The U.S. Health Resources and Services Administration (HRSA) told drug manufacturer Celgene nearly five years ago the company “must ensure” that covered entities could buy its cancer drugs Revlimid, Pomalyst, and Thalomid at the 340B ceiling price through Celgene’s limited distribution network for the drugs, according to documents obtained by 340B Report under a Freedom of Information Act (FOIA) request.
HRSA gave the company a choice in a March 29, 2017, letter. It said, “Celgene must ensure that the 340B ceiling price is available to covered entities that wish to purchase through” one of the specialty pharmacies in its network, or it “must accept into network any covered entity or covered entity’s contract pharmacy that is willing to abide by requirements that Celgene has established.”
What happened to HRSA’s order to Celgene is unknown. A spokesperson for the hospital on whose behalf it was made said last week he was told “HRSA never followed up.”
BMS’s “Voluntary Measure”
Bristol Myers Squibb (BMS), which acquired Celgene in 2019, announced this month that “as a voluntary measure” it will let covered entities excluded from the limited distribution network pick one specialty pharmacy in the network as its contract pharmacy for 340B Revlimid, Pomalyst, and Thalomid purchases. This major change will take effect March 1. It likely will result in a flood of 340B hospitals accessing 340B pricing on these otherwise expensive products.
The limited distribution network comprises about two dozen specialty pharmacies and fewer than 250 providers. Celgene said in 2015 that it closed the network to providers in 2013 to protect patient safety and did not expect to add any others. The three myeloma drugs can cause fetal death or severe birth defects when taken by women who are pregnant or plan to become pregnant. Celgene said 340B entities were “proportionately represented” in its network. Neither Celgene nor BMS has identified the providers, however.
BMS told 340B Report for our June 2021 six-part investigation of its limited distribution network that the network “complies with the law; it was audited by the Health Resources and Services Administration (HRSA) with no adverse findings, it does not discriminate against 340B covered entities and it supports compliance with the Food and Drug Administration’s (FDA) strict Risk Evaluation and Mitigation Strategies (REMS) safety protocols for these products. To date, HRSA has not communicated any required changes in these practices to BMS. Revlimid, Pomalyst, and Thalomid are widely available to patients.”
As described in our investigation, hospitals have complained for years about BMS/Celgene’s limited distribution network for the three drugs and how the network keeps them from accessing 340B pricing on the expensive medicines—on Revlimid in particular, the most widely used of the three. BMS reported $8.2 billion in U.S. revenues on Revlimid and $2.1 billion on Pomalyst in 2020. Due to Celgene’s history of price increases on Revlimid, its 340B price would likely be at or near the $0.01 floor set under a 2017 federal regulation.
A former Celgene vice president accused the company in 2018 in a federal False Claims Act lawsuit of limiting the three drugs’ distribution to 340B hospitals to increase profits, not to protect patient safety as Celgene said. The whistleblower withdrew the suit in 2020 after the federal government declined to get involved and take over as the main plaintiff. The government has not explained why it took a pass on the case and the possibility of a multi-million or possibly more than $1 billion settlement with Celgene.
340B Hospital’s Complaint
According to HRSA’s March 2017 letter to Celgene, Aurora St. Luke’s Medical Center in Milwaukee, Wis., (referred to in the letter as Aurora Healthcare Metro Inc.) complained to HRSA that it could not buy the three drugs at or below 340B price even after contracting with Accredo and Walgreens Specialty Pharmacy, both of which were in Celgene’s limited distribution network for the drugs.
Aurora St. Luke’s “stated that the explanation given for not providing these drugs at the 340B ceiling price was that access to these drugs is restricted to a limited distribution network of specialty pharmacies,” HRSA wrote to Celgene. “The inability of this covered entity to purchase these covered outpatient drugs at the 340B price through the specialty pharmacies in the network established by Celgene seems to run counter” to the company’s 2015 public notice to covered entities that it was limiting the drug’s distribution.
HRSA asked Celgene to contact Aurora St. Luke’s about the hospital’s complaint and recommended the two sides “work together in good faith” to resolve their issues. It asked Celgene to provide an update within the next 30 days “on the outcome of those efforts.”
Four-Page Letter, Entirely Redacted
Celgene responded to HRSA on May 19, 2017. What it told HRSA is unknown. The copy of its four-page letter obtained under FOIA is almost entirely redacted. A cover letter from HRSA’s FOIA office explained that the four pages were withheld under a FOIA exemption that protects privileged or confidential trade secrets and commercial or financial information.
What happened next is a mystery.
We asked Advocate Aurora Health, the health system that includes Aurora St. Luke’s, what was Celgene’s response to the hospital’s complaint and to HRSA’s March 29, 2017, letter telling the company it had to ensure that covered entities could buy Revlimid, Pomalyst, and Thalomid at the 340B ceiling price through Celgene’s limited distribution network.
The spokesperson said only, “[I] am told HRSA never followed up.”
BMS has acknowledged our request for comment on the 2017 correspondence between Celgene and HRSA about access to 340B pricing on Revlimid, Pomalyst, and Thalomid. It has not responded as of this time. HRSA has not responded to our request for comment.
Key Questions Remain
Key remaining questions include:
- Did HRSA change or abandon its position in March 2017 that Celgene must ensure that the 340B ceiling price is available to covered entities that wish to purchase through one of the specialty pharmacies in Celgene’s limited distribution network, or must accept into network any covered entity or covered entity’s contract pharmacy that is willing to abide by requirements that Celgene has established? If it did change or abandon its position, what was the reason?
- Why did the Justice Department decline to intervene on behalf of the Celgene whistleblower in 2018?
- Why did BMS announce this month that it was voluntarily letting 340B covered entities access 340B pricing on Revlimid, Pomalyst, and Thalomid through one in-network specialty contract pharmacy location per entity, after denying the vast majority of entities access to the network pharmacies for years?
Please contact Tom Mirga at tom.mirga@340Breport.com if you have information to share on this or any other 340B program-related matter.