More than 800 hospitals urge HHS to appeal controversial ruling in 340B lawsuit

More than 800 hospitals are urging the Biden administration to appeal a federal court ruling that drugmakers have the power to restrict sales of 340B-discounted drugs to contract pharmacies.

The appeal comes as drugmakers are taking the Biden administration to court over its attempts to fine the companies for restricting sales to the contract pharmacies.

The hospitals wrote to Department of Health and Human Services (HHS) Secretary Xavier Becerra (PDF) Monday that the agency must take action to help restore “340B pricing as rapidly as possible,” the letter said.

Several drugmakers started to cut off sales to contract pharmacies in summer 2020. But in May 2021, the Health Resources and Services Administration (HRSA) warned six drugmakers for the restrictions: Eli Lilly, Novartis, Sanofi, United Therapeutics, Novo Nordisk and AstraZeneca.

However, the drugmakers issued three lawsuits against HRSA in federal court, arguing that the agency didn’t have the authority to levy the fines.

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Federal judges in two of the lawsuits agreed with HHS that the agency has the authority to install the cuts. However, a third ruling upheld the decisions by the drugmakers.

HHS has until Jan. 4, 2022, to decide whether to appeal the decision, which hospitals are urging the agency to do.

“340B is a lifeline to hospitals caring for low-income patients and those living in rural communities,” the letter said. “340B savings allow us to stretch our scarce resources to serve more patients and offer more comprehensive services without using taxpayer dollars.”

Some of the hospital systems that signed onto the letter include Adventist Health, UnityPoint Health and Tampa General Hospital.

Under 340B, drug makers agree to offer discounts to safety-net providers in exchange for participation in Medicare and Medicaid. But the program has increased in recent years, as have the number of third-party contract pharmacies that dispense drugs on behalf of the covered entity.

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Drugmakers charge that the benefits of the discounts don’t trickle down to patients, while safety-net providers say the program is vital to help combat rising drug prices.

As the lawsuits make their way through federal court, more drugmakers have mimicked the restrictions.

Amgen and UCB Inc. have both cut off sales of 340B-discounted products to contract pharmacies.

It remains unclear how HRSA plans to proceed regarding the ruling. The agency issued a statement earlier this month that said it “respectfully disagrees” with the ruling but is evaluating its options.