Drug companies’ restrictions on 340B program discounts have cost covered hospitals and clinics $3.2 billion annually, according to a footnote buried in a recent federal court ruling on drug company lawsuits against HHS’ effort to make them give 340B discounts to all pharmacies that 340B hospitals contract with.
Since October, three federal courts have issued opinions on lawsuits by drug makers against the policy by the Health Resources and Services Administration, which oversees the 340B drug discount program.
The opinions differ. A federal judge in Indiana ruled the policy as “arbitrary and capricious.” A federal judge in D.C. ruled that the law doesn’t prohibit drug makers from imposing some conditions on the sales of discounted drugs, offering the friendliest of the three cases for the drug industry, while a federal judge in New Jersey sided with the government.
Lawyers at Foley Hoag pointed out a footnote in the opinion by the judge in New Jersey, which consolidated cases brought by Sanofi-Aventis and Novo Nordisk. Those companies sold a total 10.5 million units of 340B-priced drugs per month before they implemented their 340B restrictions, and after their policy took effect that number dropped to 2.9 million units.
The ruling cites an administrative record from HHS that suggests the restrictions cost the hospitals nearly 83 million units, or an annual loss of $3.2 billion.
“The stakes in these cases are therefore enormous, suggesting neither party is likely to back down anytime soon. What comes next is likely more agency action and, likely, appeals,” Foley Hoag Partner Ross Margulies wrote in a recent blog on the cases.
The results of the three cases leave room for the government to rework its case for enforcing compliance with its contract pharmacy policies. According to Margulies, the court rulings suggest that there is lawful support for HRSA’s contract pharmacy guidance, so drug makers might not be able to get away with imposing restrictions on discounts for long.
Still, drug makers aren’t likely to stop enforcing their restrictions, nor are they likely to pay the penalties HRSA tried to fine them while the government refines its approach.
“Manufacturers may have won the battle, but they have not won the war,” the Foley Hoag blog states. “While the immediate impact of the decisions is relief for the manufacturers from the Enforcement Letters, the decisions also suggests a path forward for HRSA to enforce its contract pharmacy guidance.”
Hospitals Lose $3.2 Billion Due To Drug Makers’ 340B Restrictions
Inside Health Policy
November 15, 2021 7:00 pm
Drug companies’ restrictions on 340B program discounts have cost covered hospitals and clinics $3.2 billion annually, according to a footnote buried in a recent federal court ruling on drug company lawsuits against HHS’ effort to make them give 340B discounts to all pharmacies that 340B hospitals contract with.
Since October, three federal courts have issued opinions on lawsuits by drug makers against the policy by the Health Resources and Services Administration, which oversees the 340B drug discount program.
The opinions differ. A federal judge in Indiana ruled the policy as “arbitrary and capricious.” A federal judge in D.C. ruled that the law doesn’t prohibit drug makers from imposing some conditions on the sales of discounted drugs, offering the friendliest of the three cases for the drug industry, while a federal judge in New Jersey sided with the government.
Lawyers at Foley Hoag pointed out a footnote in the opinion by the judge in New Jersey, which consolidated cases brought by Sanofi-Aventis and Novo Nordisk. Those companies sold a total 10.5 million units of 340B-priced drugs per month before they implemented their 340B restrictions, and after their policy took effect that number dropped to 2.9 million units.
The ruling cites an administrative record from HHS that suggests the restrictions cost the hospitals nearly 83 million units, or an annual loss of $3.2 billion.
“The stakes in these cases are therefore enormous, suggesting neither party is likely to back down anytime soon. What comes next is likely more agency action and, likely, appeals,” Foley Hoag Partner Ross Margulies wrote in a recent blog on the cases.
The results of the three cases leave room for the government to rework its case for enforcing compliance with its contract pharmacy policies. According to Margulies, the court rulings suggest that there is lawful support for HRSA’s contract pharmacy guidance, so drug makers might not be able to get away with imposing restrictions on discounts for long.
Still, drug makers aren’t likely to stop enforcing their restrictions, nor are they likely to pay the penalties HRSA tried to fine them while the government refines its approach.
“Manufacturers may have won the battle, but they have not won the war,” the Foley Hoag blog states. “While the immediate impact of the decisions is relief for the manufacturers from the Enforcement Letters, the decisions also suggests a path forward for HRSA to enforce its contract pharmacy guidance.”