Some drugmakers may not comply with HHS 340B opinion on contract pharmacies

Eli Lilly said it disagrees with a new HHS opinion stating that drugmakers should offer 340B discounts through contract pharmacies, signaling potential ongoing conflict.

HHS on Dec. 30 advised drugmakers that they must provide 340B discount prices to pharmacies that contract with covered entities, but the advisory opinion doesn’t have the force of law. Eli Lilly and Sanofi have indicated the new opinion may not change their behavior.

“We’ve reviewed the statement from HHS and we disagree with their conclusion. We continue to believe our 340B distribution program complies with all applicable laws and regulations, and we will continue to advocate for fixes to 340B that will help people access affordable medicines instead padding the bottom lines of hospitals and contract pharmacies that pocket discounts for themselves,” an Eli Lilly spokesperson said in a written statement.

Eli Lilly told covered entities that as of Sept. 1 the company would limit discounts to drugs dispensed via covered entities’ in-house pharmacies and impose additional conditions on discounts for its insulin products. If a covered entity doesn’t have an in-house pharmacy, it can designate one contract pharmacy.

Insulin is treated differently under Eli Lilly’s policy. Insulin is offered discounts through contract pharmacies if the drug is offered to patients at the 340B price without a dispensing fee and the covered entity provides claim-level data.

Eli Lilly had asked HHS to issue an opinion on what discounts drugmakers are required to offer covered entities through contract pharmacies. HRSA said it was evaluating the issue in a September letter to Eli Lilly, and in December made clear it believes drugmakers must offer discounts through contract pharmacies.

“The (site) of delivery, be it the lunar surface, low-earth orbit, or a neighborhood pharmacy, is irrelevant,” HHS General Counsel Robert Charrow wrote on Dec. 30.

Other drugmakers also have taken action to limit discounts to contract pharmacies. AstraZeneca, Novo Nordisk and United Therapeutics took similar, aggressive action and did not respond to a request for comment on the advisory opinion. Pharmaceutical Research and Manufacturers of America is still reviewing the policy, a spokesperson said.

Merck, Sanofi and Novartis took a different approach, and asked covered entities to provide more claims data.

Sanofi showed no indication it would back down from conditioning 340B discounts on covered entities’ provision of claims data.

“If a covered entity provides these data necessary to identify and prevent waste and abuse then nothing will change. If a covered entity chooses not to provide the limited data, it will remain able to purchase 340B-priced drugs for shipment to its own facilities, including all community health centers with in-house pharmacies,” a Sanofi spokesperson said.

Merck said its data collection program is voluntary.

“Merck seeks to work collaboratively with 340B-covered entities to access additional pharmacy claims data through a voluntary program integrity initiative that does not increase the 340B price charged to covered entities or deny 340B pricing to covered entities,” a spokesperson said in a written statement.

Novartis said the company is still evaluating the recent HHS advisory opinion.

Several hospital groups have sued HHS to try to get the agency to ramp up enforcement against drugmakers refusing to provide discounts to covered entities through contract pharmacies.

HHS also issued a final rule that would create a long-awaited 340B dispute resolution process. Implementation will be up to the Biden administration.


Tags: covid-19, pandemic

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