Providers weigh suing HHS over 340B contract pharmacy enforcement

An attorney representing the National Association of Community Health Centers said the group is considering suing HHS if the agency doesn’t discipline drugmakers restricting 340B drug discounts by Oct. 1.

Several drugmakers have taken a series of increasingly aggressive steps to demand claims data from 340B providers and limit discounts on drugs dispensed through contract pharmacies. Healthcare providers and lawmakers from both parties have decried drugmakers’ moves and HRSA is evaluating into whether drugmakers’ restrictions of contract pharmacy discounts were lawful.

Jason Reddish, a partner at Feldesman Tucker Leifer Fidell who represents NACHC, said on Wednesday that the group is considering suing HHS if the Health Resources and Services Administration does not penalize drugmakers by Oct. 1.

“If HHS hasn’t acted by then, we would consider legal action against HHS to try to push them to enforce the 340B statute,” Reddish said.

340B providers can’t directly sue drugmakers over the issue, Reddish said, but the dispute resolution process that was supposed to be available to resolve these sorts of conflicts was never set up. If HRSA finds drugmakers are in the wrong, it could fine drugmakers up to $5,000 per instance of overcharging providers.

340B Health, a coalition of more than 1,400 hospitals and health systems that receive 340B drug discounts, said the group is also considering suing HHS if no enforcement actions are taken.

“If the administration will not use its authority to enforce the law, we will pursue all legislative and legal avenues available to us to defend the safety net,” 340B Health President and CEO Maureen Testoni said.

The American Hospital Association, which has implored HHS to crack down on drugmakers, said it could not comment on other groups’ legal strategies but is considering legal options of its own.

“The AHA is considering our own legal action if big drug companies continue to try to undermine the 340B program and the vulnerable patients and communities it serves,” AHA General Counsel Melinda Hatton said.
The most recent and aggressive action was taken by Eli Lilly to limit discounts to in-house pharmacies and impose additional conditions on discounts for its insulin products. Lilly’s policy went into effect on Sept. 1.

A spokesman for Eli Lilly said, “There is no statutory obligation to provide 340B priced product to contract pharmacies. The statute requires that manufacturers must offer 340B ceiling prices to covered entities, which Lilly is continuing to do.”

AstraZeneca also outlined restrictions on the availability of 340B discounts on its drugs through contract pharmacies, and that policy would go into effect on Oct. 1.

AstraZeneca said it believes the change is consistent with HRSA guidelines and operative 340B statutory provisions.

A HRSA spokesman said the agency does not comment on hypothetical or pending litigation. The agency is currently evaluating potential sanctions including civil monetary penalties if the drugmakers’ actions violate 340B statute.


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