Advantage pharma in 340B drug discounting dispute with HHS

Mika Baumeister via Unsplash
Mika Baumeister via Unsplash

A federal appeals court in the US has ruled in favour of three pharma companies in a dispute over the supply of discounted medicines to contract pharmacies with the Health and Human Services (HHS) department.

Sanofi, AstraZeneca and Novo Nordisk have won a judgment in the lawsuit, brought by HHS on behalf of the Health Resources and Services Administration (HRSA) which oversees the so-called 340B federal drug discount system.

Section 340B of the Public Health Service Act (PHSA) requires drugmakers to discount outpatient drug sales to healthcare groups that serve uninsured and low-income patients – including contract pharmacies which can be important sources of medicines in rural areas – in order to access Medicare and Medicaid reimbursements.

The requirement has long been a source of contention for the pharma industry, which claims that the 340B programme has long since strayed away from its primary purpose of ensuring access to medicines for vulnerable people.

According to industry organisation PhRMA, it has become "less about patients, and more about boosting the bottom lines of hospitals and for-profit pharmacies."

In the lawsuit, the pharma groups argued that some recipients of the discounted medicines charge both uninsured patients and insurance companies higher prices, pocketing the difference. HHS claimed that actions by Sanofi, AZ and Novo Nordisk to limit the distribution of certain 340B drugs were unlawful.

Court documents support the drugmakers' view that the system as it currently operates is flawed.

As more than 80% of  hospitals and clinics in rural areas don't have their own pharmacy units, they contract with outside pharmacies, many owned by large chains like CVS Health and Walgreens Boots Alliance.  The original PHSA legislation allowed one such contract, but in 2010 HHS issued guidance removing that limitation, allowing unlimited contract pharmacies to be used.

"Congress never said that drugmakers must deliver discounted Section 340B drugs to an unlimited number of contract pharmacies," says the latest judgment in the lawsuit, adding: "By trying to enforce that supposed requirement, the government overstepped the statute's bounds."

HRSA said it was reviewing the opinion before deciding its next steps, and noted that other 340B-related lawsuits are still pending.

340B Health, an organisation representing more than 1,400 public and private non-profit hospitals and health systems in the US, said it "respectfully disagreed" with the verdict of the US Court of Appeals for the Third Circuit.

"Amid high prescription drug prices and limited federal resources, 340B hospitals rely on access to discounts through community and specialty pharmacies to care for their patients in need," said the organisation's chief executive ad president Maureen Testoni.

"Continued barriers to that access will weaken the health care safety net, harm patients with low incomes and those living in rural areas, and drive drug prices even higher."