HHS releases advisory opinion on 340B discounts at contract pharmacies

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The U.S. Department of Health and Human Services Office of General Counsel released an advisory opinion on Wednesday clarifying discounts from drug manufacturers under the 340B Drug Pricing Program regarding contract pharmacies.

The advisory opinion determined that drug manufacturers must provide 340B to covered entities, even when those entities use “contract pharmacies” to deliver the drugs to their patients.

The 340B program requires drug manufacturers to offer substantial discounts to “covered entities” – safety net hospitals, community health centers, and other institutions that serve vulnerable populations – in exchange for coverage of drugs under Medicaid.

Earlier this year, drug companies decided not to provide those discounts to entities that use contract pharmacies. Estimates suggest the 340B program can range between 25 and 50 percent, adding up to approximately $30 billion in drugs sold to covered entities annually.

“President Trump has been steadfastly devoted to lowering drug prices for American patients, and that includes ensuring that drug companies are offering the discounts they’re legally required to give to providers that serve the vulnerable,” said HHS Secretary Alex Azar. “Whether it’s making sure 340B discounts are passed on to patients or ensuring that drug companies are delivering these discounts in the first place, we’ve ensured that the deep discounts offered under 340B are helping the vulnerable populations the program was set up to benefit.”

While the advisory opinions do not carry the force of law, they clarify the agency’s current views on issues. Those views may be reflected in regulatory, enforcement, and oversight powers the federal government has to run the 340B program.

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