Biopharmaceutical company Amgen is ending voluntary 340B pricing on orphan drugs for certain 340B hospital covered entities effective Jan. 1. | Source: Shutterstock
Amgen Ending 340B-Like Price Reductions on Orphan Drugs on Jan. 1 (Updated)
UPDATE Wednesday Dec. 9, 2020, 4:30 p.m. EST—An Amgen spokesperson provided the following policy clarification late this afternoon:
Amgen is clarifying and confirming that children’s hospitals will not be impacted by the change in policy regarding voluntary discounts to certain ACA-expansion entities. Any children’s hospitals that erroneously received a letter will be receiving a clarifying communication from Amgen.
Biopharmaceutical manufacturer Amgen has decided, effective Jan. 1, to end voluntary 340B pricing on orphan-designated drugs for some 340B hospital covered entities, 340B Report has learned.
The U.S. Health Resources and Services Administration (HRSA) told 340B Report this morning, “HRSA has not received information from Amgen regarding this policy. We have no comment.”
Amgen said children’s hospitals are among those that will no longer get voluntary, “340B like” price reductions on orphan drugs. This raises questions, because children’s hospitals are statutorily entitled to 340B pricing on such drugs. The four other hospital types affected—free-standing cancer hospitals, critical access hospitals (CAHs), sole community hospitals (SCHs), and rural referral centers (RRCs), are precluded from getting 340B discounts on orphan drugs. Amgen and other manufacturers have been extending 340B prices on orphan drugs voluntarily to these four types of 340B hospitals.
It is unclear if Amgen’s inclusion of children’s hospitals under its new policy on voluntary 340B price reductions was inadvertent or intentional.
Rural hospital consultants say that, in recent days, at least one CAH and one SCH received an announcement from Amgen stating that, consistent with U.S. Health Resources and Services Administration (HRSA) guidance, beginning New Year’s Day, the company “will no longer offer voluntary ‘340B like’ discounts on Amgen orphan designated drugs” to covered entities described in section (a), paragraph (4) subparagraphs (M-O) of the 340B statute. Those entities are:
Children’s hospitals (subparagraph M)
Free-standing cancer hospitals (subparagraph M)
Critical access hospitals (subparagraph N)
Rural referral centers (subparagraph O)
Sole community hospitals (subparagraph O)
CAHs, SCHs, RRCs, and free-standing cancer hospitals gained eligibility for 340B under the Affordable Care Act (ACA) in March 2010. A budget reconciliation bill passed in tandem with the ACA said these types of newly eligible 340B hospitals did not qualify for 340B pricing for drugs designated for the treatment of orphan diseases or conditions.
Children’s hospitals separately gained eligibility for 340B under a 2005 law. HRSA guidelines implementing their inclusion took effect Sept. 1, 2009. Children’s hospitals were denied 340B pricing on orphan drugs under the ACA for a few months in 2010. But Congress passed a bill late that same year restoring their eligibility, saying that lawmakers never intended for them to lose eligibility. Children’s hospitals have been statutorily entitled to 340B pricing on orphan drugs ever since.
Orphan drugs are among the most expensive pharmaceutical products. Rural and free-standing cancer hospitals’ inability to buy them at 340B prices has been a major financial hardship, rural health and hospital groups say—especially for rural hospitals, which collectively were under extreme financial duress even before the COVID-19 pandemic began. Bills have been introduced in the U.S. House to give these hospital access to 340B pricing on orphan drugs, but none of them have come close to being enacted.
The National Rural Health Association (NRHA) said this morning it “is troubled by the continued, unwarranted attacks by large pharmaceutical manufacturers, like Amgen, on the 340B Drug Pricing Program.”
“The 340B Drug Pricing Program is incredibly important for rural providers, and frankly has been a stabilizing force amidst the ongoing COVID-19 pandemic,” NRHA said. “At this juncture, the unjustified attacks and instability of the program may devastate rural providers. NRHA continues to call on the Department of Health and Human Services to protect this critical lifeline program.”
Amgen’s action comes against the backdrop of drug manufacturers’ Eli Lilly and Co., AstraZeneca, Sanofi, Novartis, United Therapeutics, and Novo Nordisk’s denials of 340B pricing on their products shipped to contract pharmacies.
Amgen told 340B Report this afternoon that it “is not adopting a policy regarding contract pharmacies at this time.”
The company said it decided to cease voluntary 340B pricing on orphan drugs for affected hospitals, which it began during the second quarter of 2016, “as part of a regular review.”
The Affordable Care Act (ACA) expanded 340B eligibility to additional categories of hospitals: Freestanding cancer hospitals, sole community hospitals, rural referral centers, critical access hospitals, and children’s hospitals. For these entities the term “covered outpatient drug” doesn’t include a drug designated by the Secretary under section 526 of the Federal Food, Drug and Cosmetic Act for a rare disease or condition. Therefore, manufacturers are not required to provide these covered entities’ orphan drugs under the terms of the 340B Program. A manufacturer may, at its sole discretion, offer discounts on orphan drugs to these hospitals.
This change does not impact grantees and Disproportionate Share Hospitals that participate in the 340B program.
Amgen also said:
The Health Resources & Services Administration (HRSA) has made clear that the 340B program does not include discounts for orphan designated drugs purchased by ACA-expansion entities, although manufacturers are free to offer discounts voluntarily outside of the 340B program. Amgen has been providing “340B-like” discounts to these entities on our orphan-designated products on a voluntary basis but will end these voluntary discounts effective January 1, 2021.
We asked Amgen for its position on the current state of the 340B program. It said:
We are interested in improving affordability in both the retail market and hospital market. 340B hospitals often purchase medicines at a heavily discounted price. 340B hospitals, however, are not required to make low-income patients aware of the discounts they receive and are under no obligation to pass along 340B savings to uninsured or low-income patients. Hospitals can charge uninsured patients the full list price for 340B discounted medicines. Moreover, hospitals often significantly mark up the cost of our medicines purchased through the 340B program. We are keenly aware of significant price mark-ups applied to drugs purchased through 340B. Because of this type of dynamic, where hospitals are marking up the price of our medicines at high levels, Amgen is supportive of policy changes that would include more transparency in the program and that would require 340B hospitals to pass discounts onto a 340B patient. We would support the requirement that hospitals have a sliding fee scale, similar to other program grantees, that requires hospitals to share the 340B discounts with uninsured and low-income patients.
We have reached out to the Children’s Hospital Association and other 340B stakeholders regarding Amgen’s action. We will report more on this developing story soon.