The HHS Health Resources & Services Administration sent letters to six drugmakers Sept. 22 warning that they may face monetary penalties of $5,000 each for refusing to give 340B discounts to covered entities.
In May, Diana Espinosa, administrator of the agency tasked with improving healthcare access for the medically vulnerable, wrote the six drugmakers — AstraZeneca, Eli Lilly, Novartis, Novo Nordisk, Sanofi and United Therapeutics — telling them they were in violation of 340B requirements by refusing to sell without restriction covered outpatient drugs at 340B hospitals that dispense medications through contract pharmacies.
Ms. Espinosa ordered each drugmaker to submit plans to comply with the law, but they refused, HRSA said in a news release.
In response, the administration is referring each of them to the HHS Office of Inspector General, which will decide whether the drugmakers are liable for monetary penalties, which can total more than $5,000 per violation, for "knowingly and intentionally" overcharging 340B hospitals.
Maureen Testoni, president and CEO of 340B Health, a trade group that represents 340B hospitals, told Becker's in an emailed statement: "The safety-net hospital community applauds HRSA for taking this crucial enforcement step against drug companies that are denying 340B discounts to covered entities. 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."
The administration made the move to refer the drugmakers to the Office of Inspector General despite ongoing litigation between drugmakers and HHS over whether the 340B statute requires them to give discounts to hospitals that use contract pharmacies.
In June, HHS withdrew an advisory opinion it had issued in December stating drugmakers must give 340B discounts to hospitals that use contract pharmacies.
An Eli Lilly spokesperson told Endpoints News: "We are disappointed to see HRSA's continued attempt to circumvent the legal process."
A Novartis spokesperson told the publication it is "confident" its 340B policy "is in full compliance with the 340B statute and all binding regulations."
A Sanofi spokesperson told Endpoints News that the company has been looking into 340B-priced claims since October 2020, and that it will pay Medicaid and other insurers' rebate invoices accurately. "We continue to believe this integrity initiative complies with the 340B statute," the spokesperson said.
A Novo Nordisk spokesperson told Endpoints News the drugmaker "disagrees with the claims made by HRSA in its letter, which are also the subject of pending litigation commenced by Novo Nordisk and several other manufacturers. We stand behind the policies we have put in place to address the significant and well-documented abuses in the 340B program, resulting in program intermediaries such as for profit contract pharmacies profiting at the expense of patients."
Becker's Hospital Review has reached out to AstraZeneca and United Therapeutics for comment and will update this story accordingly.