- Six major pharmaceutical companies could face potential fines for violating federal law requiring that they provide 340B drug pricing program discounts on certain drugs at community pharmacies.
- On Wednesday, the Health Resources and Services Administration notified Eli Lilly, AstraZeneca, Novartis, Novo Nordisk, Sanofi and United Therapeutics that their cases had been referred to the U.S. health department's inspector general due to their refusal to offer 340B pricing to safety net hospitals through community pharmacy partnerships.
- HRSA asked the inspector general to decide whether the drugmakers are liable for civil monetary penalties for "knowingly and intentionally" overcharging 340B hospitals, which can total more than $5,000 per violation.
Providers and drug manufacturers have been at odds for years over the 340B drug discount program, which requires pharmaceutical companies give large discounts on outpatient drugs for providers serving low-income communities.
According to the 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 such hospitals, help them financially.
However, in July last year some drugmakers stopped giving the 340B ceiling price on their products sold to 340B providers and dispensed through contract pharmacies, while others limited sales by selling products only after a covered entity demonstrated 340B compliance, 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 asking the inspector general to weigh in, Michelle Herzog, acting director of the Office of Pharmacy Affairs, told the drugmakers in a series of letters sent Wednesday.
Should the inspector general find fault, the move could result in fines for Eli Lilly, AstraZeneca, Novartis, Novo Nordisk, Sanofi and United.
"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," said Maureen Testoni, president and CEO of 340B Health.
Pharmaceutical companies argue the 340B program drives patient costs higher, though that claim is mostly unsupported by outside research. That hasn't stopped drugmakers from trying to avoid the discounts, which can range from 25% to 50% of the cost of drugs — similar to the discounts given to Medicaid.
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 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 one approach 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 significant shift from how the Trump administration approached regulating the 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.