HHS Sends Enforcement Letters to Drug Producers Concerning 340B Contract Pharmacies Whereas HHS litigation continues | Baker Higher Well being Law

On May 17, 2021, the Health Resources and Services Administration (HRSA) sent letters to six drug manufacturers informing them that their actions to restrict access to 340B discounted drug prices by healthcare providers have resulted in high fees that Violate the 340B Act. The letters were in response to guidelines introduced by manufacturers not to offer prices of 340 billion euros for certain drugs sold through pharmacies under a contract with 340 billion suppliers.

Meanwhile, drug manufacturers have filed lawsuits against the Department of Health (HHS) related to the agency’s position on 340 billion contract pharmacies and threats of potential enforcement actions against manufacturers. During the dispute, drug suppliers dispensed by licensed pharmacies will still not be able to price $ 340 billion for drugs from the six manufacturers.

Background information on 340B contract pharmacies

The 340B providers include public and nonprofit hospitals that serve large numbers of low-income patients or are located in rural areas, as well as providers that receive government grants such as health care providers. B. Federally Qualified Health Centers (FQHCs), Ryan White HIV / AIDS clinics and recipients of funds for the treatment and prevention of sexually transmitted diseases, among others. 340B providers can access program savings by using 340B discounted drugs in different settings depending on the provider type: 1) hospital outpatient areas, 2) provider-owned retail pharmacies, and 3) external pharmacies that are under contract with the provider, delivering 340 billion from the provider medicines bought to the provider’s patients (340 billion pharmacies).

Since the program’s early years in the 1990s, providers have dispensed 340 billion drugs through the contract pharmacy model. HRSA has issued guidelines recognizing that the 340B statute requires drug manufacturers to offer program participants a price of 340B even if the drugs are to be dispensed through contract pharmacies.

HHS review of drug company actions

As of July 2020, several drug manufacturers announced that they would not price certain drugs sold through contract pharmacies at $ 340 billion; others said they would require providers to submit data on contract pharmacy claims for manufacturers to review, and would refuse 340B rates for use in contract pharmacies or take other action that affects access to 340B rates if vendors do not share the data. The pharmaceutical companies took the position that the 340B statute does not require manufacturers to offer 340B prices to suppliers of pharmaceuticals dispensed through contract pharmacies as long as manufacturers provide 340B prices to suppliers directly for use in their in-house pharmacies.

340B vendors filed lawsuits against HHS, asking federal courts to require HHS to take enforcement action against manufacturers refusing 340B prices for drugs sold through contract pharmacies. Members of Congress also wrote to HHS urging the agency to take action against drug manufacturers who deny the $ 340 billion price tag for use in contract pharmacies.

Vendors argued that drug manufacturers’ obligation to offer 340B prices under the 340B Act extends to drugs sold through contract pharmacies, and the law does not allow manufacturers to choose when to offer 340B prices. Vendors pointed to HHS ‘340B Statute authority to impose civilian fines (CMPs) on manufacturers who knowingly and willfully inflated 340B vendors. Vendors argued that denying $ 340 billion prices to drugs sold through licensed pharmacies was excessive fees to justify the imposition of CMPs.

On December 30, 2020, HHS issued an AO that states that the 340B statute requires manufacturers to offer insured outpatient medicines to 340B insured facilities at no more than the 340B maximum price, even if those covered facilities use contract pharmacies to assist to distribute these drugs to their patients. After the AO was issued, HHS continued to review manufacturer policies restricting access to 340B pricing and complaints from 340B vendors, culminating in the letters sent to the six manufacturers on May 17, 2021.

HRSA ordered that each manufacturer should immediately begin offering registered companies a price of $ 340 billion for drugs sold through contract pharmacies, suggesting that further denial of prices of $ 340 billion will lead to the imposition of CMPs can. The agency directed manufacturers to issue credits or refunds for excessive fees resulting from manufacturers’ guidelines. Finally, HRSA urged each manufacturer to notify HRSA of its plan to resume sales of 340B drugs by June 1, 2021.

Litigation Challenging HHS

Five of the six manufacturers who received letters of enforcement from HRSA have filed lawsuits against HHS challenging the agency’s position regarding the pricing of $ 340 billion for drugs sold through licensed pharmacies. Manufacturers argue that the 340B statute does not require manufacturers to offer 340B prices for drugs sold through contract pharmacies. Several manufacturers have sought legal intervention to prevent HRSA from taking enforcement action against manufacturers. To date, no federal court has ruled on the legality of HRSA’s interpretation of the 340B Statute, although several manufacturers have received an extension of the June 1 deadline for submitting updates to HRSA.

Implications for 340B providers

For some providers, the 340 billion benefits generated by contract pharmacies account for a significant proportion of their total utility of 340 billion. This is especially true for rural hospitals and community health centers, which often do not have their own pharmacies. For many providers, ensuring access to 340B prices for contract pharmacy use can be critical to maintaining the benefits of the 340B program in the future.

Questions remain as to whether HHS will impose CMPs against manufacturers who continue to refuse to price 340B and, if so, whether federal courts will step in to stop such enforcement actions. Federal courts could also consider the legality of HHS ‘position on manufacturer obligations and the underlying question of whether the 340B Act requires drug manufacturers to offer 340B prices for drugs sold through contract pharmacies. Meanwhile, drug vendors sold through licensed pharmacies continue to have no pricing of $ 340 billion for certain drugs from the six manufacturers.

We will continue to monitor developments regarding the 340B program and share new information as we learn about it.

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