Legal Update, Hill Day 2020

Legal Update

340B Program Attacks: What You Need to Know and How to Respond
By Elizabeth 'Issie' Karan and Mike Glomb

In recent weeks, three drug manufacturers have taken unprecedented actions that threaten covered entity participation in the 340B Discount Drug Pricing Program (340B Program). Although narrowly tailored, these announcements represent a new boldness from 340B Program opponents. Each drug manufacturers’ actions are slightly different, but all create significant concerns for covered entities and their patients. 

First, this week Sanofi began contacting covered entities listed in the 340B database and requesting submission of all claims of their products dispensed through contract pharmacies. In the FAQ section of Sanofi’s communication, Sanofi stated that if a covered entity does not provide this claims data that the covered entity will no longer be eligible to place “bill to/ship” to replenishment orders for Sanofi products dispensed through contract pharmacy. Second, and somewhat similar to Sanofi’s request, earlier this month Merck sent letters to seemingly every covered entity in the 340B Program database, requesting submission of all 340B contract pharmacy claims data on Merck products. Sanofi and Merck are utilizing the same vendor to compile submissions, 340 ESP. Finally, effective July 1, 2020, Eli Lilly announced on the Office of Pharmacy Affairs (OPA) website that it will only provide certain formulations of Cialis directly to covered entities, stating “Contract pharmacies will not be eligible to receive these formulations of Cialis at the 340B ceiling price.” 

The actions of these manufacturers are disturbing and not fully supported by law. The 340B Statute allows the government and manufacturers to audit covered entities when they are “…(acting in accordance with procedures established by the Secretary relating to the number, duration, and scope of audits) … that directly pertain to the entity’s compliance with…” with prohibitions on duplicate discounts and diversion. (See Section 340B(a)(5)(C) of the Public Health Service Act). In short, manufacturers must make a “good faith” request for information based on credible allegations of non-compliance. OPA usually supports a manufacturer’s request for information but we do not believe that Sanofi or Merck’s approach meets the requirements of the 340B Statute or a “good faith” inquiry, given the breadth of distribution and the absence of any details. However, as recently as July 21, 2020, Admiral Pedley, who oversees the 340B Program, stated that OPA does not have authority to regulate contract pharmacies. While this is highly debatable, the fact remains that HRSA has chosen not to intervene on behalf of covered entities. 

Given access to treatment concerns for bleeding and clotting disorder patients, we do not recommend completely ignoring these manufacturer requests. However, any response must be carefully crafted to account for future developments and covered entity obligations related to 340B Program compliance. As such, we strongly encourage you to contact the Hemophilia Alliance if you are impacted as we can provide additional background and resources.

Both the Hemophilia Alliance and the 340B Coalition are responding rapidly to these developments by raising awareness with federal policymakers, members, and stakeholders, and considering additional actions. We take the activities of these manufacturers very seriously as they threaten hemophilia treatment centers’ ability to serve their patients. We would appreciate hearing from members about these issues as our ability to help protect the 340B Program depends on knowing what is happening in the field.

Please contact us with additional questions or concerns.

Also in this Issue…

Notes from Joe
· Advocacy Matters!

Washington Update

Payer Update
· HANS PPO Agreement: 32 signed, 75 to go!

Alliance Update

Notes from the Community
· Hemophilia Alliance Foundation Offers Additional Grant Opportunities for COVID-19 Patient Assistance