- Six major drug companies are facing potential fines for continually violating federal law requiring they provide 340B drug pricing program discounts on eligible drugs at community pharmacies.
- The Health Resources and Services Administration on Wednesday sent notices to Eli Lilly, AstraZeneca, Novartis, Novo Nordisk, Sanofi and United Therapeutics noting them their cases had been referred to HHS' Office of Inspector General due to the companies' ongoing refusals to offer 340B pricing to safety-net providers through community pharmacy partnerships. That refusal is a direct violation of the 340B statute, HRSA said.
- HRSA asked the inspector general to decide whether the drugmakers are liable for civil monetary penalties for "knowingly and intentionally" overcharging 340B hospitals which, if greenlit, can total more than $5,000 per violation. The move was quickly applauded by safety-net providers, which have criticized the government for perceived inaction in enforcing 340B stipulations against drugmakers.
Providers and drug manufacturers have been at odds for years over the 340B drug discount program, which requires pharmaceutical companies to give large discounts on outpatient drugs for providers serving low-income communities.
According to safety-net hospital association 340B Health, hospitals in the program provide 60% of all uncompensated care in the U.S. and 75% of all hospital care to Medicaid patients.
Such providers usually have narrower margins, meaning the drug discounts from the program, which was established in 1992 to lower drug prices for safety-net providers, are a huge financial help.
However, in July last year some drugmakers stopped giving the 340B ceiling price on their products sold to such providers and dispensed through contract pharmacies, while others limited sales by selling products only after a covered entity demonstrated 340B compliance or requiring specific data from them, according to HRSA.
As a result, in May, acting HRSA Administrator Diana Espinosa sent letters to the six pharmaceutical manufacturers outlining their violations of the 340B statute.
The letters directed the drugmakers to submit a plan to come into compliance with the law, but in their responses "the manufacturers refused to comply," HRSA said.
HRSA is now punting the case to OIG, Michelle Herzog, acting director of the Office of Pharmacy Affairs, told the drugmakers in a series of letters sent Wednesday.
The move could result in steep fines for Eli Lilly, AstraZeneca, Novartis, Novo Nordisk, Sanofi and United.
Maureen Testoni, president and CEO of 340B Health, called on OIG to quickly review the evidence and penalize any bad actors.
"The longer these drugmakers refuse to follow the law, to stop overcharging for 340B drugs, and to repay the denied savings, the greater the harm will be to patient care," Testoni said. "This must end."
Pharmaceutical companies argue the 340B program drives patient costs higher, though that claim is mostly unsupported by outside research.
However, that hasn't stopped drugmakers from trying to dodge the discounts, which can range from 25% to 50% of the cost of the drugs, cutting into their revenue.
In January, Indianapolis-based Eli Lilly filed a lawsuit seeking to stop a rule finalized in December on how hospitals and drugmakers handle 340B disputes. In a major win for pharma, a federal judge in March granted Lilly's request for a preliminary injunction, saying HHS didn't follow rulemaking requirements or issue enough time for stakeholder comments.
The decision halted a key mechanism safety-net hospitals and community health centers could have used to challenge drugmakers restricting sales of discounted drugs to contract pharmacies.
Lilly has alleged the Biden administration promulgated the rule due to political pressure from Congress to lower drug prices. HHS Secretary Xavier Becerra's move to shore up 340B is a sharp turnaround from how the Trump administration approached regulating the three-decade-old drug discount program.
Under Trump, HHS imposed major cuts to 340B drugs dispensed through off-campus hospital outpatient sites.
The American Hospital Association, the American Association of Medical Colleges, America's Essential Hospitals and three freestanding hospitals sued not long after the rule was implemented in a case expected to be heard by the Supreme Court either later this year or early next.