United Therapeutics’ denials of and restrictions on 340B pricing involving contract pharmacies are illegal and jeopardize patient care, six hospital groups have told a federal district judge.

Hospital Groups Back Feds in United Therapeutics 340B Contract Pharmacy Case

Drug manufacturer United Therapeutics’ (UT) denials of and restrictions on 340B drug discounts when covered entities use contract pharmacies are illegal and jeopardize patient care, six hospital groups have told a federal district judge in Washington, D.C.

The groups—American Hospital Association, 340B Health, America’s Essential Hospitals, Association of American Medical Colleges, Children’s Hospital Association, and American Society of Health-System Pharmacists—urged U.S. District Judge Dabney Friedrich in an Aug. 10 “friend of the court” brief to reject UT’s argument that the 340B statute does not require manufacturers to offer 340B discounts when drugs are dispensed by contract pharmacies.

Friedrich is letting the hospital groups participate in an advisory role in UT’s lawsuit against the federal government. The U.S. Health and Human Services Department (HHS) told UT and five other companies on May 17 that their 340B actions are illegal and result in overcharges that must be repaid.

On Nov. 20 last year, UT stopped providing 340B discounts to entities on its products shipped to contract pharmacies, except if an entity used a pharmacy for “a valid 340B purchase” of a UT product during the first three quarters of 2020. In these cases, the discounts would continue.

This April, UT announced that, starting May 13, entities would have to begin giving a vendor, 340B ESP, their 340B contract pharmacy claims data to get 340B pricing when they use contract pharmacies. On May 11, UT pushed back the effective date to next week Wednesday, Sept. 1.

UT sued HHS and its Health Resources and Services Administration (HRSA) on June 23 over HRSA’s May letter telling UT it was violating the 340B statute and needed to stop its contract pharmacy policy immediately.

UT is arguing in court that HRSA’s position contravenes the 340B statute, has no valid legal or factual basis, and is arbitrary and capricious.

In their friend of the court brief, the six hospital groups say the 340B law’s plain language requires manufacturers to provide 340B discounts regardless of how they are dispensed. HRSA’s May 17 violation letter to UT “represents HHS’s longstanding policy on contract pharmacies,” the groups say. The statutory prohibitions on diversion and duplicate discounts do not support UT’s actions, the groups say. Nor does the 340B statute let manufacturers impose conditions on 340B discounts, such as access to claims data.

In an attachment to their brief, the hospital groups said 60% of 340B hospitals surveyed say reduction or elimination of 340B discounts on drugs dispensed through contract pharmacies “could lead the hospital to close.” Ninety-four percent said patient care services would be harmed, 86% said uncompensated and unreimbursed care would suffer, 81% said services in underserved areas would be harmed, and 73% said programs to serve vulnerable patients would be affected. The data come from a 340B Health survey of its members last summer.

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