Government’s Unwillingness to Act on 340B Drug Pricing Affects Patients at the Pharmacy Counter

Pharmacy Times^® interviewed William von Oehsen, JD, principal at Powers Pyles Sutter & Verville, on a lawsuit his firm recently filed against the Department of Health and Human Services (HHS) and Health Resources and Services Administration (HRSA). The suit asks the agencies to take action against drug manufacturers that are refusing to sell 340B discounted drugs to covered entities when ordered via contracted pharmacy arrangements.

During the discussion, Oehsen explained how pharmacies and their patients are affected by issues regarding the regulation of the sale of 340B discounted drugs.

Alana Hippensteele: So, in terms of the HHS and HRSA response, has it remained as you described, were there hasn't been any kind of movement past indecision, you would say?

William von Oehsen: There hasn't been, no. There was a letter that came from the office of the general counsel to one of the manufacturers articulating various reasons why this was a bad idea, like this manufacturer should not be withholding 340B pricing on contract pharmacy drugs. But in the same letter the OIG stated that they were still evaluating their authority to take action against the manufacturer. And that's really what we need here, the rest is just words. We need action because patients’ lives are at risk here.

Alana Hippensteele: So, in terms of the loss of the 340B discounts this year, how have the covered entity plaintiffs been affected, even in consideration of the current COVID-19 pandemic?

William von Oehsen: Yeah, well the filings are public documents, so anyone can go to the DC district court where we file the case and look at our complaint. Attached to our complaint are a number of affidavits by representatives of the plaintiffs talking about the adverse impact of these manufacturers’ actions on the covered entities and their patients, so ultimately it harms patients—that's really the bottom line.

But it does it in 2 ways. The discount goes to the covered entity, and that sort of means 2 things: When the covered entity or its pharmacy or its contract pharmacy dispenses a 340B drug to an individual who has no insurance or is underinsured and lacks the personal resources to pay for the drug, typically the covered entities are going to take a loss on that drug. So, by getting the drug at a discount, their loss is reduced. So, they lose less money for that segment of their population.

Now covered entities also serve patients who are insured, and so the discount actually increases the margins that they receive from insurance companies, and that increased margin then these covered entities invest in patient care. And again these are public and private non-profit organizations that are obligated to take care of patients regardless of their ability to pay and are highly dependent on taxpayer support, so that extra revenue from their insured population really helps them fund their operations and relieves the pressure, frankly, on taxpayers to make up that difference.

So, the idea is that these hospitals and clinics are on the front lines of taking care of hard to reach patient populations. These are people who are homeless, people who have infectious diseases, people who are impoverished. They lack transportation, and they're facing a host of socio-economic barriers to health care, and so taking care of them is especially challenging and expensive, and insurance, even if they have insurance, doesn't pay for a lot of the things that's really needed.

A lot of it is case management. You know, making sure that they're showing up for their visits, making sure that they have a stable home environment, making sure that they are taking their medications, and all of that's very labor intensive, and again no one really pays for that. And that's where 340B comes in—the revenue that they're getting from the program funds these services that helps stabilize these patients and allow them to be treated. [This] actually is a very wise use of resources because otherwise they're going to get sicker and impose additional costs on their health care system. So, it's actually a fabulous program, but with these manufacturers that are withholding 340B pricing on drugs to spend through contract pharmacy arrangements, it cuts directly into the revenue that they otherwise receive through their contract pharmacy arrangements. That, in turn, means that they have less resources to serve their patients and to subsidize services.

The other way that it affects patients is directly at the pharmacy counter. A number of these covered entities have arrangements with their pharmacies to take care of the patients who can't afford the drugs who are uninsured, underinsured, or otherwise can't pay out of pocket. So, those patients who may have been getting the drugs with a small copay, like a nominal fee of 5, 10, or 15 dollars—they are seeing their prices skyrocket.

If you look at some of the affidavits in our complaint, we have some good examples. There's a pharmacist from a contract pharmacy in a very rural town in Louisiana, and this pharmacist talked about 3 sort of heartbreaking stories where patients who needed medication who were paying, I think, for 2 of them, it was like $17—this was for insulin. All of a sudden, they saw the price of the drug jumped to $1300. Well, they can't afford that, and they walked away without getting their prescriptions filled. That's what we're dealing with here. So that's a very direct impact on patients.

Undermining the resources for the hospitals and clinics will also have a profound effect. It's a little harder to measure because they use the 340B savings in so many ways to serve their patients, but at some point, they're going to have to start letting go of staff, cutting back services. So yeah, there's sort of 2 ways that this adversely affects patients by undermining the resources to the institutions themselves and by prices skyrocketing right at the pharmacy counter.

Alana Hippensteele: Right, thank you so much for taking the time to speak with me today, William. Now let’s hear from some of our other MJH Life Sciences brands on their latest headlines.