The U.S. Health Resources & Services Administration (HRSA) today referred six drug manufacturers to the U.S. Health and Human Services Department of the Office of the Inspector General (HHS OIG) regarding their refusal to offer 340B discounts to 340B covered entities that dispense discounted medications through their contract pharmacy partners. The move is a significant escalation of the current standoff between the federal government and the six manufacturers.
The companies being referred are AstraZeneca, Eli Lilly, Novartis, Novo Nordisk, United Therapeutics and Sanofi. The letters noted that HRSA had asked each of them last spring to immediately resume offering 340B pricing to the contract pharmacies, noting that they faced civil monetary penalties for refusing to do so. All of the letters – signed by HRSA’s Acting Director of the Office of Pharmacy Affairs Michelle Herzog – made note of each manufacturer’s “continued refusal to comply.”
HRSA previously warned each of the manufacturers in letters dated May 17 that their refusal to offer discounts through contract pharmacies “have resulted in overcharges and are in direct violation of the 340B statute.” HHS OIG, which has broad authority to penalize drug manufacturers and other health care entities, will have the option of initiating an investigation of the drug manufacturers and their practices.
Each of the drug manufacturers have questioned the legality of the contract pharmacy program and are suing the government to prevent enforcement of the May 17th letters. These cases are pending in various federal court systems throughout the nation. This summer, two other drug companies placed restrictions on 340B pricing in the contract pharmacy setting and they are expected to receive demand letters from HRSA shortly if they have not received them already.
If HHS OIG undertakes an investigation and concludes that the manufacturers had violated the 340B statute, they could be subject to steep civil monetary penalties. Congress and 340B advocates have been putting pressure on HRSA to step up its enforcement of the companies they believe have violated the 340B statute.