Drug manufacturer United Therapeutics on Monday launched phase two of its restrictions on 340B contract pharmacy, telling covered entities what they must do to keep getting 340B pricing from the company on its drugs when dispensed by the entities’ retail pharmacy partners.
The company said in an April 12 letter and FAQ to a covered entity that, starting May 13, entities must upload their 340B contract pharmacy claims data to its vendor 340B ESP twice monthly. Those failing to do so “will no longer be eligible to place Bill To / Ship To replenishment orders for United Therapeutics products dispensed through a contract pharmacy.”
“All 340B covered entities will continue to be able to purchase United Therapeutics products at the 340B price when shipped to an address registered on the 340B covered entity database as a parent or child site,” the company said.
The company warned covered entities in November that a claims submission requirement was coming in May. In November, it announced a policy of accepting 340B contract pharmacy orders only if a covered entity used the pharmacy “for a valid 340B purchase” of a company covered outpatient drug “during the first three full quarters” of 2020.
United Therapeutics said it will use the contract pharmacy claims data that 340 ESP collects on its behalf “to identify and resolve duplicate Medicaid, Medicare Part D and commercial rebates.”
Covered entities are statutorily required to prevent duplication of 340B discounts and Medicaid fee-for-service rebates. But entities are under no such requirement to prevent duplicate 340B discounts in Medicaid managed care, Medicare Part D, or commercial rebates.
United Therapeutics appeared to acknowledge as much, at least partially, in the letter. “In practice, manufacturers continue to pay Medicaid rebates to states on prescriptions filled with 340B purchased drugs despite this being statutorily prohibited,” it said. “Similarly, manufacturers pay ineligible rebates on Medicare Part D and commercial utilization due to the lack of transparency in the 340B program.”
United Therapeutics said it “strongly supports” the 340B program but “serious program integrity and transparency challenges must be addressed for the 340B program to continue its mission.”
Drugmakers Sanofi and Novartis last year imposed similar 340B contract pharmacy claims submission requirements on covered entities, as a condition for continuing to get 340B pricing on contract pharmacy drugs. They also are using 340B ESP as their agent. Drug manufacturer Merck asks entities to voluntarily upload their contract pharmacy claims data to 340B ESP. In a letter to entities last month, Merck contrasted its “collaborative” approach with others that would be more burdensome and less streamlined, such as “undertaking individual manufacturer audits of each of the thousands of covered entities participating in the 340B program and their numerous contract pharmacy relationships.”
Hospital groups in December sued the U.S. Health and Human Services Department (HHS) to force it to compel United Therapeutics, Sanofi, Novartis, Eli Lilly, AstraZeneca, and Novo Nordisk to sell their drugs at 340B prices when the drugs are dispensed through contract pharmacies. A federal district judge dismissed their suit in February on procedural grounds, saying it would be premature to move forward until HHS has adjudicated the matter through the 340B program’s administrative dispute resolution (ADR) process.
Lilly, AstraZeneca, Sanofi, and Novo Nordisk are suing HHS to block it from taking action against them. In March, a federal district judge temporarily shielded Lilly from the 340B ADR process. The hospital groups whose suit against HHS was dismissed are trying to be named third parties to Lilly, AstraZeneca, Sanofi, and Novo Nordisk’s lawsuits against HHS. Decisions on their motions to be allowed to intervene in those suits are expected soon.
Ryan White Clinics for 340B Access (RWC-340B) sued HHS last October, both to force it to make drug manufacturers sell their drugs dispensed by contract pharmacies at 340B prices, and to implement the long-delayed 340B ADR regulations, the latter of which the government did in December.
The National Association of Community Health Centers (NACHC) also sued HHS in October, but only to make it issue the 340B ADR final regulations.
NACHC in January filed petitions for dispute resolution against Lilly, Sanofi, and AstraZeneca over their refusals to offer 340B pricing when their drugs are dispensed by contract pharmacies.
“We are disappointed that United Therapeutics is following in the footsteps of other drug manufacturers by imposing restrictive policies on 340B covered entities, especially when health centers have launched an unprecedented effort to vaccinate hard hit communities against COVID,” a NACHC spokesperson said yesterday. “Health centers have proven to be excellent stewards of 340B savings. They are nonprofits, accountable by law and audit, and driven by mission—not money. We have argued before, and underscore again, that if drug companies were interested in 340B program compliance, they would be insisting on the implementation of the mandated ADR process. But instead they are choosing to flout the law for their own profit at the expense of safety-net providers and vulnerable patients and at the worst possible time.”
“It is disappointing United Therapeutics followed through with its threat to withhold 340B discounts if covered entities do not comply with its onerous and illegal claims data reporting requirements—especially after the federal government clearly said such actions run afoul of the law that created the 340B program,” said Shahid Zaman, principal policy analyst at America’s Essential Hospitals. “United Therapeutics’ rationale for its action rings hollow, given the strong safeguards already in place to avoid duplicate discounts. Particularly concerning is that its data requests unduly exceed the scope of federal protections by including commercial and Medicare activity. We again call on the Department of Health and Human Services to act decisively to enforce manufacturers’ obligation under statute to provide 340B discounts.”