Screenshot of complaint AHF v. Apexus
AIDS Healthcare Foundation says in a lawsuit that Apexus, the 340B prime vendor, fails and refuses to negotiate sub-ceiling 340B discounts on HIV/AIDS medicines.

340B Prime Vendor Sued for Allegedly Not Negotiating Sub-Ceiling Pricing on HIV/AIDS Drugs

AIDS Healthcare Foundation sued Apexus, the federally contracted 340B prime vendor, on Friday for allegedly failing and refusing to negotiate sub-ceiling 340B discounts on HIV/AIDS prescription drugs pursuant to its agreement with the government.

An Apexus spokesperson yesterday said it does not comment on pending litigation but provided the following:

“As the [U.S. Health Resources and Services Administration] designated Prime Vendor for the 340B Drug Pricing Program, we serve all 340B participants equitably by negotiating pharmaceutical contracts with traditional and specialty manufacturers and distributors to obtain advantageous drug pricing for all covered entities. Through Apexus, all participants have access to prime vendor discounts, value-added products and services as well as market competitive payment terms.”

HRSA, the other party to the prime vendor contract, yesterday said it had no comment on the lawsuit. AHF did not name HRSA as a defendant.

AHF, the nation’s largest provider of HIV/AIDS medical care, said in a Nov. 18 court filing that  Apexus’ alleged inaction has cost it millions of dollars and harms its ability to deliver safety-net healthcare. It asked the Los Angeles-based U.S. District Court for the Central District of California to order Apexus to restore to AHF the money it said it has lost, to award AHF compensatory damages, and to order Apexus to fulfill is contractual obligations “fairly, in good faith, and without discrimination.”

“AHF brought this civil action to recover the many millions of dollars lost due to Apexus’ failure to conduct timely and successful price negotiations on our behalf in violation of the exclusive contracts Apexus entered into with HRSA,” AHF attorney David Gruen said in a news release about the case. “They have one job, and they won’t do it. In a time of rising healthcare costs, and rural hospitals closing in record numbers, Apexus’ unlawful inaction is hurting nonprofits and the patients they serve.”

Apexus, a subsidiary of health system group purchasing and services company Vizient, has been the 340B prime vendor since 2004 under a series of competitively bid agreements with HRSA. The federal agency announced in February 2020 that it awarded Apexus a new five-year agreement.

Apexus receives no federal payment under the agreement. It covers its costs and earns revenue by charging wholesalers and drug manufacturers administrative fees. Separately from its role as the 340B prime vendor, Apexus earns revenue through its Acentrus health system specialty pharmacy service, its advanced 340B operations certificate program, and its manufacturer-to-covered-entity and covered-entity-to-manufacturer 340B refund services.

AHF said in its legal complaint that Vizient, and thus Apexus, “has an interest in favoring its Section 340B eligible hospital clients in negotiating sub-ceiling 340B pricing on the drugs most used by those clients, rather than HIV/AIDS drugs.” It said, “Apexus’ acts and/or omissions in unfairly negotiating sub-ceiling pricing have been undertaken to expressly benefit” Vizient.

“Apexus has failed to directly provide price negotiating services in accordance with standard business practices when it comes to HIV/AIDS drugs, and has thus failed to provide all member entities advantageous sub-ceiling prices,” AHF said in the suit. “Apexus has demonstrated it lacks the capacity and/or the desire to conduct timely and successful price negotiations with manufacturers of HIV/AIDS drugs, and upon information and belief, has no good faith plan to competently negotiate sub-ceiling pricing on HIV/AIDS drugs for covered member entities.”

AHF accuses Apexus of breach of contract in violation of California state law; dealing with AHF unfairly and in bad faith; and engaging in unlawful, unfair, or fraudulent business practices.

The lawsuit against Apexus, HRSA’s main 340B program contractor, comes on top of several drug company lawsuits against HRSA over its 340B contract pharmacy requirements and a federally qualified health center’s suit against HRSA challenging the agency’s 340B patient definition.

The new U.S. House Republican majority may hold hearings on 340B. All 340B-related litigation could come up in such hearings.

AHF and Apexus both are 340B Report sponsors.

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