Since last summer, drugmakers and hospitals participating in the 340B drug pricing program have been locked in a battle over whether drugmakers are required to give hospitals discounts on drugs that are dispensed through contract pharmacies.
The 340B program was created in 1992 and requires drugmakers to offer discounts on all outpatient drugs to hospitals and clinics that serve indigent populations. About 2,500 hospitals around the country participate in the program.
Drugmakers argue that giving discounts on drugs dispensed at contract pharmacies forces them to waste money by giving duplicate discounts. Hospitals say drugmakers are required under federal law to provide the discounts and failing to do so inhibits access to healthcare for the indigent populations 340B hospitals serve.
A timeline of the conflict:
Aug. 21, 2020: Merck, Sanofi, Eli Lilly, Novartis and AstraZeneca all tell 340B hospitals that they may withhold drug discounts for various reasons. AstraZeneca and Eli Lilly say they'll withhold the discounts for some or all of their drugs if they are dispensed by contract pharmacies. Merck, Novartis and Sanofi say they will withhold discounts if they don't receive claims data for all commercially insured, Medicaid and Medicare Part D patients filling prescriptions in a contract pharmacy.
Sept. 1, 2020: Eli Lilly stops giving 340B discounts to hospitals that use contract pharmacies. The drugmaker says the move is a precaution to avoid duplicate discounts that could be offered at the pharmacies. It says 340B hospitals that don't have an in-house pharmacy can contact Eli Lilly regarding an exception.
Sept. 14, 2020: A bipartisan group of 243 members of the U.S. House of Representatives sends a letter to former HHS Secretary Alex Azar urging him to use his authority to stop drugmakers from blocking hospitals' access to 340B discounts.
Sept. 21, 2020: HHS General Counsel Robert Charrow scolds Eli Lilly in a letter for its actions to halt 340B discounts to hospitals. He writes that Eli Lilly could face a potential False Claims Act lawsuit if it knowingly violates a material condition of the 340B program that results in overcharges.
Oct. 30, 2020: Novartis notifies 340B hospitals that it will continue to honor contract pharmacy arrangements as long as they're within 40 miles of their parent facility. Novartis says the policy change will ensure the 340B drug discount program benefits the intended communities and is consistent with federal guidelines for hospitals and off-site affiliates. Hospital representatives say the rule is unlawful.
Dec. 8, 2020: Novo Nordisk sends a notice to 340B hospitals saying that beginning Jan. 1, 2021, it will no longer give 340B discounts to contract pharmacies, becoming the sixth drugmaker to put such a restriction on the discounts. Under the new rule, if hospitals don't have an in-house pharmacy to dispense 340B-covered drugs, they can designate one contract pharmacy to receive all of its drugs covered under the program.
Dec. 10, 2020: The Health Resources & Services Administration releases a final rule creating a panel to settle disputes between 340B hospitals and drugmakers. The rule implements an administrative dispute resolution, or ADR, process for the 340B program. HRSA indicates hospitals can use the process to challenge drugmaker policies denying the discounts on drugs dispensed through community pharmacies.
Dec. 11, 2020: Five national hospital organizations sue HHS, citing its "failure" to make drugmakers pay 340B discounts to hospitals that dispense their drugs through community pharmacies. The lawsuit asks the court to order HHS to require that drugmakers provide 340B discounts on drugs dispensed at community pharmacies, issue refunds to hospitals that were denied discounts and order HHS to refer the drugmakers to the HHS Office of Inspector General to assess penalties.
Dec. 14, 2020: More than two dozen state attorneys general urge HHS to address drugmaker policies denying 340B discounts to hospitals that use contract pharmacies, including by issuing fines. The attorneys general argue that HHS has the authority to compel drugmakers to follow the 340B statute.
Dec. 30, 2020: HHS releases an advisory opinion stating that 340B drug discounts should be given to hospitals even if drugs are dispensed through contract pharmacies. Advisory opinions don't carry the force of a law, but they guide how HHS enforces the program.
Jan. 14: Eli Lilly, Sanofi and AstraZeneca all file lawsuits asking courts to reverse the December HHS advisory opinion. They argue the advisory opinion is unlawful and requires them to honor a practice not covered under the 340B statute.
Feb. 17: A federal judge in California grants an HHS motion to dismiss a lawsuit accusing the department of failing to force drugmakers to pay 340B discounts to hospitals that dispense drugs through contract pharmacies. The judge rules that the issue can't be challenged in court because HHS has not issued a final agency action regarding 340B discounts for hospitals that use community pharmacies.
March 16: A federal judge blocks HHS from implementing its administrative dispute resolution final rule, saying the department didn't follow proper protocols when finalizing the rule. Judge Sarah Evans Barker of U.S. District Court for the Southern District of Indiana states that HHS messaging on the final rule was "ambiguous, confusing, duplicitous and misleading," and says that because HHS issued the final rule without additional notice or a comment period, it violated Eli Lilly's rights.
May 17: Diana Espinosa, acting administrator of the Health Resources and Service Administration, says six drugmakers are in violation of the 340B statute and must begin offering their drugs at discounted prices to hospitals participating in the program. They must also credit or refund all hospitals for overcharges that resulted from the limiting policies. If they don't, they may face civil monetary penalties for each instance of overcharging. The drugmakers have until June 1 to release a plan on how to resume giving the discounts, the letters state.
May 20: Eli Lilly files a motion asking a federal court to stop the government from placing monetary penalties on it for its refusal to provide 340B discounts to contract pharmacies. The motion claims HRSA was bowing to political pressure from Congress to "come down" on drugmakers when Ms. Espinosa sent the letters ordering Eli Lilly and five other drugmakers to begin offering 340B discounts to hospitals that use contract pharmacies. Eli Lilly requests that the federal judge impose a restraining order and preliminary injunction to halt any penalties until a court case between the drugmaker and HHS is resolved.