HHS on Wednesday (Sept. 22) asked the HHS Inspector General to investigate six drug companies that restrict 340B discounts to pharmacies with which hospitals contract. The move, which could result in fines, is the Health Resources and Services Administration’s latest gambit to get drug companies to comply with its interpretation of a vague law, this time by seeking a favorable IG opinion that could influence pending court cases, a hospital lobbyist said.
During the Trump administration, the HHS general council issued an advisory opinion that stated drug companies must give discounts to hospitals in the 340B program no matter how many contract pharmacies dispense those drugs. Drug companies ignored that opinion and sued over it. In May, Biden’s HRSA threaten to fine companies that don’t comply with the advisory opinion, but so far the courts have not been sympathetic to HHS. In rejecting the Biden administration’s request to dismiss a lawsuit against the advisory opinion, a federal judge said the law is vague and HHS’ advisory opinion is a departure from previous policy. HRSA then withdrew the advisory opinion but said it would still fine companies that don’t follow the advisory opinion.
Which brings us to HRSA’s referral of six companies to the IG for fines. If the IG says contract pharmacies are an extension of hospitals, that might help the government in lawsuits filed by drug companies against HRSA’s enforcement actions.
The problem is that neither the law nor regulations mention contract pharmacies. Instead, HRSA is trying to enforce its stance through guidance.
Congress could fix the problem by adding contract pharmacies to the law, but despite the lip service in support of hospitals from many lawmakers in both parties, Congress has shown no interest in including such a measure in the drug pricing legislation it is writing. Some question the need for the 340B program if Medicare were to negotiate prices.
IG’s Handling Of 340B Opinion Could Help HRSA In Court
Inside Health Policy
September 23, 2021 2:34 pm
HHS on Wednesday (Sept. 22) asked the HHS Inspector General to investigate six drug companies that restrict 340B discounts to pharmacies with which hospitals contract. The move, which could result in fines, is the Health Resources and Services Administration’s latest gambit to get drug companies to comply with its interpretation of a vague law, this time by seeking a favorable IG opinion that could influence pending court cases, a hospital lobbyist said.
During the Trump administration, the HHS general council issued an advisory opinion that stated drug companies must give discounts to hospitals in the 340B program no matter how many contract pharmacies dispense those drugs. Drug companies ignored that opinion and sued over it. In May, Biden’s HRSA threaten to fine companies that don’t comply with the advisory opinion, but so far the courts have not been sympathetic to HHS. In rejecting the Biden administration’s request to dismiss a lawsuit against the advisory opinion, a federal judge said the law is vague and HHS’ advisory opinion is a departure from previous policy. HRSA then withdrew the advisory opinion but said it would still fine companies that don’t follow the advisory opinion.
Which brings us to HRSA’s referral of six companies to the IG for fines. If the IG says contract pharmacies are an extension of hospitals, that might help the government in lawsuits filed by drug companies against HRSA’s enforcement actions.
The problem is that neither the law nor regulations mention contract pharmacies. Instead, HRSA is trying to enforce its stance through guidance.
Congress could fix the problem by adding contract pharmacies to the law, but despite the lip service in support of hospitals from many lawmakers in both parties, Congress has shown no interest in including such a measure in the drug pricing legislation it is writing. Some question the need for the 340B program if Medicare were to negotiate prices.