Community health centers sue HHS over 340B contract pharmacy enforcement

Community health centers are suing HHS to force the agency to create a dispute resolution process so providers can challenge drugmakers’ policies in the 340B drug discount program.

Drugmakers have taken steps in recent months to restrict 340B discounts on drugs delivered to patients through contract pharmacies and demand data reporting from providers, and HHS has not yet taken enforcement action. The National Association of Community Health Centers is suing HHS to expedite the creation of a dispute resolution process that was required by the Affordable Care Act.

Pharmaceutical companies appear to be testing how far they can challenge subregulatory guidance issued by the Health Resources and Services Administration that allows 340B providers to receive discounts for working with multiple contract pharmacies. If the trend continues at its current clip, the limitations on discounts could have a big impact on some covered entities’ finances.

HRSA has said it is evaluating drugmakers’ crackdowns but has not yet made a determination on their legality. Members of Congress on both sides of the aisle have urged HHS to curtail drugmakers’ actions.

“The manufacturers’ abrupt about-face, after decades of shipping [health centers’] purchases of 340B-priced drugs to their contract pharmacies—during a global pandemic and a recession—is not only callous, but a clear violation of 340B statutory requirements and the binding pharmaceutical pricing agreements manufacturers have with HHS,” NACHC wrote in the complaint.

The Obama administration proposed a rule creating a 340B dispute resolution process in August 2016, but the proposed rule was withdrawn by the Trump administration in August 2017.

Providers are limited in their capacity to directly sue drugmakers because of prior court decisions, which leaves HRSA with the responsibility to enforce the law.

Contract pharmacy usage has skyrocketed since HRSA issued guidance allowing 340B covered entities to contract with multiple pharmacies in 2010. An analysis by the Drug Channels Institute found that fewer than 1,300 locations served as contract pharmacies in January 2010, compared with nearly 28,000 in July 2020.

HHS did not immediately respond to a request for comment on the lawsuit.


Tags: covid-19, pandemic

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