Skip to main content
Sister Publication Links
  • ESG: THE IMPLEMENTATION IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Digital Health
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Unwell in America
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Legal
February 01, 2023 05:26 PM

Drugmakers restrict 340B sales after appellate court ruling

Alex Kacik
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    drugs_money
    MH Illustration

    Bayer and EMD Serono told customers Wednesday they would limit 340B discounts on drugs dispensed through contract pharmacies, announcements made just days after three other drug manufacturers were handed a court victory on the issue.

    Starting March 1, Bayer and EMD will only offer 340B drug discounts to hospitals and their affiliates registered as 340B-covered entities, the companies said in letters to customers. The decisions make Bayer and EMD two of around 20 companies that restrict 340B discounts distributed through outside pharmacies.

    The program has “strayed far from its original purpose” of helping safety-net hospitals increase access to medication for vulnerable, low-income populations, Bayer said in its letter. 

    Bayer did not respond to a request for comment. EMD said in a statement that the policy change does not deny a single discounted sale to any 340B-covered entity and that it supports the mission of the program.

    Monday's ruling in the Third Circuit Court of Appeals was largely in favor of three drug companies that imposed limits on 340B drug discounts provided to safety-net hospitals via contract pharmacies. The three-judge panel concluded the Health and Human Services Department cannot require AstraZeneca, Novo Nordisk and Sanofi to deliver 340B-discounted drugs purchased by hospitals to an unlimited number of community and specialty pharmacies. Two similar cases cases are pending in federal appeals courts.

    The three companies applauded the ruling. Hospital associations said it will result in greater profits for pharmaceutical companies at the expense of hospitals and the low-income individuals they serve.

    The 340B program gives hospitals that treat low-income and uninsured patients drug discounts as steep as 50%. Participation has grown considerably over the past two decades, prompting scrutiny from drug manufacturers and policymakers regarding whether hospitals are abusing the program.

    Monday's ruling could prompt other manufacturers that hadn’t limited 340B drug sales to contract pharmacies to take action, experts said.

    Because of the ruling, it is unlikely that HHS would issue any enforcement actions against manufacturers that limit the sales of 340B drugs, said Emily Cook, a healthcare partner at  law firm McDermott Will & Emery. “The decision Monday opened a path for drug manufacturers to impose more restrictions than they have been imposing to date on the sales of 340B drugs,” she said.

    More 340B hospitals may invest in their IT systems to meet drugmakers' 340B data requests to prove  the discounted drugs are benefiting vulnerable populations, said Ricky Yuen, a principal at the consultancy ZS.

    “The implication to 340B hospitals is that their contract pharmacy savings continue to be impacted, unless they comply to many of these pharmaceutical manufacturers’ requirements of submitting claims data in order to extend the 340B pricing back to multiple contract pharmacies,” he said in an email. 

    In 2010, HHS allowed 340B hospitals to use more than one contract pharmacy and since then, the compound annual growth rate of 340B purchases has grown by roughly 25%. Drugmakers began limiting 340B drug sales to outside pharmacies in 2020, alleging the practice led to more drugs entering the black market and, in some cases, to the drugmakers providing double discounts on the same drug.

    In addition to the two other pending cases involving contract pharmacies, there are two pending lawsuits involving the administrative dispute resolution process between 340B hospitals and drugmakers and another related to the 340B program definition of a patient and whether that definition is consistent with the 340B statute.

    Earlier this month, a federal judge ordered HHS to create a plan to correct underpayments made to 340B hospitals from 2018 to 2021 under a regulation the Supreme Court in June deemed unlawful. In 2018, the Centers for Medicare and Medicaid Services cut 340B reimbursement by nearly 30% and redistributed the money to all hospitals.

    CMS is expect to release more information about the repayment plan by April, Cook said. Hospitals may disagree with the terms and file lawsuits, she said.

    The American Hospital Association sent a letter to HHS Wednesday requesting a meeting to discuss the repayment plan. 

    Related Articles
    Judge tosses AHA challenge to 340B cuts
    Lawmakers worry providers are abusing the 340B program
    Lawmakers introduce 340B legislation to step up program oversight
    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    outcome-main_1.jpg
    Google investor describes troubling rumors heard before Outcome Health fell
    outcome health.png
    Outcome Health trial moves faster than expected as prosecution wraps up case
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Dose Newsletter: Sign up to receive a late afternoon weekday roundup of that day’s breaking news and developments in healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Digital Health
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Unwell in America
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing