More Pharma Companies Limit 340B Discounts to Safety-Net Hospitals

Bristol Myers Squibb has notified safety-net hospitals participating in the 340B Drug Discount Program that it will only recognize two designated contract pharmacy locations per hospitals. The company is now part of a growing list of pharmaceutical giants limiting 340B discounts for contract pharmacies.

The notification letter acquired by 340B Health states that Bristol Myers Squibb will offer 340B prices for its immunomodulatory imide drugs (IMiD) products, including Revlimid®, Pomalyst®, and Thalomid®, at just one contract pharmacy when a participating hospital does not have an entity-owned pharmacy. It will also recognize another contract pharmacy for non-IMiD products, if the hospital wants to qualify a separate location. The policy starts March 1, 2022.

Bristol Myers Squibb took on the IMiD products as part of the Celgene acquisition. The drugs are subject to strict requirements from the Food and Drug Administration (FDA), including dispensing only at certified pharmacies.

The pharmaceutical company explains in the letter that it has to satisfy the FDA’s requirements to optimize patient safety and access and will leverage its limited distribution network of pharmacies, which includes some covered 340B hospitals. Safety-net hospitals not part of the network will have the option to access the products at the 340B discounted price through one in-network specialty contract pharmacy.

However, safety-net hospitals are saying this is just another attempt to undermine the 340B Drug Pricing Program.

“The actions being taken by Bristol Myers Squibb, one of the world’s largest drug companies, will weaken the [healthcare] safety net and harm patients who rely on 340B providers for access to affordable drugs and care while enriching the company and its stockholders,” Maureen Testoni, president and CEO of 340B Health, said in a statement.

Bristol Myers Squibb isn’t the only pharmaceutical company seeking to limit 340B discounts to participating hospitals that use contract pharmacies, which 340B Health calls community pharmacies. In fact, 340B Health said it is now the 12th pharmaceutical company to send letters to participating hospitals notifying them of changes to the drug pricing schedule. Other companies on that list include AbbVie, UCB, Novartis, Sanofi, and Novo Nordisk.

The Health Resources & Services Administration (HRSA), which operates the discount drug program, has referred six pharmaceutical companies for potential fines for their policies regarding contract pharmacies. The referrals were sent in September 2021.

However, federal courts have recently ruled that the 340B Drug Pricing Program does not explicitly stop pharmaceutical companies from imposing conditions on 340B discounts to safety-net hospitals that use contract pharmacies. The federal government is appealing the decisions.

340B Health maintains that limiting 340B discounts to safety-net hospitals has hurt patient care, especially for the chronically ill. The organization released a report in September 2021 that found three of the eight pharmaceutical companies limiting 340B discounts to contract pharmacies at the time had over 90 precent of the American insulin market. Most of the diabetes drugs made by the companies limiting discounts were also more heavily discounted than other 340B drugs because of significant price increases.

“Denying 340B discounts on nominally priced diabetes drugs dispensed by community pharmacies allows these companies to circumvent inflationary penalties and dramatically increases the cost of diabetes drugs to safety-net providers in the 340B program,” the report stated.

Safety-net hospitals oftentimes use contract pharmacies to distribute drugs to patients since their facilities tend to be smaller, located in remote locations, and have more limited resources for patient care. Data obtained by the HHS Office of the Inspector General shows that over 95 percent of hospitals and other covered entities in the 340B Drug Pricing Program use contract pharmacies.

The 340B Drug Pricing Program has allowed participating hospitals to use the pharmacies as part of its efforts to help organizations serving a disproportionate number of disadvantaged and low-income patient populations to stretch federal resources as far as possible to provide more comprehensive services.