HRSA Warns Drug Companies to Stop Denying 340B Discounts at Community Contract Pharmacies

May 20, 2021

In what could be a major victory for 340B hospitals, the federal Health Resources & Services Administration (HRSA) announced on May 17 that it intends to start fining drug manufacturers that illegally deny 340B discounts at contract pharmacies.
HRSA sent letters to six drug manufacturers putting them on notice that their policies restricting 340B discounts to covered entities is in direct violation of the 340B statute, that these actions must cease and that the drug manufacturers must credit or refund any overcharges to covered entities that resulted from these policies. Continued failure to provide 340B discounts may subject drug companies to civil monetary penalties of up to $5,000 per violation, in addition to paying back overcharges.
Last October, WHA was joined by more than 70 Wisconsin health care leaders in expressing concerns to the U.S. Department of Health and Human Services (HHS) and requesting it immediately enforce the requirements of the program prohibiting drug manufacturers from denying 340B discounts. In December, HHS wrote an advisory opinion concluding that drug manufacturers must offer 340B discounts to community contract pharmacies acting as agents of hospitals and other covered entities. However, the advisory opinion did not carry the force of law, and drug companies decided against following it. They have instead filed lawsuits challenging the opinion.
It is not yet clear if the new actions by HRSA will change drug manufacturers actions or if they will continue denying discounts while pursuing legal actions. HRSA requested the drug companies provide an update on their plans to conform to the law by June 1, 2021.
WHA will continue to closely follow this issue and advocate on behalf of 340B hospitals. Please contact WHA Vice President of Federal and State Relations Jon Hoelter with questions.

This story originally appeared in the May 20, 2021 edition of WHA Newsletter