"Today is the day we’ve been waiting for," RWC-340B President Shannon Stephenson said about HRSA's 340B contract cease and desist letters yesterday to six drug manufacturers.

Drug Makers Defensive, Providers Thrilled About HRSA’s 340B Contract Pharmacy Letters

Drug manufacturers yesterday defended the legality of their restrictions on 340B contract pharmacy, in the wake of cease and desist letters from the U.S. Health Resources and Services Administration (HRSA).

Groups and individuals representing 340B covered entities, meanwhile, praised HRSA for taking a stand against the six drug makers—AstraZeneca, Eli Lilly, Novartis, Novo Nordisk, Sanofi, and United Therapeutics.

(Click here for more about the letters’ contents and the events leading up to them.)

Drug Industry Reactions

AstraZeneca

“AstraZeneca is strongly committed to the 340B Program and to ensuring that any patient prescribed an AstraZeneca product has access to that medicine. AstraZeneca’s products have been—and will continue to be—available to all covered entities at or below applicable statutory ceiling prices through either their own on-site dispensing pharmacy or a designated contract pharmacy. AstraZeneca’s approach to contract pharmacy arrangements fully complies with all operative requirements and continues to support the mission of the program to provide a healthcare safety net for the most vulnerable patients in our country.”

Eli Lilly

“Lilly can confirm that we are in the process of reviewing HRSA Acting Administrator Espinosa’s May 17 letter. Lilly has continued to offer 340B ceiling prices to all covered entities, and believes that patients—not large, for-profit contract pharmacies—should benefit from those 340B drug discounts.”

Novo Nordisk

“Novo Nordisk remains committed to ensuring vulnerable patients continue to have access to care, including Novo Nordisk medicines, under the 340B program. It’s important to remember that covered entities still have the ability to purchase our covered outpatient drugs at or below the ceiling price. Instead, we no longer accept covered entities’ requests that Novo Nordisk transfer its covered outpatient drugs (or cause its covered outpatient drugs to be transferred) to an unlimited number of commercial contract pharmacies servicing hospitals. Grantee organizations, such as Community Health Centers and Federally Qualified Health Centers, among others, are exempt from this policy. This change is consistent with the 340B statute. As the issue is currently in litigation, we can’t comment further.”

Pharmaceutical Research and Manufacturers of America

“We continue to have concerns with the increasing number and role of contract pharmacies in the 340B program and the lack of evidence that their participation in 340B has improved patients’ access to medicines. The fact is that contract pharmacies were never authorized by Congress in statute, nor does the 340B statute require manufacturers to ship 340B medicines to contract pharmacies. Contract pharmacies only appear in sub-regulatory guidance, which cannot impose any binding requirements on the public and lack the force and effect of law. Past reports from independent government watchdogs have shown there is little to no oversight of contract pharmacies and no way of ensuring covered entities are using the program to the benefit of America’s vulnerable patients. That’s why we are advocating for meaningful improvements to the program that ensure patients directly benefit from the tens of billions of dollars in discounts that manufacturers provide each year.”

Sanofi

“Sanofi supports the 340B Program and its core objective of increasing access to outpatient drugs for uninsured and vulnerable populations and we remain committed to strengthening this mission. However, waste and abuse in the form of duplicate discounts—when manufacturers pay Medicaid rebates on 340B-priced drugs—has become increasingly prevalent in recent years with over 30% of Health Resources and Services Administration (HRSA) audits of covered entities in 2018-2019 finding Medicaid duplicate discounting.”

“Sanofi launched an integrity initiative effective October 1, 2020, under which Sanofi collects limited, de-identified, claims data on 340B-priced drugs dispensed by contract pharmacies. If a covered entity provides these data necessary to identify and prevent waste and abuse then nothing will change. If a covered entity chooses not to provide the limited data, it will remain able to purchase 340B-priced drugs for shipment to its own facilities, including all community health centers with in-house pharmacies. Where a 340B covered entity does not have an in-house pharmacy, it may designate one contract pharmacy to which 340B-priced drugs will be shipped, regardless of whether the covered entity provides the limited data requested. We continue to believe this integrity initiative complies with the 340B statute. Sadly, and contrary to recent public statements by other program stakeholders, patients do not always benefit from contract pharmacy arrangements. Often patients receive no discount at all on contract pharmacy-dispensed drugs, and 340B covered entities’ own in-house pharmacies are much more likely to provide discounts to patients than pharmacy chains.”

340B Provider Reactions

Bruce Siegel (President and CEO of America’s Essential Hospitals)

“Essential hospitals praise the Department of Health and Human Services for its decisive action today to hold drug manufacturers accountable for their unlawful limits on access to 340B Drug Pricing Program discounts.”

“In letters to manufacturers, HHS makes a clear and forceful statement about the manufacturers’ illegal actions. We thank HHS Secretary Xavier Becerra, Health Resources and Services Administration (HRSA) Acting Administrator Diana Espinosa, and HRSA Office of Pharmacy Affairs Director Krista Pedley for protecting access to affordable drugs.”

