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U.S. House Leaders Press HHS to Stop Drug Companies from Undermining the 340B Program

September 04, 2020

Yesterday, Energy and Commerce Chairman Frank Pallone, Jr. (D-NJ), Health Subcommittee Chair Anna G. Eshoo (D-CA), and Oversight and Investigations Subcommittee Chair Diana DeGette (D-CO) sent a letter to U.S. Health and Human Services (HHS) Secretary Alex Azar expressing strong concerns about recent actions taken by drug manufacturers that undermine the 340B Drug Pricing Program. These actions range from limiting the distribution of certain 340B drugs, to demanding—on short notice—superfluous, detailed reporting about 340B drugs distributed through hospitals’ contract pharmacies.

“The 340B [p]rogram is a critical tool in the fight to lower drug prices, and helps safety net health providers, including Federally Qualified Health Centers (FQHC) and disproportionate share (DSH) hospitals, among others, to provide frontline care in the midst of the coronavirus disease of 2019 (COVID-19) pandemic,” the letter’s authors wrote. “It is critical that the Administration maintains program integrity to ensure this care is not interrupted.”

Under the 340B Drug Pricing Program, drug manufacturers participating in Medicaid are required to provide discounts on outpatient prescription drugs to certain safety net health providers, called “covered entities,” who can then use those savings to expand and improve care for the uninsured and underinsured. 

Several drug manufacturers have recently announced that they will institute new burdensome requirements on covered entities beyond what the 340B statute requires, or stop deliveries to contract pharmacies that dispense drugs to patients on behalf of covered entities. Some of these changes were slated to take effect as early as September 1, 2020.

“[T]here is no provision of law which allows participating manufacturers to deny service to covered entities or choose where covered entities may dispense the drugs they purchase,” the three committee leaders continued in their letter to Azar. “Failure of manufacturers to offer drugs at the appropriate 340B price may violate the 340B statute’s requirements or result in overcharges to covered entities, in contravention of the law.”  

In the letter, the committee leaders expressed hope that drug manufacturers would retreat from these announced policies in order to prevent patients from losing access to care, but also cited HHS’ obligation to ensure drug manufacturers comply with the law and use the tools provided by Congress to enforce compliance.  

“As we confront the COVID-19 pandemic, patients are relying on 340B covered entities to go the extra mile to provide care,” the  committee leaders concluded. “We look forward to working with you to ensure access to care is not threatened and all participants in the 340B program are fulfilling their obligations under the law.”

HAP strongly echoes the American Hospital Association’s statement, which affirmed that it “is an outrage that this action is being taken at a time when hospitals are in the midst of their response to the COVID-19 public health emergency, which has further demonstrated the fractured, inadequate state of the prescription drug supply chain,” and that the drug companies’ actions are “attempting to compel hospitals to divert critical resources away from the pandemic.” 

For questions or more information, contact Jolene Calla, Esq., HAP’s vice president, health care finance and insurance, or Laura Stevens Kent, HAP’s senior vice president, strategic integration.