HHS' general counsel on Wednesday advised drugmakers that they must provide 340B discount prices to pharmacies that contract with covered entities.
Drugmakers in recent months have taken aggressive actions to crack down on 340B drug discounts through contract pharmacies and demand more data from healthcare providers. Pharmaceutical companies appeared to be testing how far they could challenge subregulatory guidance issued by the Health Resources and Services Administration that allows 340B providers to receive discounts while working with multiple contract pharmacies.
The action prompted several lawsuits, including those filed by community health centers and several hospital groups. HHS issued an opinion in support of covered entities.
"To the extent contract pharmacies are acting as agents of a covered entity, a drug manufacturer in the 340B Program is obligated to deliver its covered outpatient drugs to those contract pharmacies and to charge the covered entity no more than the 340B ceiling price for those drugs," HHS General Counsel Robert Charrow wrote in the advisory opinion.
The American Hospital Association, praised HHS' perspective and said further action needs to be taken.
"HRSA also needs to ensure that hospitals are made whole as a result of being denied appropriate discounts since these illegal practices began earlier this year," AHA CEO Rick Pollack said.
Drugmakers had voiced displeasure with the rapid growth of contract pharmacy usage and sought to restrict the discounts they provided to on-site pharmacies run by covered entities, or a limited number of contract pharmacies if providers didn't have an on-site option. Charrow said the drugmakers could not restrict their discounts in this way, as less than 5% of covered entities had on-site pharmacies.
"The (site) of delivery, be it the lunar surface, low-earth orbit, or a neighborhood pharmacy, is irrelevant," Charrow wrote.
The Pharmaceutical Research and Manufacturers of America did not immediately respond to a request for comment.
Although HHS said the advisory opinions do not carry the force of law, the views may be reflected in various regulatory, enforcement, and oversight powers the federal government has to run the 340B program.
340B Health, a coalition of hospitals and health systems that participate in the 340B drug discount program, welcomed the decision.
"The important work of repairing the damage done to these hospitals must begin as quickly as possible. We stand ready to work with the department to identify overcharges and facilitate refunds," 340B Health CEO Maureen Testoni said.