Following Spanberger-Led Push to Save 340B Drug Pricing Program & Low-Cost Prescription Medication, HHS Takes Action Against Drug Manufacturers that Block Drug Discounts

May 19, 2021
Healthcare
Press

This Week, the Health Resources & Services Administration Determined that Six Pharmaceutical Manufacturers are in Violation of the Federal 340B Statute and Must Repay the Denied Discounts

WASHINGTON, D.C.  – Following a major, bipartisan push led by U.S. Representative Abigail Spanberger earlier this year, the Health Resources and Services Administration (HRSA) this week is taking action against pharmaceutical manufacturers that refuse to provide Central Virginia safety net and rural healthcare providers with discounted prescription drugs.

The 340B Drug Pricing Program has a demonstrated record of protecting patients who are low-income, live in underserved communities, or suffer from serious chronic illnesses. However, some drug manufacturers have stopped honoring 340B discounts for drugs dispensed through pharmacies that contracted with 340B providers — dramatically increasing the price of those drugs for vulnerable patients and providers.

Earlier this week, HRSA Acting Administrator Diana Espinosa sent formal letters to six U.S. pharmaceutical manufacturers stating that HRSA has determined that their current policies — which place restrictions on 340B Drug Pricing Program pricing to covered entities that dispense medications through pharmacies under contract — have resulted in overcharges and are in direct violation of the federal 340B statute. In her letters, Acting Administrator Espinosa said that these drug manufacturers “must immediately begin offering its covered outpatient drugs at the 340B ceiling price to covered entities through their contract pharmacy arrangements, regardless of whether they purchase through an in-house pharmacy.”

This major announcement comes after Spanberger led 225 of her colleagues in calling on the U.S. Department of Health and Human Services (HHS) to defend the integrity of the 340B Drug Pricing Program from reckless changes that have led to significant prescription drug cost hikes for healthcare providers and the people they serve.

“To prevent our neighbors in Central Virginia from facing additional financial hardships as we recover from the pandemic, we need to make sure drug companies are playing by the rules. I’m glad to see the federal government take this step to protect the 340B Program for the Virginia hospitals and community health centers that depend on it,” said Spanberger. “Higher drug prices at this time would put more of a financial strain on our healthcare infrastructure — particularly in our rural communities. This program provides Virginia patients and providers with low-cost access to lifesaving prescription drugs, and I have long believed that it is a key part of a community-focused healthcare approach. I’d like to thank the Biden Administration for holding these drug companies accountable, and I’ll keep working to protect the health and wellbeing of Central Virginians.”

“The 340B program is a valuable resource for Virginia Community Health Centers and their patients,” said Tracy Douglas-Wheeler, CEO, Virginia Community Healthcare Association. “We thank Rep. Spanberger for her bipartisan work to encourage the Administration to take decisive action to protect the integrity of the program.”

“HRSA’s notification to drug manufacturers is a critical step to assuring that safety-net providers like UVA Health receive discounted pricing from drug manufacturers.  I appreciate Rep. Spanberger’s leadership in urging HRSA to take this action,” said Wendy Horton, PharmD, MBA, FACHE, CEO, UVA Medical Center. “The savings we see from reduced drug expenditures as a result of the 340B Drug Pricing Program are important to support our mission to serve those who need us most.”

“The AHA thanks Representatives Spanberger and McKinley, and the entire bipartisan group of representatives they led, for their important efforts to protect the 340B program, and the vulnerable patients and communities it benefits, from big drug companies’ efforts to harm the program by unlawfully limiting the distribution of certain 340B drugs through community pharmacies,” said Stacey Hughes, Executive Vice President, American Hospital Association.

“We are pleased that the bipartisan support for the 340B program, led by Congresswoman Spanberger, has resulted in positive action by the Health Resources and Services Administration today. Now it is time for these drug companies to abide by the law, restore 340B pricing, and repay the millions of dollars they have withheld from safety-net hospitals,” said Maureen Testoni, President & CEO, 340B Health.

“Service providers offering essential HIV care and medications have suffered too long from inadequate financial support,” said Jesse Milan Jr., President & CEO, AIDS United. “We applaud HRSA in calling out instances where providers are overcharged, because in a time when health equity is so critically important, these threats against the 340B program directly affect our front-line efforts to end the HIV epidemic.”

BACKGROUND

The 340B Drug Pricing Program was enacted by Congress in 1992 with bipartisan support and is overseen by HHS. The program requires that pharmaceutical companies give safety-net and rural healthcare providers discounts on their drugs, in exchange for having their drugs covered by Medicaid. 

Last summer, some drug manufacturers stopped honoring 340B discounts for drugs dispensed through pharmacies that contracted with 340B providers, dramatically increasing the price of those drugs. In response, HHS’s General Counsel in December 2020 published an advisory opinion that the manufacturers’ price hikes on safety net providers are unlawful under the 340B statute.

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