HHS Advisory Opinion Affirms 340B Discounts for Community Contract Pharmacies, But Drug Companies May Not Comply

January 07, 2021

On Dec. 30, the U.S. Department of Health and Human Services (HHS) issued an advisory opinion concluding that drug manufacturers must offer 340B discounts to community contract pharmacies acting as agents of hospitals and other covered entities.

As reported in a recent The Valued Voice article, the issue stems from drug manufacturers denying discounts to 340B hospitals that utilize community contract pharmacies.

In reaching its conclusion, HHS said the plain meaning of the statute and the department's longstanding interpretation of it over the last 24 years consistently reinforce that drug companies must issue these discounts regardless of where the drugs are dispensed. It also noted that community contract pharmacies have been an integral part of the program from the outset, with less than 5% of covered entities using in-house pharmacies at the program's inception, and the rest using contract pharmacies. This is notable, as drug companies have tried to cast aspersion on the 340B program by alleging inordinate growth in the use of contract pharmacies.

Last October, WHA was joined by more than 70 Wisconsin health care leaders in expressing concerns to HHS and requesting it enforce the requirements of the program immediately. While this advisory opinion by HHS is a positive step for 340B hospitals, it does not carry the force of law, and it is unclear at this point what impact, if any, it will have on drug companies' actions. Eli Lilly, for instance, has announced it disagrees with the HHS advisory opinion and intends to continue its policy of denying discounts, while Sanofi said it intends to continue to require additional data from covered entities to receive discounts at contract pharmacies.

A federal lawsuit filed by the American Hospital Association and other hospital groups continues to press this issue, and WHA continues to advocate on behalf of its members for HHS to require drug makers to comply with the program.

Contact WHA Vice President of Federal and State Relations Jon Hoelter with questions.

This story originally appeared in the January 07, 2021 edition of WHA Newsletter