340B Update: HRSA Notifies Six Manufacturers That They Are In Violation Of The 340B Statute

Husch Blackwell LLP

Since mid-2020, many pharmaceutical manufacturers have introduced policies that scope their offering of 340B pricing, including limiting contract pharmacy arrangements and requiring covered entities to submit claims data. These policies have generated a good deal of attention generally, and a significant number of covered entities have made attendant complaints to the Health Resources and Services Administration (HRSA).

On May 17, 2021, following an analysis of the covered entities’ complaints, HRSA’s Acting Administrator Diana Espinosa notified six pharmaceutical manufacturers that HRSA has determined their policies are in direct violation of the 340B statute. Common to all six letters is the following language:

[The drug manufacturer] must immediately begin offering its covered outpatient drugs at the 340B ceiling price to covered entities through their contract pharmacy arrangements…[the drug manufacturer] must comply with its 340B statutory obligations and the 340B Program’s CMP final rule and credit or refund all covered entities for overcharges that have resulted from [this] policy. . . . Continued failure to provide the 340B price to covered entities utilizing contract pharmacies, and the resultant charges to covered entities of more than the 340B ceiling price, may result in CMPs as described in the CMP final rule.[1]

Two policies are at issue across the six manufacturers:

  • Placing restrictions on 340B pricing to covered entities that dispense medications through pharmacies under contract, unless the covered entity lacks an in-house pharmacy
    • AstraZeneca Pharmaceuticals, LP
    • Eli Lilly and Company
    • Novo Nordisk Inc. and Novo Nordisk Pharma, Inc.
  • Placing restrictions on 340B pricing to covered entities that dispense medication through pharmacies, unless the covered entities provide claims data to a third-party platform
    • Novartis Pharmaceuticals Corporation
    • Sanofi
    • United Therapeutics Corporation

Each manufacturer must provide HRSA by June 1, 2021 with an update on its “plan to restart selling, without restriction, 340B covered outpatient drugs at the 340B price.”

HRSA’s May 17, 20201 announcement can be found here.

[1] If a manufacturer knowingly and intentionally charges a covered entity more than the ceiling price for a covered outpatient drug, it may be liable for a CMP of up to $5,000 per instance (over and above making the covered entity whole for the price differential).

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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