“Essential hospitals serve people who face significant social and financial barriers to care, and they depend on 340B savings to meet their safety net mission. The 340B program operates as Congress intended, making affordable drugs available to low-income patients and creating savings hospitals use to reach underserved communities. Essential hospitals extend their reach into these communities by partnering with pharmacies to make 340B drugs more accessible.”

“We look forward to drug manufacturers’ prompt compliance with the HHS letters by restoring full access to 340B savings through contract pharmacies and refunding overcharges made under policies that violate the 340B law.”

Colleen Meiman (national policy advisor to state and regional health center associations)

“Community Health Centers are enormously relieved that HHS has directly informed the six manufacturers that they don’t get to pick and choose when they will provide 340B prices. It’s been close to a year that CHCs and their patients have been dealing with the fallout of these manufacturers’ unilateral decisions to violate the statute—while simultaneously serving on front lines of the pandemic. We hope these manufacturers will immediately resume appropriate shipments of 340B-priced drugs, rather prolonging the damage through further litigation. We also hope that CHCs will be made whole not only for overcharges, but also for the extensive efforts involved in minimizing the fall-out of these policies on patients and staff. This fall-out has included the need to switch patients to different drugs, different pharmacies, and even different CHCs to ensure that they could continue accessing affordable medications despite manufacturers’ restrictions on 340B pricing.”

Maureen Testoni (President and CEO of 340B Health)

“Today’s action by the Health Resources & Services Administration is an emphatic defense of the 340B drug pricing program and the thousands of safety-net hospitals, health centers, and clinics serving millions of Americans with low incomes and those in rural communities. As we have been saying for nearly a year, the 340B statute requires drug manufacturers participating in the program to provide discounted prices to support the care of patients. The denial of these discounts has damaged providers and patients and must stop. It is vital that these companies immediately begin to repay the millions of dollars owed to these providers.”

“We thank Health and Human Services Secretary Xavier Becerra, Acting HRSA Administrator Diana Espinosa, and HRSA Office of Pharmacy Affairs (OPA) Director Krista Pedley for their leadership and commitment to the safety net and the patients it serves.”

“The 340B community has been united in its opposition to these dangerous actions and must be applauded for its months of advocacy. We also thank the members of Congress, governors, state attorneys general, and other leaders for their support. 340B is, and always has been, a bipartisan program designed to support the safety net so that patients who might otherwise fall through the cracks receive the care and compassion they need and deserve.”

National Association of Community Health Centers

“We are deeply grateful that Health Resources and Services Administration is stepping up pressure on these six pharmaceutical companies who are unlawfully refusing to provide discounts to 340B covered entities. NACHC has called for action on this issue, using every legal and policy means available for past year. These violations have tied the hands of Community Health Centers as they battled on the frontlines of a deadly pandemic. While it remains to be seen how drug manufacturers will react in the long run, today at least, there is a glimmer of hope that a legal boundary has been drawn.”

Rick Pollack (President and CEO of American Hospital Association)

“We commend the Department of Health and Human Services’ (HHS) Health Resources and Services Administration (HRSA) for responding to the deep concerns of 340B hospitals and the AHA by taking the decisive action we’ve called for against drug companies that skirt the law by limiting the distribution of certain 340B drugs through community pharmacies. These concerns led us to file a lawsuit late last year to require HHS to stop these illegal actions from drug companies and protect vulnerable patients and communities and to participate in other cases challenging the program. We continue to urge HRSA to ensure that the drug companies that denied appropriate discounts since these illegal practices began last year make the impacted hospitals whole for the benefit of the vulnerable communities they serve.”

“In an era of skyrocketing drug prices, the 340B program plays a critical role in helping eligible hospitals provide a wide range of comprehensive services and low-cost drugs to vulnerable patients and communities, many of which have been the hardest hit by the COVID-19 pandemic.”

Shannon Stephenson (President of Ryan White Clinics for 340B Access, and CEO of Cempa Community Care)

“Today is the day we’ve been waiting for. We are thrilled that the Administration heard our pleas and recognized that these manufacturers can’t simply make up the rules for the 340B program to line their pockets. These manufacturers should be ashamed to attack safety net providers while we are fighting not only the HIV/AIDS epidemic but also the COVID-19 pandemic.”

Tom Kraus (Vice President of Government Relations of American Society of Hospital Pharmacists)

“HRSA’s aggressive action is necessary to stem manufacturer efforts to illegally undercut the 340B program. HRSA’s clear directive to manufacturers to comply with the program or face financial penalties is a major step toward safeguarding the 340B program and the vulnerable populations it benefits.”

William von Oehsen (principal in Powers law firm and counsel to Ryan White Clinics for 340B Access)

“The Administration’s announcement today is welcome and greatly appreciated. If the companies don’t resume selling contract pharmacy drugs at 340B prices, the Administration must impose Civil Monetary Penalties on them immediately. The manufacturers should also make repayment on all drugs for which they unlawfully withheld 340B pricing, dating back to when they first instituted those harmful policies.”

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