Protecting the 340B Program

Major efforts continue to protect the beleaguered discount drug program.

The American Hospital Association (AHA) filed a supporting brief to the US Court of Appeals in the third appellate district. SANOFI-AVENTIS U.S. LLC, Plaintiff-Appellant/Cross-Appellee, v. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al.

Summarizing the case, the pharmaceutical companies in 2020, as the COVID-19 pandemic roared, began refusing to give discounts on drugs purchased and distributed by 340B covered entities using contract pharmacies. The drug companies began refusing to honor 340B discounts unless the drugs were both purchased and dispensed by the covered entity.

Most 340B recipients do not operate their own in-house pharmacy. It is my opinion, and that of the AHA it appears, that there is no language in the 340B regulations requiring that only pharmacies operated by the 340B provider be allowed to benefit from 340B drug pricing. 

Due to the complexity of running a pharmacy, it is out of the budget for most 340B recipients to create an in-house pharmacy. It also ignores the economies of scale that using contract pharmacies provide.  Maybe as importantly, such in-house pharmacies would no be able to offer patients the benefits of technologies that scale.

In my opinion, this is part of an ongoing push by drug companies into the healthcare market, particularly the rural market. Drug companies have an inherent conflict of interest when they are both 340B drug providers and healthcare providers in the same markets. 

Few folks think of the Stark laws that restrict self-dealing among physicians and what is going on in the pharmaceutical industry. Maybe it is time to revisit Stark and add other providers including drug companies into Stark restrictions.