Restrictions on safety-net hospital access to 340B drug pricing program discounts have been a challenge for health system pharmacy leaders, with 16 drug companies imposing or announcing such constraints as of April 13.
The 340B program, created in 1992, enables hospitals and other organizations that treat a large number of low-income and uninsured patients to buy certain outpatient drugs from drugmakers at a discount.
But since July 2020, some drugmakers have said they would limit or halt hospital 340B discounts for drugs dispensed at community-based pharmacies. These measures include requiring hospitals to submit claims data for patients filling prescriptions through a contract pharmacy as well as limitations on proximity between a contract pharmacy and a hospital.
The HHS' Health Resources and Services Administration, which administers the 340B program, has been involved in legal proceedings over the discount restrictions.
In September 2021, HHS sent letters to six drugmakers, including AstraZeneca, Eli Lilly and Sanofi, warning them that they may face monetary penalties for refusing to give healthcare organizations the 340B discounts.
A lower court vacated that enforcement letter, and on April 12, HHS appealed in a court case involving AstraZeneca's restrictions, according to 340B Health, which represents more than 1,400 public and private nonprofit hospitals and health systems in the drug pricing program.
On its website April 13, 340B Health said this means decisions from four courts related to restrictions by six drugmakers are at the appeals court level or are moving to that level soon.
Meanwhile, six health systems shared with Becker's Hospital Review how restrictions to 340B discounts have affected their pharmacy operations, and how they are responding.
Editor's note: Responses were lightly edited lightly for length and clarity and are listed in alphabetical order.
Richard Demers. Chief Administrative Officer of Ambulatory Pharmacy Services at Penn Medicine (Philadelphia): Improving the lives of people throughout the region Penn Medicine serves is a cornerstone of our mission to advance knowledge and enhance health through patient care, research and education. The 340B Drug Pricing Program, which helps health systems like ours purchase outpatient medications at a discount from manufacturers, has expanded access to medications and controlled escalating costs that can put medicine out of reach. We support the mission and benefits of the 340B program and use it and all available resources to help ensure our patients can access the medications they need at as reasonable of a cost as possible.
Steve Fijalka. Chief Pharmacy Officer of UW Medicine (Seattle): For UW Medicine, 340B discounts enable us to provide comprehensive inpatient and outpatient services at our hospitals and clinics to uninsured and underinsured patients, including Harborview Medical Center's International Medicine Clinic, which serves the region's refugee community, and Pioneer Square Clinic, which serves the city's homeless population. The actions by a subset of drug manufacturers to severely restrict 340B discounts for drugs dispensed through community pharmacies have increased UW Medicine’s financial losses to a degree that our hospitals will be unable to continue to absorb these losses without impacts to patient care. Almost 20 percent of the uncompensated costs of care provided to uninsured, Medicaid and Medicare patients in fiscal year 2021 was supported by the 340B contract pharmacy savings at University of Washington Medical Center and Harborview Medical Center.
At UW Medicine, we are concerned that the restrictions by the drug manufacturers will undermine the purpose of the 340B program and its support of our safety net populations. We understand that the data may be used by manufacturers and payers to target 340B community pharmacies and hospitals for discriminatory treatment, including reduced reimbursement on 340B claims and potential exclusion from payer networks.
Amy Gutierrez. Vice President of Pharmacy Services for UCHealth (Aurora, Colo.): UCHealth has seen significant impact to our 340B contract pharmacy network, with loss of access to 340B pricing for our patients filling prescriptions at our contracted pharmacy locations. As the largest provider of Medicaid services in Colorado and a provider of complex care, we see that 340B discounts are essential to helping make treatments more affordable and accessible for patients.
Mike O'Brien. Associate Chief Pharmacy Officer at Mayo Clinic (Rochester, Minn.): The impact of pharmaceutical manufacturer contract pharmacy restrictions has been relatively modest since Mayo Clinic 340B-covered entities are participating in external contract pharmacy arrangements only on a limited basis. Most manufacturers allow exceptions to contract pharmacy restrictions for pharmacies that are wholly owned by the parent institution, which is the case for the majority of contract pharmacies for Mayo Clinic 340B-covered entities.
Sinthu Sinnadurai. Director of Business Operations and Strategic Initiatives, Pharmacy Services at Stanford Health Care (Palo Alto, Calif.): Participating in the program funding allows Stanford Health Care to provide high-quality healthcare to uninsured and low-income patients by expanding critical health services and offering financial assistance on medication to patients that need it most.
Recent manufacturer restrictions on the 340B program have created an administrative burden on the pharmacy operations team and reduced our hospitals' exposure to 340B opportunities to help provide comprehensive services to the community. Stanford Health Care is now required to meet manufacturer-imposed patient and volume data reporting requirements not obligated by the federal government; rebuild procurement processes and establish healthcare industry numbers for each pharmacy; and conduct daily reconciliation of eligible transactions and other various tasks not required by the federal 340B program administrator, the Health Resources and Services Administration.
Jonathan Williams, PharmD. Director of Pharmacy for 340B at Cleveland Clinic: Like other safety-net providers across the country, we are continually working to reduce costs while improving outcomes. The recent removal of discount pricing by manufacturers adversely affects these efforts. In addition, predicating mandatory discount pricing on providers supplying patient data to help manufacturers mediate contract disputes with private insurers is inconsistent with the 340B statute and adds significant administrative burden to covered entities. We support the Health Resources and Services Administration and the Office of Inspector General in their continued efforts to enforce these discount requirements for drug companies.