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181 bipartisan U.S. House members on Friday urged HHS to quickly fine all drug manufacturers that deny 340B pricing when covered entities use contract pharmacies.

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181 House Members Prod HHS to Start Fining Drug Makers for “Unlawful” 340B Overcharges Involving Contract Pharmacies

One hundred eighty-one U.S. House members—144 Democrats and 37 Republicans—urged the Biden administration on Friday to quickly impose civil monetary penalties against all drug manufacturers that restrict access to 340B pricing when covered entities use contract pharmacies.

“Manufacturers have received multiple warnings that their overcharges are unlawful, but still refuse to comply,” the representatives said in a July 15 letter to U.S. Health and Human Services Secretary Xavier Becerra. The letter was released this morning. “Further delay of enforcement actions emboldens more manufacturers to begin overcharging safety net providers, threatening the integrity of the entire 340B program.”

The representatives are frustrated with HHS’s slowness to fine drug makers up to $6,323.00 for each instance of 340B program overcharging. Eighteen drug makers have restricted 340B pricing involving the contract pharmacy program. HHS’s Health Resources and Services Administration has informed nine that their policies are illegal and must stop. HRSA has referred seven of those nine to HHS’s Office of the Inspector General for possible imposition of civil monetary penalties—six in September 2021 and the seventh in March.

“We urge OIG to conclude its review of the seven referrals as soon as possible and begin imposing civil monetary penalties against manufacturers it finds in violation of the law,” the House members said in their letter to Becerra. “We also request HHS initiate enforcement actions against the remaining eleven drug companies that have implemented overcharge policies but have not yet been referred to the OIG.”

“These actions are essential to bringing manufacturers back into compliance with their responsibilities under the statute and will deter other manufacturers from pursuing similar unlawful courses of action,” the letter said. “Every day that drug manufacturers violate their obligation to provide these discounted drugs, vulnerable communities, federal grantees, and safety net health care providers are deprived of resources Congress intended to provide.”

Six representatives—three from each party—who have collaborated before on behalf of 340B entities led the drive to collect signatures on Friday’s letter to Becerra: Abigail Spanberger (D-Va.), Cindy Axne (D-Iowa), Doris Matsui (D-Calif.), David McKinley (R-W.Va.), Dusty Johnson (R-S.D.), and John Katko (R-N.Y.).

In February 2021, the same group of six lawmakers got 226 House members—173 Democrats and 57 Republicans—to sign a letter to Acting HHS Secretary Norris Cochran urging immediate assessment of civil monetary penalties against the six drugmakers that at the time were the only ones imposing conditions on 340B pricing involving contract pharmacy.

Forty-five fewer House members signed Friday’s letter to Becerra than signed the February 2021 letter to Cochran—29 fewer Democrats (down 16%) and 20 fewer Republicans (down 35%).

340B covered entity lobbyists said the pharmaceutical industry worked hard to discourage representatives from signing the new letter.

Eighty percent of the representatives who signed Friday’s letter to Becerra were Democrats and 20 percent Republicans. Sixty-five percent of the House Democratic caucus (144 out of 220) and 17% of the Republican caucus (37 out of 211) signed. Four House seats currently are vacant.

Sen. Chuck Grassley (R-Iowa), a senior Republican lawmaker who is well respected by the U.S Office of Inspector General, has also been urging the HHS OIG to take action.

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