Manufacturers continue denying 340B pricing to safety-net hospitals
Issue Overview
Beginning in July 2020, several major drug companies have stopped providing, or have imposed restrictions on, 340B pricing to covered entities for their drugs that are dispensed through community pharmacies. These policies are in violation of manufacturers’ obligations under the 340B statute to offer discounted pricing to 340B providers. The actions drastically cut into savings that 340B hospitals rely on to finance care for low-income and rural patients, increasing drug companies’ profits at the expense of the health care safety net. As of March 2022, a total of 16 drug companies have implemented or announced restrictions on 340B pricing to covered entities on drugs dispensed at community pharmacies.
Actions Taken to Stop Manufacturer Denials of 340B Pricing
Congressional Actions: On two occasions, In September 2020 and February 2021, more than half of the U.S. House sent bipartisan letters to HHS calling for the agency to enforce the 340B statute and stop manufacturers from denying 340B pricing in violation of the law. In 2020, half of the Senate wrote letters to the Department of Health and Human Services (HHS) and these drug companies expressing concerns.
Administration Actions: The Health Resources & Services Administration (HRSA) has sent letters to seven drug companies – Eli Lilly, Novo Nordisk, Sanofi, Novartis, AstraZeneca, United Therapeutics, and Boehringer Ingelheim – informing them that their policies violate the 340B law and that they must resume offering 340B pricing and repay past overcharges. HRSA also has referred these seven companies to the Health and Human Services Office of Inspector General (OIG) to consider civil monetary penalties (CMPs) against the companies for their continued violations of the statute.
Court Actions: Rather than complying with those directives, the seven companies have gone to federal courts attempting to prevent the government from enforcing the 340B law. Two of these courts have ruled that HRSA has the authority to enforce the requirement that companies offer 340B pricing to 340B hospitals through community pharmacy partners. Two other courts largely have sided with drug companies on the issues in question. Three of the decisions are pending before federal appeals courts, and HHS is determining whether to appeal the fourth decision as well.
Current Status and Need for Continued Support of 340B
Despite the clear message HHS sent to manufacturers and the broad bipartisan opposition in Congress to drug company policies denying or limiting 340B pricing, these manufacturers continue their restrictive 340B policies. These actions are harming safety-net hospitals, community health centers, public health clinics, and the patients who rely on them for care. The 340B community is calling on the companies to halt their illegal actions and asking the government to enforce the law, including imposing financial penalties on the companies that refuse to comply.
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