On Wednesday, the HHS Office of the General Counsel released an advisory opinion concluding that drug manufacturers are required to deliver discounts under the 340B Drug Pricing Program on covered outpatient drugs when contract pharmacies are acting as agents of 340B covered entities
During height of coronavirus pandemic, nine rogue drug companies recently announced they planned to refuse to provide certain drugs at the legally required ‘340B price’ as required by section 340B of the U.S. Public Health Services Act
WASHINGTON (December 30, 2020) AIDS Healthcare Foundation (AHF) welcomed and praised an advisory opinion issued earlier today by the Office of the General Counsel for the United States Health and Human Services Department (HHS) which concluded that drug manufacturers are required to deliver discounts under the 340B Drug Pricing Program on covered outpatient drugs when contract pharmacies are acting as agents of 340B covered entities. (HHS press release)
The opinion came on the heels of widespread public pressure on HHS by safety net providers after nine rogue drug companies including Amgen, AstraZeneca, Eli Lilly, Merck, Novartis and Sanofi-Aventis, among others, announced they planned to refuse to continue to provide certain drugs at the legally required ‘340B price’ as required by section 340B of the U.S. Public Health Services Act.
In addition, 28 U.S. state attorneys general recently drew a line in the sand trying to protect this essential part of the healthcare safety net against the seemingly limitless greed of the drug industry. In a December 14 letter, the bipartisan group of elected attorneys general demanded that U.S. Health and Human Services Secretary Alex Azar take immediate steps to enforce the law “to address drug companies’ unlawful refusal to provide critical drug discounts to covered entities such as community health centers under the 340B Drug Pricing Program.”
On December 7, 2020, Senator Richard Blumenthal (D-CT), also spoke to reporters at a federal qualified health center in East Hartford, Conn., about drug manufacturers’ recent denials of 340B pricing on drugs shipped to contract pharmacies.
“What the pharmaceutical drug companies are doing here is absolutely unconscionable and unacceptable,” Blumenthal said. “They are required by law to provide discounted drugs not out of the goodness of their heart, but because they participate in the Medicaid program that yields them tons of profit. They are making money from the Medicaid program, and one of the conditions for those profits is that they provide discounted drugs to federally qualified health care centers, to clinics, and hospitals, and others that serve the most vulnerable people in our society.”
“We thank HHS for really listening to safety net providers, the attorneys general and others in recognizing—and checking—the unbridled greed of the pharmaceutical industry. We also thank HHS for recognizing the crucial need the 340B program—and the many contract pharmacies that provide services to 340B covered entities—fulfills, particularly in more rural areas of the country,” said Michael Weinstein, president of AHF. “The 340B program represents at most just six percent of the industry’s billions and billions in annual revenue, yet they are still not satisfied. Instead, they chose to break their contractual obligations underlining their participation in 340B and have now been taken to task by HHS. Thank you, HHS, for this important and very definitive opinion.”
340B is a lifeline that allows nonprofit safety net providers, such as rural hospitals and HIV/AIDS clinics receiving funding through federal programs, to obtain prescription drugs at below-retail prices. It was established with bipartisan support as part of the Veterans Health Care Act of 1992. With 340B savings, Ryan White HIV clinics and other covered entities are able to stretch their grant funds, offer a wider range of services, and improve the quality of care for under-insured vulnerable populations, such as people living with HIV.
In today’s advisory opinion, Robert P. Charrow, general counsel for HHS wrote, “…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.”