BREAKING: HRSA is Investigating Whether Manufacturer Policies to Restrict 340B Pricing at Contract Pharmacies Violates Statute

Your 340B Report for Wednesday September 2, 2020

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HRSA is Investigating Whether Manufacturer Policies to Restrict 340B Pricing at Contract Pharmacies Violates Statute

In a major development, the Health Resources and Services Administration (HRSA) has told 340B Report that it is investigating whether recent manufacturer policies to restrict access to 340B pricing at contract pharmacies violates the 340B statue and whether sanctions may apply. Following up on our breaking news from yesterday, 340B Report had reached out to HRSA to inquire whether the agency was planning to post Eli Lilly’s September 1 limited distribution notice on the Office of Pharmacy Affairs (OPA) web site.  HRSA posts approved limited distribution notices under OPA’s Manufacturer Notices to Covered Entities section of the web site.  

HRSA’s latest statement is much stronger than previous statements, which had emphasized its limited authority to enforce contract pharmacy rules. While the latest statement again acknowledges the agency’s belief that it needs broad regulatory authority to oversee all aspects of the program, HRSA is clearly ratcheting up the pressure on pharmaceutical manufacturers that are not providing or are considering discontinuing 340B discounts to contract pharmacies. Below is HRSA’s full statement: 

HRSA is not posting a letter at this time as HRSA is considering whether manufacturer policies, including Lilly’s, violate the 340B statute and whether sanctions may apply.  Under section 340B(a)(1) of the Public Health Service Act (PHSA), a manufacturer participating in the 340B Program must offer its covered outpatient drugs for purchase at or below the 340B ceiling price.  Those sanctions could include, but are not limited to, civil monetary penalties pursuant to section 340B(d)(1)(B)(vi) of the PHSA. 

The 340B statute does not specify the mode by which 340B drugs may be dispensed.  However, the Agency believes contract pharmacies serve a vital function in covered entities’ ability to serve underserved and vulnerable populations, particularly as many covered entities do not operate in-house pharmacies.  Without comprehensive regulatory authority, HRSA has only limited ability to issue enforceable regulations to ensure clarity in program requirements across all the interdependent aspects of the 340B Program. 

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.  To this end, HRSA continues to strongly encourage all manufacturers to sell 340B priced drugs to covered entities directly and through contract pharmacy arrangements.  

Meanwhile, 340B Report has learned that President Trump’s executive order targeting community health center savings on insulin and EpiPens has arrived at the White House’s Office of Management and Budget (OMB) for review. The details of the executive order, which will be published as an Interim Final Rule, are not yet available to the public.  

340B Report will provide more details on both of these developments in tomorrow’s issue.