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In recent weeks several major drugmakers have stopped providing 340B pricing for safety net hospitals

In recent weeks several major drugmakers have stopped providing 340B pricing for safety-net hospitals.

Mallory Hackett, Associate Editor

More than 1,100 hospitals have sent a letter to Health and Human Services Secretary Alex Azar demanding that the department enforce 340B drug pricing requirements.

In recent weeks several major drugmakers have stopped providing 340B pricings for safety net hospitals. First, AstraZeneca announced it would stop offering discounts for 340B drugs beginning October 1. Then, Eli Lilly cut off discounts for the drugs, with a limited exception for insulin products.

Merck, Sanofi and Novartis have also threatened to block access to discounts if hospitals don't provide them with claims data, which the letter says providers have no obligation to do under the law.

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The letter says that the actions of these manufacturers are "clear violations" of the 340B drug-pricing program and set a "dangerous precedent."

WHAT'S THE IMPACT?

The 340B program requires pharmaceutical companies to sell outpatient drugs to safety net providers to "stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services," according to the Health Resources and Services Administration.

In 2017 alone, 340B hospitals provided more than $64.2 billion in total benefits for their communities, according to a report from the American Hospital Association. The figures point to the value of the savings program to provide needed services to communities that otherwise wouldn't have access to them, according to Rick Pollack, AHA president and CEO.

The letter warns of the repercussions of allowing these practices to continue, saying that 340B hospitals may not be able to serve the same volume of patients, especially now during the pandemic.

THE LARGER TREND

The AHA has sent letters in July and September to HHS urging it to take action in preventing drug manufacturers from limiting the distribution of 340B drugs.

The most recent letter was on behalf of AHA's nearly 2,000 340B member hospitals and asked the department to act immediately to "ensure that 340B drugs are available and accessible to vulnerable communities."

In August, a federal appeals court ruled that 340B hospitals would be subject to Medicare cuts in outpatient drug payments by nearly 30%, reversing an earlier ruling calling those cuts illegal. Hospitals that qualify for the 340B program would get drugs for a discounted price and then get reimbursed at the original higher price. They would use the pay gap to cover operational expenses, an act that HHS and the appeals court deemed inappropriate.

The action was met with vastly different reactions from healthcare stakeholders. HHS Secretary Azar said the court's decision means vulnerable patients will pay less out-of-pocket for Medicare Part B drugs. Providers, on the other hand, said the 340B decision will hurt hospitals and the patients they serve.

ON THE RECORD

"These collective actions to deny access to 340B pricing are clear violations of the 340B statute that will set a dangerous precedent," the hospitals' letter states. "The statute requires manufacturers to provide the 340B discounts to entities that meet 340B's strict eligibility requirements and does not grant them the ability to condition the discounts or otherwise create barriers to covered entities' ability to access the discounts. If the administration permits pharmaceutical companies to continue these practices, 340B hospitals will face increased difficulties serving high volumes of patients living with low incomes in our rural and urban communities."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org