HRSA Finds 6 Pharmaceutical Manufacturers in Violation of 340B Requirements

This article was updated with additional information May 17, 2021, at 6:21 pm.

The Health Resources and Services Administration (HRSA) has found 6 drug manufacturers in violation of 340B pricing requirements.^1-7

According to HRSA, the companies’ policies are placing restrictions on 340B program pricing to entities that are covered for dispensing medications through pharmacies under contract. As a result of the policies, overcharges have occurred, and the 6 companies were found to be in direct violation of the 340B statute.¹

Notification letters were sent Monday to manufacturers found to violate 340B pricing after a review of the manufacturers’ actions and an analysis of complaints received from covered entities. Letters addressing the pricing violations, signed by HRSA Acting Administrator Diana Espinosa, were addressed to officials with AstraZeneca,² Eli Lilly & Company,³ Novartis Pharmaceuticals,⁴ Novo Nordisk,⁵ Sanofi,⁶, and United Therapeutics.⁷

According to HRSA, beginning in July 2020, the drug manufacturers were taking specific actions that limited a covered entity’s access to discounted medications that are available for purchase under the 340B program. Some of these manufacturers stopped providing the 340B ceiling price on drug products sold to covered entities and dispensed through contract pharmacies, according to HRSA. Other manufacturers limited required specific data submissions or sold drug products only after a covered entity demonstrated 340B compliance, limiting sales.¹

In a statement emailed to Pharmacy Times^®, Eli Lilly & Company acknowledged receipt of the HRSA letter and confirmed that it is under review. “Lilly has continued to offer 340B ceiling prices to all covered entities, and believes that patients—not large, for-profit contract pharmacies—should benefit from those 340B drug discounts,” the company added.

Novartis and Novo Nordisk also confirmed receipt of the letter in emails to Pharmacy Times®. Novartis said the company would give the letter a priority, thoughtful review, and they intend to respond to HRSA.

According to Novo Nordisk, the company is committed to ensuring that vulnerable patients continue to have access to care and medications under the 340B program.

“It’s important to remember that covered entities still have the ability to purchase our covered outpatient drugs at or below the ceiling price. Instead, we no longer accept covered entities’ requests that Novo Nordisk transfer its covered outpatient drugs (or cause its covered outpatient drugs to be transferred) to an unlimited number of commercial contract pharmacies servicing hospitals. Grantee organizations, such as Community Health Centers and Federally Qualified Health Centers, among others, are exempt from this policy. This change is consistent with the 340B statute,” Novo Nordisk said, in an emailed statement.

Novo Nordisk is currently engaged in litigation related to the 340B matter, and company officials were unable to provide further comment.

However, some pharmacy organizations publicly expressed support for HRSA’s decision to act against the drug manufacturers.⁸

According to 340B Health, an advocacy association with more than 1400 member hospitals, the HRSA’s action is an emphatic defense of the 340B pricing program and thousands of hospitals, health centers, and clinics that serve low-income individuals and those living in rural areas.⁸

“The 340B community has been united in its opposition to these dangerous actions and must be applauded for its months of advocacy,” said Maureen Testoni, president, and CEO of 340B Health, in a press release. “As we have been saying for nearly a year, the 340B statute requires drug manufacturers participating in the program to provide discounted prices to support the care of patients. The denial of these discounts has damaged providers and patients and must stop. It is vital that these companies immediately begin to repay the millions of dollars owed to these providers.”⁸

According to the American Society of Health-System Pharmacists (ASHP), the organization is 1 of 5 national hospital organizations that have engaged in litigation to have the government enforce the 340B requirements.⁹

“HRSA’s aggressive action is necessary to stem manufacturer efforts to illegally undercut the 340B program,” said Tom Kraus, vice president of government relations, ASHP. “HRSA’s clear directive to manufacturers to comply with the program or face financial penalties is a major step toward safeguarding the 340B program and the vulnerable populations it benefits.”⁹

Any drug manufacturer participating in the 340B that knowingly or intentionally charges a covered entity more than the ceiling price for a covered outpatient medication may be subject to a Civil Monetary Penalty up to $5000 for each instance of overcharging, according to the 340B Program Ceiling Price and Civil Monetary Penalties final rule. That penalty would be in addition to repayment of the overcharge.¹

In the letters, HRSA instructed the 6 companies to provide—by June 1, 2021—an update of their respective plans to restart selling covered outpatient drugs at 340B pricing, without restriction, to covered entities that dispense medications through contracted pharmacies.^2-7

REFERENCES

1. HRSA determines six pharmaceutical manufacturers are in violation of the 340B statute. Health Resources & Services Administration. ReviewedMay 2021. Accessed May 17, 2021. https://www.hrsa.gov/opa/index.html
2. HRSA letter to AstraZeneca regarding sales to covered entities through contract pharmacy arrangements. Health Resources & Services Administration. May 17, 2021. Accessed May 17, 2021. https://www.hrsa.gov/sites/default/files/hrsa/opa/pdf/hrsa-letter-astraaeneca-covered-entities.pdf
3. HRSA letter to Lilly USA, LLC regarding sales to covered entities through contract pharmacy arrangements. Health Resources & Services Administration. May 17, 2021. Accessed May 17, 2021. https://www.hrsa.gov/sites/default/files/hrsa/opa/pdf/hrsa-letter-eli-lilly-covered-entities.pdf
4. HRSA letter to Novartis Pharmaceuticals regarding sales to covered entities through contract pharmacy arrangements. Health Resources & Services Administration. May 17, 2021. Accessed May 17, 2021. https://www.hrsa.gov/sites/default/files/hrsa/opa/pdf/hrsa-letter-novartis-pharmaceuticals-covered-entities.pdf
5. HRSA letter to Novo Nordisk regarding sales to covered entities through contract pharmacy arrangements. Health Resources & Services Administration. May 17, 2021. Accessed May 17, 2021. https://www.hrsa.gov/sites/default/files/hrsa/opa/pdf/hrsa-letter-novo-nordisk-covered-entities.pdf
6. HRSA letter to Sanofi regarding sales to covered entities through contract pharmacy arrangements. Health Resources & Services Administration. May 17, 2021. Accessed May 17, 2021. https://www.hrsa.gov/sites/default/files/hrsa/opa/pdf/hrsa-letter-sanofi-covered-entities.pdf
7. HRSA letter to United Therapeutics regarding sales to covered entities through contract pharmacy arrangements. Health Resources & Services Administration. May 17, 2021. Accessed May 17, 2021. https://www.hrsa.gov/sites/default/files/hrsa/opa/pdf/hrsa-letter-united-therapeutics-covered-entities.pdf
8. Statement on HRSA ordering drug companies to restore 340B discounts on drugs dispensed at community pharmacies. News release. 340B Health; May 17, 2021. [email]
9. Government supports ASHP’s position on 340B, takes enforcement action against manufacturers for failing to provide discounts. News release. American Society of Health-System Pharmacists; May 17, 2021. [email]