AHA, others urge drug companies to provide 340B discounts to community pharmacies

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Counsel for the American Hospital Association (AHA) and other groups have put drug companies on notice that they need to immediately halt their practice of eliminating drug discounts for contract pharmacies.

The letter was sent to AstraZeneca, Eli Lilly and Company, Novartis, Novo Nordisk, Sanofi, and United Therapeutics. In it, the AHA, 340B Health, the American Society of Health-System Pharmacists, America’s Essential Hospitals, the Association of American Medical Colleges and the Children’s Hospital Association directed that the drug companies discontinue the practice and follow guidance from the U.S. Department of Health and Human Services.

Under the federal 340B drug pricing program, as a condition of their Medicaid and Medicare coverage, drug companies must sell discounted prescription drugs to Critical Access Hospitals, who in turn, pass those saving along to their patients.

In August, the drug companies announced that they would no longer provide 340B discounts to contract pharmacies. This would have negatively impacted many rural hospitals who regularly contract out their pharmacies to save money.

In late December, Health and Human Services Secretary Alex Azar issued an advisory opinion stating the drug companies are required to provide those discounts to contract pharmacies.

“The Office of the General Counsel (“OGC”) has received numerous requests from both manufacturers and covered entities to address whether it is proper for a drug manufacturer participating in the 340B Program to refuse to provide covered outpatient drugs at the 340B ceiling price to a covered entity for drugs distributed at the entity’s contract pharmacies. For the reasons set forth below, we conclude that to the extent contract pharmacies are acting as agents of a covered entity, a drug manufacturer in the 340B Program is obligated to deliver its covered outpatient drugs to those contract pharmacies and to charge the covered entity no more than the 340B ceiling price for those drugs,” the opinion said.

The letter from the hospital associations threatened legal action if drug companies do not comply.

If the drug companies continue the illegal practices, the litigants “will continue to seek to require that HHS enforce the 340B statute, covered entities are reimbursed for damages caused by the illegal policy, and the matter is referred to the HHS Inspector General for the imposition of civil money penalties,” the letter said.

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