340B advocates urge HHS to step up enforcement after Amgen aims to cut off access to contract pharmacies

Drug prices
Amgen announced that starting in January it will cut off sales of 340B-discounted products to contract pharmacies, becoming the 10th drugmaker to make such a restriction. (Getty/Tero Vesalainen)

An advocacy group for covered entities under the 340B program is calling for the federal government to do more to stop drugmakers from cutting off sales of discounted products to contract pharmacies.

340B Health called on the Biden administration to do more after reports that Amgen plans to cut off sales to contract pharmacies early next year. If the change goes through, Amgen would become the 10th drugmaker to install such a restriction.

“It is long past time for these unlawful actions to stop,” said Maureen Testoni, president and CEO of 340B Health, which represents more than 1,400 hospitals. “For the companies that the courts have ruled to be in noncompliance with the 340B law, we call on the administration to escalate enforcement actions in line with those decisions.”

Amgen’s decision to cut off sales starting Jan. 3 comes roughly a week after UCB instituted a similar move, making them the ninth and 10th drugmakers to cut off access.

Amgen told Fierce Healthcare concerns about program integrity sparked the move.

“In the decade since the Health Resources & Services Administration (HRSA) expanded its contract pharmacy policy, the number of contract pharmacy arrangements in the 340B program has grown by a staggering 4,000%,” Amgen said. “More than 50% of the profits generated by contract pharmacies are retained by for-profit companies.”

The drugmaker said it will only provide discounted products to the 340B covered entity with some exceptions.

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Amgen will offer the products to the contract pharmacy if the covered entity agrees to provide claims data to “increase transparency and mitigate instances of diversion and duplication related to contract pharmacy arrangements.”

The 340B drug program calls on drugmakers to offer discounts to safety net providers in exchange for participation in Medicare and Medicaid.

Amgen and UCB don’t appear to be fazed at the prospect of potential fines from the Biden administration.

HRSA has moved to fine six drugmakers—Eli Lilly, Sanofi, United Therapeutics, Novo Nordisk, Novartis and AstraZeneca—for similar moves they instituted back in 2020.

But the drugmakers have sued the Biden administration in federal court, arguing that the Department of Health and Human Services (HHS) doesn’t have the statutory authority to install the cuts.

While two rulings earlier this month appeared amenable to HHS’ arguments, another ruling found that drugmakers can impose conditions on sales to 340B products, including to contract pharmacies.

Testoni said HHS should appeal the ruling and escalate enforcement actions against drugmakers. She warned that Amgen and UCB’s moves could be the start of a troubling trend.

“The longer this problem continues without resolution, the more drug companies will become emboldened to start unilaterally violating the law and causing irreparable harm to hospitals and their patients,” she said.