HRSA is evaluating drugmakers’ 340B contract pharmacy crackdowns

The Health Resources and Services Administration said it is evaluating potential sanctions on increasingly aggressive actions by drugmakers to crack down on 340B drug discounts through contract pharmacies.

Several drugmakers have in recent weeks taken actions to collect claims data and restrict 340B discounts for some or all of their drugs to in-house pharmacies run by 340B providers. The drugmakers appear to be pushing boundaries to test how much they can unilaterally curtail the use of contract pharmacies in the 340B drug-discount program.

A HRSA spokesman said the agency is evaluating potential sanctions including civil monetary penalties if the drugmakers’ actions violate 340B statute.

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.

Eli Lilly notified covered entities of their intention to limit 340B discounts to in-house pharmacies in a letter first reported by 340B Report.

“Covered entities will not be eligible to purchase Eli Lilly and Company products at the 340B ceiling price for shipment to a contract pharmacy,” the letter states.

Insulin would be treated differently in light of an executive order signed on July 24 by President Donald Trump, Eli Lilly wrote. Insulin would only be offered discounts through contract pharmacies if the drug were offered to patients at the 340B price without a dispensing fee and the covered entity provides claim-level data.

However, the executive order only applied to federally qualified health centers, not all 340B providers.

HRSA said it is evaluating Lilly’s policy and steps taken by other drugmakers.

“HRSA is considering whether manufacturer policies, including Lilly’s, violate the 340B statute and whether sanctions may apply,” a HRSA spokesman said.

HRSA said it believes that drugmakers that refuse to honor discounts through contract pharmacies could limit access to drugs for vulnerable populations. The agency encouraged manufacturers to allow discounts through contract pharmacies.

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.”

Trump’s executive order would require federally qualified community health centers to give their discounts to patients with high cost-sharing for insulin or Epi-Pens, a high unmet deductible or who are uninsured. Community health centers said they were shocked by the president’s portrayal of the centers as a problem in the 340B system.

The White House budget office on Tuesday began reviewing an interim final rule advancing the 340B executive order. An interim final rule could be implemented immediately upon its publication in the Federal Register.

Contract pharmacy usage has skyrocketed since HRSA issued guidance in 2010 that recommended 340B covered entities contract with multiple pharmacies. 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.

Democratic leaders of the House Energy & Commerce Committee called on HHS to ensure drugmakers are complying with statutory requirements, and consider audits or monetary penalties if they are found noncompliant.

“While we recognize many manufacturers have taken issue with the expanded reach of contract pharmacies and have expressed concern about the potential for duplicate discounts, these actions are not oversight or compliance measures authorized by law, and could represent a failure of manufacturers to meet their requirements under the 340B statute,” wrote Energy & Commerce Chair Frank Pallone (D-N.J.), Energy & Commerce health subcommittee Chair Anna Eshoo (D-Calif.) and Energy & Commerce oversight and investigations subcommittee Chair Diana DeGette (D-Colo.).

Stakeholders have also weighed in on the recent developments. The Association Society of Health-System Pharmacists said it is concerned the drugmakers’ actions are a coordinated effort to restrict access to 340B discounts.

“We hope the investigations by HRSA and Congress will shine a light on the threat these manufacturer actions pose to patient access and the patient services supported by 340B savings,” said ASHP vice president of government relations Tom Kraus.

The Florida Association of Community Health Centers said the suite of conditions and restrictions that drugmakers are placing on the program could be a significant financial stress for its members.

“Unless Congress and the Health Resources and Services Administration—the agency under HHS charged with overseeing the 340B drug discount program—take action, this program may be killed under the weight of self-serving, selfish manufacturers and PBMs and it will assure that prices at the counter quickly skyrocket for millions of Americans,” Andrew Behrman, president of the Florida Association of Community Health Centers, said in a written statement.