The Biden administration is moving to fine six drug companies for refusing to offer drugs discounted under the 340B program to contract pharmacies, even as a federal lawsuit over the authority to penalize the drug companies continues.
Wednesday, the Health Resources and Services Administration (HRSA) referred the six drugmakers to the Department of Health and Human Services' Office of Inspector General for penalties for violating the 340B statute.
Eli Lilly, Sanofi, AstraZeneca, Novartis, Novo Nordisk, and United Therapeutics all received letters dated Wednesday outlining the update. The six drugmakers were warned back in May by the HRSA that moves to restrict sales to contract pharmacies violated the 340B statute.
The drugmakers could face more than $5,000 a violation if the fines are assessed.
But it remains unclear whether the penalties will be enforced.
Eli Lilly sued the Biden administration in federal court back in May shortly after the warnings. The goal of the lawsuit was to prevent the federal government from penalizing drug companies for restricting sales to contract pharmacies.
HRSA’s decision was cheered by 340B advocates who say safety net providers have been harmed by the drugmakers’ actions, which started last summer.
“Despite unequivocal determinations from the government that these drugmaker actions are unlawful, the companies continue to ignore federal law and refuse to offer 340B pricing on drugs dispensed at community pharmacies,” said Maureen Testoni, president and CEO of advocacy group 340B Health. “The longer these drugmakers refuse to follow the law, to stop overcharging for 340B drugs, and to repay the denied savings, the greater the harm will be to patient care.”
Sanofi responded that its integrity initiative is intended to combat duplicative discounts for both Medicaid and 340B and that the initiative complies with the statute.
Novo Nordisk slammed the decision by HRSA to pursue penalties.
"We stand behind the policies we have put in place to address the significant and well-documented abuses in the 340B program, resulting in program intermediaries such as for-profit contract pharmacies profiting at the expense of patients," the company said in a statement to Fierce Healthcare.
The other five drugmakers did not immediately respond to a request for comment.
Drugmakers agree to give 340B discounts to safety net providers in exchange for participation in Medicare and Medicaid. But drug manufacturers have complained that the program has gotten too large and question whether the benefits of the discounts reach patients. Hospitals and 340B advocates counter the program is vital to help safety net providers that operate on thin margins and as drugmakers have continued to raise prices.