration, or scope of
audits that are not imposed on pharmacies or providers that are not 3408 entities;
(5) Impose requirements relating to accreditation, recertification, credentialing,
or recredentialing that are not imposed on pharmacies or providers that are not .3408
entities; or
(6) Impose any requirement determined by the attorney general and reporter to
interfere with the ability of a 3408 entity to access discounts provided under the 3408
program.
(b) On or after July 1, 2025, a person or entity that contracts with a 3408 entity to
dispense 3408 drugs or to administer a 3408 entity's participation in the 3408 program shall:
(1) Not interfere with, prohibit, restrict, or limit a 3408 entity's contracts or
prospective business relationships with another person or entity;
(2) Not deny, restrict, prohibit, or otherwise interfere with a 3408 entity's choice
of 3408 drugs acquired, delivered, or otherwise distributed; or
SB 1414
(3) Exclude claims from 3408 entities which would result in a net loss to the
covered entity.
(c) A drug manufacturer, or its agent or affiliate, shall not, either directly or indirectly,
deny, impose any restrictions or prohibitions on, discriminate against, or otherwise limit the
acquisition of a 3408 drug by, or delivery of a 3408 drug to, a 3408 entity or other location
that is under contract with, or otherwise authorized by, a 3408 entity to receive 3408 drugs
on behalf of the 3408 entity unless such receipt is prohibited by the United States
department of health and human services or applicable state law. This subsection (c) does
not apply to any requirements, prohibitions, limitations, or restrictions in place on or before
June 1, 2025.
(d)(1) A violation of subsection (a) or (c) constitutes an unfair or deceptive act or
practice affecting trade or commerce and is a violation of this part; provided, that a
civil penalty may be assessed in the amount of fifty thousand dollars ($50,000) per
violation.
(2) Each package of 3408 drugs applicable to a violation of subsection (a) or
(c) constitutes a separate violation.
(e) This section must not be construed or applied to be in conflict with or less
restrictive than:
(1) Applicable federal law and regulations, including limited distribution of a
drug required under 21 U.S.C. § 355-1; or
(2) Another law of this state if the law is compatible with applicable federal
law, including, but not limited to, title 39, chapter 15, part 2; title 68, chapter 1, part 1;
title 68, chapter 33; and any other law related to a patient's citizenship status.
(f) This section does not apply to:
(1) The TennCare program administered under the Medical Assistance Act of
1968, compiled in title 71, chapter 5, part 1, or a successor medicaid program;
(2) The CoverKids Act of 2006, compiled in title 71, chapter 3, part 11, or a
successor program; or
(3) The prescription drug discount plan described in title 56, chapter 57, or a
successor program.
(g) As used in this section:
(1) "3408 drug" means a drug that is a covered outpatient drug within the
meaning of 42 U.S.C. § 256b; is eligible for any offer for reduced prices by a
manufacturer under 42 U.S.C. § 256b(a)(1 ); and is purchased by a 3408 entity or
would have been purchased by a 3408 entity but for a restriction or limitation
described in§ 56-7-3119(b);
(2) "3408 entity" means a covered entity participating in the federal 3408 drug
discount program, as defined in section 3408 of the Public Health Service Act, 42
U.S.C. § 256b, including the entity's pharmacy or pharmacies;
(3) "Claim" means a request from a 3408 entity to be reimbursed for the cost
of filling, refilling, or administering a prescription drug or for providing a medical
supply or device;
(4) "Health information" means any information, including demographic
information collected from an individual or a group of individuals, that:
(A) Is created or received by a healthcare provider, pharmacy, health
plan, employer, or healthcare clearinghouse; and
(8) Relates to the past, present, or future physical or mental health or
condition of an individual, the provision of health care to an individual, or the
past, present, or future payment for the provision of health care to an
individual; and
(5) "Package" has the same meaning as defined in 21 U.S.C. §
360eee(11 }(A).
2
SB 1414
SECTION 2. Tennessee Code Annotated, Section 47-18-104(b), is amended by adding the
following new subdivision:
(68) Violating§ 47-18-136.
SECTION 3. If any provision of this act or its application to any person or circumstance is
held invalid, then the invalidity does not affect other provisions or applications of the act that can be
given effect without the invalid provision or application, and to that end, the provisions of this act are
severable.
SECTION 4. This act takes effect upon becoming a law, the public welfare requiring it.
3~
SENATE BILL NO. 1414
PASSED: April 16, 2025
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SPEAKER OF nrn,nru.. L..
CAMERON'""SEXTON,SPEAKER
HOUSE OF REPRESENTATIVES
f:1!:_ APPROVED this ~ day of 2025
BILL LEE, GOVERNOREvery fact on this page links to its source, starting with the official bill record.