The Battle Continues Over 340B

In November, we published a post detailing how several drug manufacturers would no longer be providing 340B drug pricing to most contract pharmacies.  As we predicted, the Department of Health & Human Services (HHS) reacted to this move, issuing an eight-page advisory opinion on contract pharmacies under the 340B drug program.

This guidance was published on December 30th and can be found here.  Within the HHS publication, the Office of the General Counsel (OGC) reiterated that contract pharmacies are acting as agents of the covered entity.  Furthermore, HHS notes that “manufacturers’ rationale for precluding the use of contract pharmacies is not supported by the language of the statue and leads to absurd results.”  HHS concludes by saying that drug manufacturers are required to deliver covered outpatient drugs to contract pharmacies and charge covered entities no more than the 340B ceiling price for those drugs.

On January 12th, three manufacturers sued HHS over this advisory opinion, with each company filing a separate lawsuit.  The manufacturers claim that the advisory opinion contradicts the 340B program statues and does not require manufacturers to recognize contract pharmacies.  On the other side, the American Hospital Association (AHA) and similar groups have also sued HHS to get the agency to clamp down on these manufacturers.  Getting sued from both sides, HHS will likely act on this issue and defend themselves in court.  With the 340B program seeing exponential growth in the past decade, it was only a matter of time before this issue came to a head.  PHSL will continue to monitor the situation and provide updates.

 

Posted January 2021

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