Lawmakers urge HHS to fine drugmakers restricting 340B drug discounts


Dive Brief:

  • More than 180 members of the House of Representatives are urging the Biden administration to crack down on drugmakers restricting drug discounts in the 340B program.
  • Enforcement actions should include fines, the letter from a bipartisan group of House members to HHS Secretary Xavier Becerra and other administration officials said.
  • Currently, 18 drug manufacturers are limiting 340B discounts dispensed through pharmacies that contract with 340B providers, according to the letter.

Dive Insight:

The 340B program requires drugmakers to charge hospitals only the statutory ceiling prices for eligible outpatient drugs. The goal of the three-decade-old program is to have savings flow into care for low-income patients and underserved communities. But critics — notably, drugmakers and some lawmakers — argue the program doesn’t have enough oversight, as hospitals don’t need to account for what they do with any savings.

Drug manufacturers began imposing restrictions on 340B discounts as early as summer 2020, sparking legal challenges from regulators. The HHS sent nine warning letters to pharmaceutical companies, referring seven of them to the Office of the Inspector General for investigation and potential enforcement.

However, eight months later, the OIG has yet to take enforcement action, the new letter from 181 House members reads.

The letter asks the OIG to finish its ongoing review of seven drug manufacturers for potential noncompliance with federal law on 340B discounts “as soon as possible.”

The law allows the OIG to impose fines up to $6,000 per drug claim on companies that intentionally overcharge 340B providers, according to the Health Resources and Services Administration, which oversees the program.

Regulators should begin imposing civil monetary penalties against pharmaceutical companies found in violation, the congresspeople said.

The letter also argues that the Biden administration should pursue enforcement action against 11 drug companies restricting 340B pricing, which either haven’t received notice from the HHS that they’re in violation of law yet, or have received a notice but haven’t been referred to OIG for enforcement.

“Every day that drug manufacturers violate their obligation to provide these discounted drugs, vulnerable communities, federal grantees, and safety net health care providers are deprived of resources Congress intended to provide,” the letter reads.

A number of hospital associations came out in support of the letter, including the National Rural Health Association, the American Hospital Association, America’s Essential Hospitals and the National Association of Community Health Centers.

340B Health, which lobbies on behalf of hospitals in the 340B program, thanked the House members for the letter in a statement Monday, and reiterated calls for fines.

“HHS should impose steep financial penalties on all the companies that are ignoring their legal commitments to the health care safety net,” said Maureen Testoni, CEO of 340B Health, in a statement.

A survey of more than 500 hospitals by 340B Health released in May estimated that the annual financial impact from drug company restrictions has doubled since the end of 2021, costing hospitals millions of dollars per year.

Drugmakers that have imposed or announced restrictions on 340B discounts for drugs dispensed at community and specialty pharmacies include AbbVie, AstraZeneca, Johnson & Johnson, Merck and Pfizer.

The 340B discounts can range from 25% to 50% of the cost of the drugs.

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