BREAKING: Novartis Retreats, But Not Entirely, on 340B Contract Pharmacy (Update 2)

Your 340B Report for Friday Oct. 30, 2020

Novartis Retreats, But Not Entirely, on 340B Contract Pharmacy (Update 2)

Update 2, Friday Oct. 30, 4:00 p.m. EDT—Hospital group 340B Health said Novartis’ action was inexcusable. “The 340B statute is crystal clear,” 340B Health President and CEO Maureen Testoni said. Drug companies cannot “put limits on [340B] discounts based on where hospitals are distributing the drugs to their patients. Manufacturers that knowingly and intentionally overcharge for their drugs are subject to civil monetary penalties. It is long past time for the Department of Health & Human Services to put a stop to this unlawful behavior.”

Update 1, Friday Oct. 30, 3:40 p.m. EDT—Ryan White Clinics for 340B Access (RWC-340B) told 340B Report: “While the grantee community is very pleased that Novartis has decided not to include them in their reformulation of the 340B program, changing the rules midstream underscores why Congress and HHS should not abdicate their authority over the 340B program to manufacturers.”

Drug manufacturer Novartis this afternoon announced changes to its policy on provision of 340B discounts on drugs dispensed by contract pharmacies. It said in a new fact sheet:

  • Ryan White clinics, community health centers, and other federal grantee covered entities will continue to receive 340B discounts “exactly as they do today.”

  • Novartis will honor hospital contract pharmacy arrangements for contract pharmacies located within a 40 mile radius of the covered entity hospital. It said it would work with rural hospitals and other institutions with special circumstances to ensure they have “appropriate access to a contract pharmacy.”

  • Novartis says it “encourage(s) all covered entities to voluntarily upload their claims data to the Second Sight Solutions 340B ESP platform to increase transparency and mitigate instances of duplicative discounts.” In an August FAQ document sent to covered entities, Novartis gave entities an Oct. 1 deadline to register with 340B ESP and provide contract pharmacy claims data biweekly. It said then that entities that did not provide contract pharmacy claims data would no longer be eligible to receive 340B discounts from Novartis. As recently as Sept. 25, it said it expected covered entities to register with its vendor and upload their claims data, but was evaluating next steps about denying 340B discounts to entities that did not comply.

This afternoon, Novartis spokesperson Heather Swedlin said, “While we encourage all covered entities to voluntarily upload their claims data on the ESP platform to increase transparency, it is not mandatory to continue to receive 340B discounts.”

In the fact sheet, Novartis said it “continues to firmly support the intent of the 340B program to serve the uninsured and other vulnerable patients.”

“While these actions do not fully resolve all concerns under the current contract pharmacy model, they are important, common-sense steps toward ensuring that the communities served by these covered entity hospitals are the beneficiaries of the 340B program and that the program itself is sustainable,” the company said.

Novartis said it has submitted comments to U.S. Sen. Lamar Alexander (R-Tenn.) and Rep. Greg Walden (R-Ore.) in response to their call for ideas on how to improve the 340B program. The deadline for comments is today. We will report on stakeholders’ submissions to the lawmakers next week.

“After listening to stakeholders and following careful consideration, we have decided to take an approach that focuses on the vast networks of contract pharmacies that hospitals have established well outside of the communities they serve. We believe this is a common-sense step to maintain the integrity and intent of the program,” Novartis spokesperson Swedlin said.

“We firmly support the 340B program in its mission to serve the uninsured and other vulnerable patients in our communities. However, the exponential growth of far-flung networks of contract pharmacies—which have no basis in statute—raises compliance concerns and thereby undermines the integrity and sustainability of the program,” Swedlin said.

Hospital groups are likely to object to Novartis’s policy and 340B Report anticipates all covered entity groups to oppose what they believe to be unilateral actions taken by drug manufacturers to set their own rules under the program. We will provide more reaction from stakeholders in our next issue.