BREAKING: Health Centers Sue HHS Over Drug Company Denials of 340B Pricing

Your 340B Report for Wednesday Oct. 21, 2020

Health Centers Sue HHS Over Drug Company Denials of 340B Pricing

This is a developing story. Check the online version for possible updates.

The National Association of Community Health Centers (NACHC) today sued U.S. Health and Human Services (HHS) Secretary Alex Azar to force him to implement a long-delayed 340B program mandatory and binding administrative dispute resolution (ADR) process. NACHC said in a news release that the ADR process would let health centers “act against drug companies that are violating the 340B statute and have abruptly stopped shipping discounted drugs to health centers’ contracted pharmacies.”

We will reach out to HHS for comment shortly.

NACHC’s lawsuit, filed this morning in U.S. District Court in Washington, D.C., is the second such suit filed against HHS this month. On Oct. 9, Ryan White Clinics for 340B Access (RWC-340B) sued HHS over drug manufacturers’ Eli Lilly and Co., AstraZeneca, Sanofi, and Novartis’ recent 340B actions. Groups representing 340B hospitals, which have a record of collectively suing HHS about 340B issues, could be next to sue.

NACHC said in its news release, “The manufacturers’ abrupt about-face, after decades of shipping [health centers’] purchases of 340B-priced drugs to their contract pharmacies—during a global pandemic and a recession—is not only callous, but a clear violation of 340B statutory requirements and the binding pharmaceutical pricing agreements manufacturers have with HHS.”

“While HHS has signaled some disapproval of recent manufacturers’ practices, no action has been taken despite concerns raised by hundreds of bipartisan Members of Congress,” NACHC said.

NACHC said hundreds of health centers have complained to it in recent weeks “about high drug prices that low income patients will be forced to pay” due to the manufacturers’ actions. “A health center patient may now pay up to $600 for a 30 day supply of insulin that used to cost $17,” the group said. “The price of a preventive inhaler for asthma may rise from $17-18 to $350 or more per month.”

In its legal complaint, NACHC said HHS’s failure to implement the congressionally mandated 340B ADR process “has tied the covered entities’ hands and deprived them of their exclusive means to protect themselves….Outside of 340B’s exclusive remedial scheme, covered entities have no other—much less an adequate—remedy available to them to challenge the drug manufacturers’ violation of the 340B statute or to remedy the significant harm these violations have caused and will continue to cause.”

“As a direct result of Defendants’ unlawful inaction, FQHCs [federally qualified health centers] and their patients, who are typically among the most vulnerable and medically underserved, are being irreparably harmed,” NACHC said. “Those harms, which include threats to FQHCs’ patients’ health and safety, will continue absent either an immediate enforcement action by HHS, or an injunction compelling the immediate implementation of the FQHCs’ remedy for manufacturer overcharging.”

NACHC said, “had there been a final, binding ADR regulation providing covered entities a way to challenge prohibited overcharges, drug manufacturers may well have been reticent to take the unauthorized, unilateral actions at the heart of this suit.”

The suit seeks:

  • a declaration that Azar and HHS violated the 340B statute by failing to promulgate 340B ADR regulations and implement a 340B ADR process

  • a declaration that Azar and HHS violated the federal Administrative Procedure Act

  • an order requiring the defendants to promulgate final 340B ADR regulations no later than 60 days from the order

  • court maintanenace of jurisdiction over the matter pending defendants’ compliance with the order; an award of legal fees and other expenses; and “such other relief as this Court deems just and proper.”

In 2010 in the Affordable Care Act (ACA), Congress required HHS to publish regulations creating and implementing a binding 340B ADR process for claims by covered entities against manufacturers, and vice versa. The health care reform law gave HHS a 180-day deadline. Congress authorized “such sums as necessary” to pay for an ADR system, but it never appropriated funds.

The U.S. Health and Resources Administration (HRSA) finally published an ADR proposed rule in October 2016, as the Obama administration was winding down. The new Trump administration withdrew the proposed rule in August 2017. Last March, HRSA told 340B Report it did not plan to create a 340B ADR system “until such time that HRSA receives regulatory authority” from Congress “for the issues that would be addressed” in such a process.

Giving HRSA broad regulatory authority over 340B is one of the issues in play as Congress considers whether it needs to pass new 340B legislation—a subject addressed in depth in yesterday’s 340B Report.