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Established the framework for the 340B program but did not address contract pharmacy arrangements explicitly.
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Allowed covered entities without in-house pharmacies to contract with a single external pharmacy to dispense 340B drugs.
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Medicaid Duplicate Discounts: Concerns arose regarding manufacturers being required to offer 340B discounts to covered entities while also paying Medicaid rebates for the same drugs. Manufacturers began scrutinizing 340B transactions more closely. Diversion Allegations: Manufacturers occasionally alleged that covered entities were diverting 340B drugs to ineligible patients, raising questions about compliance in contract pharmacy arrangements.
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Emergence of Audits:
- Manufacturers began conducting audits of covered entities to ensure compliance with 340B program requirements. Disputes Over HRSA Oversight:
- Several manufacturers questioned HRSA’s oversight and enforcement authority, particularly in cases where HRSA sought to impose penalties or require corrective actions for alleged violations. -
Broadened the eligibility criteria for participation in the 340B program to include:
- Critical access hospitals (CAHs)
- Free-standing cancer hospitals
- Sole community hospitals
- Rural referral centers
The expansion of covered entities indirectly increased the reliance on contract pharmacy arrangements to manage 340B-discounted drugs. -
Allowed covered entities to enter into arrangements with an unlimited number of contract pharmacies. Also, introduced compliance requirements for covered entities, including maintaining auditable records to prevent duplicate discounts and diversion.
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Update that reminded CE's to conduct independent annual audits and establish as well as maintain oversight mechanisms
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Provided clarification regarding contract pharmacies experiencing change of ownership
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Manufacturers, including Eli Lilly and Sanofi, cited concerns over program abuses and duplicate discounts under Medicaid and Medicare.
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The Biden administration directed HRSA to enforce compliance with 340B program requirements.
Issued letters to manufacturers (e.g., Eli Lilly, AstraZeneca) stating their restrictions on contract pharmacy arrangements violated the 340B statute.
Imposed fines and requested corrective actions. -
Novo Nordisk:
Limited hospitals to two contract pharmacies (one specialty, one regular) and required claims data submission.
United Therapeutics:
Phase 1: Accepted orders only from CEs with valid 340B purchases during the first three quarters of 2020.
Phase 2: Required claims data submission for contract pharmacy pricing.
Boehringer Ingelheim:
Restricted 340B pricing to drugs shipped to CEs and their child sites, with one contract pharmacy allowed if no in-house pharmacy existed. -
H.R. 4390 (340B PAUSE Act): Proposed a temporary halt to new contract pharmacy arrangements while federal oversight mechanisms were developed. The bill did not advance.
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Arkansas Act 1103: Mandated manufacturers honor 340B discounts for contract pharmacy arrangements, irrespective of manufacturer policies.
West Virginia Code §33-15: Prohibited manufacturers from discriminating against 340B contract pharmacies. -
Pfizer:
Required claims data submission and limited CEs without in-house pharmacies to a single contract pharmacy.
Merck:
Prohibited multiple contract pharmacies for 340B pricing, even with data submission.
Gilead:
Refused 340B pricing for Hepatitis C drugs dispensed at contract pharmacies without claims data submission.
Bayer:
Implemented distance limits (40 miles from hospital sites) for contract pharmacies and required claims data submission. -
Proposed Federal Legislation:
Protecting Access for the Underserved by Insuring Transparency and Equal Standards (PATIENTS) Act:
- Required manufacturers to provide 340B discounts regardless of dispensing location or method.
- Sought to codify HRSA’s position against manufacturer restrictions.
- Introduced new data reporting requirements for covered entities to enhance transparency. (Pending congressional approval) -
Johnson Johnson (JJ) proposed a rebate model requiring certain 340B covered entities, specifically disproportionate share hospitals, to purchase drugs like Stelara and Xarelto at full price and subsequently receive rebates to achieve the 340B ceiling price. HRSA rejected this proposal, asserting it violated 340B statutory obligations, and threatened enforcement action against JJ.