BREAKING: Florida Medicaid Asks Rx Manufacturer to Suspend “Broad Brush” 340B Pricing Restrictions, Will Other States Follow?

Florida Medicaid Asks Rx Manufacturer to Suspend “Broad Brush” 340B Pricing Restrictions, Will Other States Follow?

Florida’s Medicaid director has asked drug manufacturer Eli Lilly and Co. and reportedly other manufacturers to suspend its restrictions on 340B pricing on its products shipped to covered entities’ contract pharmacies, saying Lilly’s actions “threaten to negatively impact the health of Florida residents.”

Beth Kidder, Deputy Secretary for Medicaid in Florida’s Agency for Health Care Administration, made the request in a Nov. 23 letter to Lilly CEO David Ricks. Lilly is one of several drug manufacturers that are denying or imposing conditions on 340B pricing on products dispensed by contract pharmacies. AstraZeneca, Sanofi, Novartis, United Therapeutics, and Novo Nordisk are the others. 340B Report has been told that Kidder sent similar letters to some or all of those companies and we are working to confirm this.

Kidder’s letter to Lilly is the first known example of a state Medicaid agency intervening in the growing dispute over 340B contract pharmacy involving manufacturers, entities, federal regulators, and federal courts. Medicaid is a significant player in the U.S. drug market and could potentially play a role in sanctioning drug makers or making formulary decisions that would reduce the state’s costs. That will be challenging in the case of insulin since all three major manufacturers of insulin have stopped offering 340B pricing at contract pharmacies to some extent. 

Medicaid programs are quite concerned about the precarious financial condition of its state’s health care providers. This is particularly true of 340B covered entities since they are taking care of a disproportionate share of low-income and uninsured patients at the time of the COVID-19 pandemic. Kidder is the current President of the National Association of Medicaid Directors (NAMD). It is unclear if other state Medicaid programs have already contacted the drug manufacturers or will follow Florida’s lead.

In October, Connecticut Attorney General William Tong (D) sent letters to Lilly, AstraZeneca, Sanofi, Novartis, and drug manufacturer Merck demanding that they cease imposing restrictions or conditions on 340B covered entities access to 340B pricing on drugs shipped to contract pharmacies, calling the actions “unlawful.” (Merck has said that entities that fail to provide it with contract pharmacy claims data could face unspecified adverse actions.) It is uncertain whether Connecticut will be able take any concrete steps to sanction the manufacturers or prohibit their actions.

Kidder told Lilly its and other manufacturers’ 340B actions are “a troubling development for Florida’s health care safety net providers,” which she said rely on 340B savings “to support health care services and to fund patient assistance programs that make prescription drugs more affordable.”

Kidder said that, while she understands Lilly’s concern for 340B program integrity, such concerns “are best tackled directly and specifically, rather than through broad brush approaches.” She said “any program integrity action needs to be carefully assessed to ensure it does not inappropriately restrict access to care.”

Kidder asked Lilly to drop its restrictions “and instead work directly” with covered entities to address the company’s concerns.

HIV/AIDS clinics and community health centers have sued the U.S. Health and Human Services Department (HHS) over the manufacturers actions. Lilly and Sanofi have separately asked a federal district court to let them participate in the HIV/AIDS clinics case as defendants. A hospital group reportedly might file its own lawsuit soon.

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