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Exclusive: HHS OIG Declines to Penalize Drug Manufacturers at This Time Over 340B Contract Pharmacy Restrictions

The U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) has informed a bipartisan group of House lawmakers that the enforcement agency does not plan to impose civil monetary penalties against the drug makers that have placed restrictions on 340B discounts in the contract pharmacy setting at this time, 340B Report has learned.

The decision occurs despite significant concern from hundreds of lawmakers from both parties who have been pushing HHS Secretary Xavier Becerra, HHS OIG Inspector General Christi Grimm and Health Resources and Services Administration Administrator Carole Johnson to take more aggressive steps against the drug companies.  The latest Congressional request came just this week in a letter from Senators Joe Manchin (D-WV) and Mike Braun (R-Ind.) to HHS leadership.

The HHS OIG, which would have to show that drug manufacturers are knowingly and intentionally overcharging 340B providers, told the lawmakers that it wants to see how the federal appeals court cases play out before it decides whether to act, 340B Report has learned.  340B Report reached out to the office of one of the leading House members who has been imploring HHS to take action but the office did not respond to our inquiries regarding the matter.

Oral arguments in two of the three federal appellate courts are scheduled to take place in October.  The third case, involving 340B contract pharmacy lawsuits filed by Novo Nordisk, Sanofi, and AstraZeneca against the government, has been tentatively scheduled for November 15 in Philadelphia, PA.

The HHS OIG apparently does not feel it has a strong enough case to start fining the manufacturers or is worried that the agency will upset the judges that are reviewing the legality of the drug manufacturer restrictions.  Secretary Becerra has recently stepped up his call for Congress to pass legislation to give the agency more power to enforce the 340B law. 

In a September 1 response to the six Congressional leaders of a bipartisan letter with 181 signatures requesting more aggressive action, Becerra said:  “While there is ongoing litigation around this issue, HRSA has and will continue to exercise its available authority under the 340B statute to hold manufacturers accountable for compliance.”

“At the same time,” he said, “the President’s budget includes a proposal to ensure that HRSA has broad rulemaking authority to support the 340B program as well as an increase of $7 million to expand HRSA’s program integrity efforts, including increased audit and oversight efforts.” 

Becerra added: “Legislative action is needed to strengthen the tools that the agency has to ensure the accountability and oversight that we all believe is necessary here.”

More details on the matter can be found in 340B Report Publisher and CEO Ted Slafsky’s monthly column just published in Omnicell’s blog.

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