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BREAKING: Hospitals and Other Providers Ask HHS to Halt Lilly and Merck’s Clampdowns on 340B; Companies Defend Their Positions

Hospitals and Other Providers Ask HHS to Halt Lilly and Merck’s Clampdowns on 340B; Companies Defend Their Positions

The U.S. Health and Human Services Department (HHS) should halt drug manufacturers Eli Lilly and Merck’s recent separate actions to curtail or investigate 340B drug discounts on products dispensed to patients by covered entities’ contract pharmacies, an umbrella group for associations that represent 340B covered entities says.

“It is in the public interest that the [Trump] Administration act swiftly and firmly to stop these actions,” the 340B Coalition said in a July 16 letter to HHS Secretary Alex Azar. The coalition’s annual summer meeting, being held virtually for the first time due to the COVID-19 pandemic, begins July 20.

The coalition told HHS that letting Lilly and Merck’s actions stand “will set a dangerous a negative precedent.” Halting them “will be an important part” of the administration’s efforts to lower drug prices, it said.

Lilly told 340B Report, “We stand by our previously stated position that the statute requires manufacturers to provide 340B ceiling prices to covered entities, but that sub-regulatory guidance, after our own review and discussions with [the U.S. Health Resources and Services Administration] HRSA, regarding contract pharmacies is inconsistent with the statute and not legally binding.”

Merck said while it “strongly supports” the 340B program, it “has grown well beyond its intended purpose and requires greater transparency, regulatory oversight, and accountability to ensure that it continues to effectively serve patients as intended and remains sustainable over the long-term.”

“Manufacturers continue to pay Medicaid rebates to states on prescriptions filled with 340B program-purchased drugs despite this being statutorily prohibited,” the company said. “To help address this problem, Merck seeks to work collaboratively with 340B-covered entities to access additional pharmacy claims data.”

340B Report also reached out to HHS for comment.

The 340B Coalition said Lilly’s decision to stop distribution effective July 1 of three formulations of its drug Cialis to 340B contract pharmacies and limit distribution to covered entities and their child sites “is a clear violation of the law, and HHS is compelled to take action to stop it from being carried out.” The coalition said nothing in the 340B statute requires covered entities to ship drugs bought at lower 340B prices “only to locations that the manufacturer has approved.”

As 340B Report first reported, Lilly has left open the possibility of excluding 340B prices on other products shipped to contract pharmacies. “If this is allowed to stand, there would be nothing preventing Lilly from extending this policy to hundreds of very expensive drugs that qualify for 340B pricing, including critical drugs like Humalog,” the coalition said.

The coalition said Merck’s decision to ask covered entities to voluntarily supply Merck’s vendor 340B ESP with 340B contract pharmacy claims data every two weeks “goes well beyond” what manufacturers normally ask of covered entities to address compliance concerns. Merck’s statement that uncooperative entities could face less collaborative and substantially more burdensome action “is not supported under the 340B statute,” it said.

The coalition said Merck’s data collection request would be “extremely burdensome” for covered entities. It added, “the data sought by Merck to prevent Medicare Part D and commercial ‘duplicate discounts,’ neither of which is prohibited under the 340B statute, will only be used to benefit the company’s financial bottom line, not 340B compliance.”

The coalition said, “under federal rules,” if Merck has concerns about a particular entity, it can make a targeted good-faith inquiry and, if dissatisfied, request to audit the entity. It said HHS should stop Merck from setting up barriers to 340B discounts by threatening uncooperative entities with harsher consequences.

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