Six healthcare provider associations, including the American Hospital Association and America's Essential Hospitals, and three hospitals have filed a federal lawsuit against HHS seeking increased enforcement of the 340B drug pricing program.
The suit accuses HHS of not requiring drug companies to provide discounted drugs to hospitals in the program as mandated by 340B regulations, according to a news release from the group, which also includes 340B Health, the Association of American Medical Colleges, the Children's Hospital Association and the American Society of Health-System Pharmacists. Also participating in the suit, filed in U.S. District Court for the Northern District of California, are Avera St. Mary's Hospital in Pierre, S.D., Riverside Regional Medical Center in Newport News, Va., and St. Mary's Medical Center in San Francisco.
The suit alleges that drugmakers are refusing to provide discounts to drugs provided by community-based pharmacies, according to the release.
The release said they are seeking an order that HHS require the drug companies to provide 340B discounts on drugs dispensed at community-based pharmacies and issue refunds to hospitals that were refused discounts. The suit also asks for an order requiring HHS to assess penalties against drug companies involved.
"Drug industry players have moved without restraint to undermine the 340B drug pricing program, putting access to vital medications at risk for millions of Americans and destabilizing hospitals—including those on the front lines of the COVID-19 pandemic," said Dr. Bruce Siegel, CEO of America's Essential Hospitals, in the release.
The Pharmaceutical Research and Manufacturers of America says the program has gotten off-track with its use of contract pharmacies, which are not mentioned in the law. "The exponential growth in the number of contract pharmacies participating in 340B, including the largest for-profit chain pharmacies in the country, is just one example of how the program has evolved away from what Congress originally envisioned. There is also little to no evidence that contract pharmacy participation in 340B has improved patients' access to medicines," PhRMA said in a prepared statement.
"Contract pharmacy arrangements were born out of guidance issued by the Health Resources and Services Administration. … Unlike laws and regulations, agency guidance cannot impose any binding requirements on the public and lack the force and effect of law," the drugmakers' group said.
HHS' HRSA declined comment.
Just this week, HHS created a board to resolve payment disagreements called the 340B Administrative Dispute Resolution Board. The dispute resolution process proposed in 2016 allows covered entities to force drugmakers into a process that would result in final, binding decisions by the agency. The policy is a win for safety-net providers, like those represented by America's Essential Hospitals. But it's unlikely to end the heated conflict between providers and drugmakers over providers' use of contract pharmacies.
The rule goes into effect next month, just days before President-elect Joe Biden takes office. It will be up to his administration to implement the rule.