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  • Brett Louderback

Hospitals urge HHS to step in on 340B fight with drug manufacturers

UPDATE: Sept. 11, 2020: Another group of hospitals sent a letter to HHS Secretary Alex Azar on Thursday asking him to take action against the drugmakers limiting 340B drug distribution. "If the administration permits pharmaceutical companies to continue these practices, 340B hospitals will face increased difficulties serving high volumes of patients living with low incomes in our rural and urban communities," More than 1,100 hospitals in the 340B Health group wrote.

Also Thursday, the American Hospital Association released a report finding 340B hospitals provided $64.3 billion in benefits to their surrounding communities in 2017, according to tax form data. That's an increase from $56.1 billion in 2016.

Dive Brief:

  • The American Hospital Association on Tuesday sent another letter to HHS about the 340B drug discount program, asking the department to stop drug manufacturers from limiting distribution of medicines covered by the program and asking for detailed information about distribution through hospital's contract pharmacy arrangements.

  • It follows a similar July letter protesting action from Eli Lilly and Merck. AHA said Sanofi, Novartis and AstraZeneca have followed suit with what the group calls "abusive tactics."

  • The Health Resources and Services Administration, which administers the program, said it is considering whether manufacturer policies violate the 340B statute and whether sanctions such as civil monetary policies may apply.

The 340B program has a storied history of conflicts between drug manufacturers, regulators and the hospitals that are enrolled, which are mostly disproportionate share and critical access facilities.

The most recent issue stems from drugmaker decisions to stop giving 340B discounts to contract pharmacies, which many hospitals use instead of dispensing drugs in-house. Manufacturers have said they are concerned about duplicate discounts through the program and Medicaid, which AHA characterizes as "unsubstantiated."

"The drug companies are attempting to exploit for their financial benefit the current COVID-19 health care crisis," AHA said in its letter. "As you are aware, hospitals throughout the nation are under severe stress by the need to prepare for, and/or care for, COVID-19 patients, while coping with the financial damages inflicted by the virus. Therefore, we urge you to act immediately against any drug manufacturer employing these pernicious tactics to ensure that 340B drugs are available and accessible to vulnerable communities."

HRSA said it believes contract pharmacies are a vital function for 340B providers but noted it has a "limited ability to issue enforceable regulations to ensure clarity in program requirements."

"We believe that manufacturers that refuse to honor contract pharmacy orders could significantly limit access to 340B-discounted drugs for many underserved and vulnerable populations who may be located in geographically isolated areas and rely on contract pharmacies as a critical point of access for obtaining their prescriptions," the agency said. "To this end, HRSA continues to strongly encourage all manufacturers to sell 340B priced drugs to covered entities directly and through contract pharmacy arrangements."

A U.S. Government Accountability Office report from 2018 did find that HRSA had a weakness in its oversight that stifled its ability to ensure compliance at contract pharmacies, including potential duplicate discounts. And another report from earlier this year found that limitations in HHS oversight of the 340B program and Medicaid Drug Rebate Programs could increase the risk of duplicate discounts.

The pharmaceutical lobby PhRMA said that while it cannot speak to individual company actions, the growth in contract pharmacies participating in 340B "has raised concerns about the integrity of the program" and it advocates for fixes to the program including revisiting the role of those pharmacies.

Hospitals have been losing another fight over 340B, this one over a CMS plan to reduce the drug payments by 28.5%. In July, a district court ruled the cut was based on a "reasonable interpretation of the Medicare statute" and could stand.

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