BREAKING: 28 State AGs—Including HHS Nominee Becerra—Want Action on Pharma 340B Pricing Denials. Also, New GAO Report on HRSA 340B Oversight. (Updated)

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28 State AGs—Including HHS Nominee Becerra—Want Action on Pharma 340B Pricing Denials. Also, New GAO Report on HRSA 340B Oversight.

UPDATE, Monday Dec. 14, 3:50 p.m. EST—California Attorney General Xavier Becerra, President-elect Biden’s choice to be the next U.S. Health and Human Services (HHS) Secretary, issued a news release this afternoon about the letter he and other state attorneys general sent today to current HHS Secretary Alex Azar about drug manufacturers’ recent denials of 340B pricing. Becerra, in his first known public statement on the 340B program since being nominated, said:

While Americans grapple with COVID-19, it is critical that we protect access to affordable care. Discounts afforded under the 340B Drug Pricing Program are more critical now than ever. They ensure that low-income and uninsured patients have access to affordable medication as they deal with the substantial impact of the pandemic. We call on HHS to hold these non-compliant drug manufacturers accountable and provide immediate relief for healthcare centers and the Americans they serve.


Twenty-eight state attorneys general—including California Attorney General Xavier Becerra (D), President-elect Biden’s nominee to be the next U.S. Health and Human Services (HHS) Secretary—today sent a letter to current HHS Secretary Alex Azar urging his department “to address drug manufacturers’ unlawful refusal to provide critical drug discounts to covered entities, such as community health centers, under the 340B Drug Pricing Program.”

“Each day that drug manufacturers violate their statutory obligations, vulnerable patients and their healthcare centers are deprived of the essential healthcare resources that Congress intended to provide,” the attorneys general wrote. “Drug manufacturers are, without justification, flouting discounted pricing requirements for low-income patients and/or unreasonably conditioning 340B pricing on data demands, depriving such patients of affordable medications to the detriment of the health centers and hospitals that serve these vulnerable communities. During a national public health crisis, these actions are especially egregious and cannot be ignored.”

Connecticut Attorney General William Tong (D) co-led the bipartisan coalition of state law officials with Becerra, Kansas Attorney General Derek Schmidt (R), and Nebraska Attorney General Doug Peterson (R). The other states represented are Colorado, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia.

Tong’s office issued a news release about today’s action. In October, Tong sent letters to drug manufacturers Eli Lilly and Co., AstraZeneca, Sanofi, Novartis, and Merck demanding they cease recent unilateral actions restricting access to 340B pricing for drugs dispensed by contract pharmacies, or cease unreasonable demands for contract pharmacy claims data.

The attorneys’ general letter to Azar stems from several drug manufacturers’ decisions to deny 340B pricing on their products shipped to contract pharmacies. Hospitals, community health centers, and HIV/AIDS clinics have sued the U.S. Health and Human Services Department (HHS) over its lack of action about the 340B pricing denials.

GAO Report

Today’s letter to Azar was released shortly after the U.S. Government Accountability Office (GAO) separately reported this morning that, as of the end of September, the U.S. Health Resources and Services Administration (HRSA) had issued just 23 findings of “duplicate discount-related errors at contract pharmacies,” and just 40 findings of “failure to oversee 340B program compliance at contract pharmacies,” in the 1,242 covered entity 340B program compliance audits it had conducted and finalized during the past eight years.

Overall, GAO found that HRSA has 1,536 340B program non-compliance findings in its covered entity audits it had conducted since it began auditing 340B health care providers in fiscal year 2012. They include more than 400 findings that prescribed drugs “may have been subject” to both the 340B price and a Medicaid rebate, more that 500 findings of diversion of 340B drugs to ineligible patients, and more than 500 eligibility-related findings, the vast majority of those related to incorrect information entered in 340B OPAIS, HRSA’s 340B program database.

The drug industry and its supporters in Congress likely will cite the report as further evidence that the 340B program should be changed to reduce hospital participation, to rein in contract pharmacy, and to reduce the number of prescriptions eligible for 340B pricing. Covered entities and their congressional supporters likely will cite the relatively small number of covered entity non-compliance findings specifically related to contract pharmacy as evidence that drug manufacturers’ actions on 340B contract pharmacy are not supported by facts.

U.S. Senate Health, Education, Labor, and Pensions Committee Chair Lamar Alexander (R-Tenn.), House Energy & Commerce (E&C) Committee ranking Republican Greg Walden (Ore.), E&C Health Subcommittee ranking Republican Michael Burgess (Texas), and E&C Oversight & Investigations Subcommittee ranking Republican Bret Guthrie (Kan.) asked GAO for the report.

The GAO made no recommendations. The Republican requestors asked GAO to look only at HRSA’s efforts to oversee covered entity compliance with 340B program requirements, not drug manufacturer compliance as well.

In the report’s highlights section, GAO said:

HRSA officials told GAO that, beginning in fall 2019, the agency started issuing findings only when audit information presents a clear and direct violation of the requirements outlined in the 340B Program statute. HRSA officials explained that guidance, which is used to interpret provisions of the 340B statute for the purposes of promoting program compliance among covered entities, does not provide the agency with appropriate enforcement capability. For example, HRSA officials reported that there were instances among fiscal year 2019 audits in which the agency did not issue findings for a failure to comply with guidance related to contract pharmacies in part because the 340B statute does not address contract pharmacy use and, therefore, there may not have been a clear statutory violation.

These are developing stories. We will have more on these developments in tomorrow’s issue or sooner if breaking news occurs.

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