HHS scraps policy to compel 340B discounts for contract pharmacies

HHS is withdrawing a December advisory opinion from the Health and Human Resources Administration requiring drugmakers to give 340B drug discounts to contract pharmacies, according to a court filing on Friday.

AstraZeneca, Eli Lilly, Sanofi and Novo Nordisk each sued the agency earlier this year, arguing that the opinion didn’t adhere to federal law and that drugmakers might not get a fair hearing if they were to file a complaint. The drugmakers’ cause got a boost last Wednesday after a federal judge denied HHS’ request to dismiss AstraZeneca’s challenge, allowing the case to go ahead. Now HHS is pulling the opinion “in the interest of avoiding confusion and unnecessary litigation,” the filing said.

The court filing reverses a December opinion from the Health Resources and Services Administration that mandated drugmakers offer lower prices to such pharmacies that operate within health care facilities that qualify for 340B pricing.

The department’s battle with drugmakers over 340B drug discounts for contract pharmacies continues, however. HRSA could still try to force the companies into compliance even without a blanket policy. The agency sent letters to six drugmakers last month, warning that they could face steep fines if they don’t discount drug prices for pharmacies that contract with 340B providers.

“Withdrawal of the December 2020 advisory opinion eliminates an unnecessary distraction created by drug company efforts to challenge the government’s authority to enforce the law. We look forward to continuing our work to fight the abuses of the 340B program by these companies and fully support HHS actions on this vital matter,” 340B Health CEO Maureen Testoni said in a statement.

Drugmakers are concerned with the rapid growth of contract pharmacy usage and have tried to limit the discounts they provide to on-site pharmacies run by covered entities and some contract pharmacies. That led to several lawsuits from community health centers and hospital groups.

CVS, Walgreens, Walmart, Rite-Aid and Kroger make up 60% of all contract pharmacies under the 340B program.