Drugmakers face fines for 340B contract pharmacy violations

Six drugmakers could soon face steep fines over their refusal to discount drug prices for pharmacies that contract with 340B providers.

The Health Resources and Services Administration on Wednesday sent letters to Eli Lilly, AstraZeneca, Novartis, Novo Nordisk, Sanofi and United Therapeutics, informing them that it has asked the Department of Health and Human Services’ Office of the Inspector General to determine whether they should pay fines for the violations. The drugmakers could get fined more than $5,000 for each instance.

Safety-net providers heralded the move.

“Despite unequivocal determinations from the government that these drugmaker actions are unlawful, the companies continue to ignore federal law and refuse to offer 340B pricing on drugs dispensed at community pharmacies. We ask the OIG to undertake an expeditious review of the substantial evidence that these companies are knowingly and intentionally overcharging safety-net providers.” 340B Health CEO 340B Maureen Testoni said in a news release.

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HRSA had sent letters to the drugmakers in May, warning them that it believes limiting pharmaceutical sales to contract pharmacies violates the law. That followed a December advisory opinion holding that drugmakers must offer lower prices to contract pharmacies that operate within healthcare facilities that qualify for 340B Drug Pricing Program.

The agency withdrew its opinion this past summer after a federal judge denied the federal governments’ motion to dismiss a legal challenge from AstraZeneca, allowing the case to move forward.

Drugmakers have been concerned about the rapid growth of contract pharmacy usage by 340B providers, claiming that patients often aren’t getting the benefits of discounted drugs. They struck back last year by trying to limit the discounts they provide to on-site pharmacies run by covered entities and some contract pharmacies. That led to several lawsuits from community health centers and hospital groups, prompting the December advisory opinion.

340B providers and patient advocates argue that the discount program gives vulnerable people better access to the care they need by enabling safety-net providers to keep their doors open.

CVS, Walgreens, Walmart, Rite-Aid and Kroger make up 60% of all contract pharmacies under the 340B program.

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