UPDATE: Dec. 15, 2020: Twenty-eight states' and the District of Columbia's attorneys general urged HHS to force drugmakers to comply with the 340B drug pricing program rules in a Monday letter.
Led by California Attorney General Xavier Becerra, President-elect Joe Biden's pick to lead HHS, the group alleges Eli Lilly, AstraZeneca, Sanofi, Novartis, Merck & Co., United Therapeutics and other pharmas have unlawfully refused to give discounts to covered entities.
- Six provider groups including the American Hospital Association on Friday filed a federal lawsuit against HHS, alleging the department failed to enforce 340B drug pricing program requirements and allowed actions from drug companies that undermined the program.
- Three 340B hospitals also joined the suit, alleging they had been harmed by drugmakers’ refusal to discount prescription drugs at community-based pharmacies as the program requires.
- HHS could not be reached for comment on the suit by time of publication. The plaintiffs want the department to force drug companies into compliance and issue refunds to hospitals that didn’t receive discounts. They’re also asking for an order requiring HHS to pinpoint which drug companies are responsible for the violations, and refer them to the Office of Inspector General to assess penalties.
The 340B drug discount program obligates drug companies to give discounts on outpatient drugs to providers serving communities in need, especially those in rural areas. Hospitals say it’s essential to helping them treat their neediest patient populations. However, pharmaceutical companies and lawmakers in the past have pushed for more oversight into how the savings are spent, alleging providers use the savings to boost their bottom line.
The new lawsuit alleges that since July, an increasing number of drug companies have refused to offer discounts to 340B hospitals, and despite asking HHS to enforce the program’s requirements, the agency has yet to do so.
"These savings enable hospitals to provide more comprehensive health care and support to patients — including free or low-cost drugs — without incurring costs for taxpayers," the plaintiffs said in a release on the suit.
Along with AHA, America’s Essential Hospitals, the Association of American Medical Colleges, the American Society of Health-System Pharmacists, 340B Health and the Children’s Hospital Association filed the suit in the U.S. District Court for the Northern District of California on Friday.
The individual 340B hospitals plaintiffs in the suit are Avera St. Mary’s Hospital in Pierre, S.D.; Riverside Regional Medical Center in Newport News, Va.; and St. Mary’s Medical Center in San Francisco.
Hospitals in the 340B program provide 60% of all uncompensated care in the U.S. and 75% of all hospital care to Medicaid patients, according to Maureen Testoni, CEO of 340B Health.
"Our joint lawsuit demonstrates the immense harm this issue has caused the nation’s 340B hospitals and the low-income and rural patients who rely on them for care, and it makes a strong case for the court to intervene now before the damage to the health care system becomes permanent," Testoni said in a Friday statement.
Since the 340B program was launched in the early 1990s to help safety net hospitals get a price break on drugs for low-income and vulnerable patients, it has weathered significant controversies. Some of the biggest disputes have been over hospitals reselling deeply discounted drugs to patients with private insurance coverage, along with pharma manufacturers limiting distribution of drugs covered by 340B.
On Thursday, HHS finalized a rule aimed at providing additional stability to the program. The rule would create a dispute desolution mechanism for hospitals that believe they were overcharged for 340B medications by any amount of $35,000 or more.
Drug companies can also appeal if they think a provider received duplicative discounts.
Provider groups weren't pleased about the rule, with the AHA slamming the new process as insufficient to addressing drug companies' attacks on 340B. Lobbying group 340B Health noted the resolution process holds some promise, but agreed in a Thursday statement it wasn't an "appropriate or timely" solution for refusals by drugmakers Eli Lilly, AstraZeneca, Sanofi, Novartis, United Therapeutics, and Novo Nordisk to comply with the program.