Hospitals Wage War with Pharma Over 340B Drug Pricing Program Cuts

The controversy surrounding the notorious 340B Drug Pricing Program continues with more than 1,100 hospitals now urging HHS to stop pharmaceutical companies from refusing discounts for drugs covered by the federal program.

The Sept. 10th letter to HHS Secretary Alex Azar was written by hospitals in response to a growing number of major pharmaceutical companies reining in the discounts they must offer to entities in the program.

For example, AstraZeneca and Eli Lilly recently announced that they would no longer provide lower drug prices for 340B entities for any of its drugs if they are dispensed through contract pharmacies.

Other companies including Merck, Sanofi, and Novartis have also asked for more detailed reporting from 340B hospitals on the drugs distributed through their contract pharmacies, which will be used by the drug manufacturers to determine discounts on drugs.

“These collective actions to deny access to 340B pricing are clear violations of the 340B statute that will set a dangerous precedent,” the letter stated. “The statute requires manufacturers to provide the 340B discounts to entities that meet 340B’s strict eligibility requirements and does not grant them the ability to condition the discounts or otherwise create barriers to covered entities' ability to access the discounts.”

“If the administration permits pharmaceutical companies to continue these practices, 340B hospitals will face increased difficulties serving high volumes of patients living with low incomes in our rural and urban communities,” the hospitals emphasized.

The letter represents some of the “key voices in a large and growing chorus of opposition to pharmaceutical manufacturers’ unlawful attacks against 340B,” said Maureen Testoni, president and CEO of 340B Health, a trade group representing hospitals in the program.

Days prior to the letter from thousands of hospitals, the American Hospital Association (AHA) also expressed concerns to HHS Secretary Azar about the recent actions taken by major pharmaceutical companies to limit discounts to 340B hospitals.

“The AHA has written to each of these drug manufacturers’ leadership to request they discontinue these abusive tactics,” the hospital group wrote on Sept. 8th. “The responses received thus far cite unsubstantiated concerns about duplicate discounts between the Medicaid and 340B programs. However, even if these concerns are valid, there is no legitimate basis for these companies to limit the distribution of prescription drugs to 340B hospitals or demand superfluous paperwork.”

The Health Resources & Services Administration, which oversees the 340B Drug Pricing Program, has indicated to AHA that it will investigate any 340B statute violations and pursue sanctions against pharmaceutical companies not complying.

However, hospitals are looking for swift action against the pharmaceutical companies.

“As you are aware, hospitals throughout the nation are under severe stress by the need to prepare for, and/or care for, COVID-19 patients, while coping with the financial damages inflicted by the virus,” the AHA explained. “Therefore, we urge you to act immediately against any drug manufacturer employing these pernicious tactics to ensure that 340B drugs are available and accessible to vulnerable communities.”

Hospitals are slated to lose at least $323 billion in 2020 as a result of the COVID-19 pandemic, the AHA recently projected.

At the same time, hospitals are also seeing a nearly 30 percent cut to payments for drugs covered by the program.

340B hospitals help improve the health of their communities, the AHA maintains.

In a report released last week, the group found that 340B tax-exempt hospitals provided more than $64 billion in total benefits to its communities in 2017, the most recent year for which comprehensive data was available.

The data also revealed that the hospitals upped their community contribution from $56 billion the previous year, putting more money to resources like financial support for patients in need, chronic disease management programs, and transportation for follow-up appointments.

“Hospitals and health systems of all kinds, sizes and forms of ownership deliver a wide variety of benefits designed to meet the unique needs of their communities,” said Rick Pollack, AHA president and CEO. “This new report once again confirms the immense value of the 340B drug savings program, which allows those eligible hospitals in particular to provide a unique range of important programs and services to their patients and communities, many of which would otherwise be unavailable.”

Despite these benefits, the federal government and others in the healthcare industry have called for more oversight of the 340B Drug Pricing Program, citing invalid program contracts, inappropriate discounts, and hospital profitability concerns as reasons why.