UNLAWFUL DRUG COMPANY LIMITS ON 340B PRICING ARE CAUSING BIG LOSSES FOR SAFETY-NET HOSPITALS
WASHINGTON, D.C.— Hospitals participating in the 340B drug pricing program are losing significant resources due to the unlawful actions of a group of drug companies that are limiting the availability of 340B discounts for drugs dispensed by community pharmacies. A new report that 340B Health released today quantifies the loss of savings and demonstrates these losses are particularly acute for the nation’s network of small, rural hospitals.
Since July 2020, a growing number of drug companies have begun imposing unilateral restrictions on the availability of discounted pricing for 340B hospitals, health centers, and clinics that partner with community-based pharmacies to dispense drugs to their patients. The number of companies that have implemented or announced such policies has grown to 12 in that time.
According to the results of a survey of 510 hospitals in November and December 2021, the losses caused by these policies are significant and growing:
- Large, mostly urban hospitals have lost 23% of the savings they derive from 340B discounts through community pharmacy partnerships. The median reported loss is $1 million, and 10% of these hospitals reported losses of $9 million or more.
- For critical access hospitals (CAHs), which are rural hospitals that have 25 beds or fewer and are the only hospitals within 35 miles of the next provider, the losses averaged 39%. This is an average of $220,000 per CAH, and 10% of these hospitals have lost $700,000 or more.
At the time of the survey, only eight of the 12 drug companies that are limiting 340B pricing had those policies in place, so the losses are expected to grow. Companies with community pharmacy limits are Eli Lilly, Sanofi, AstraZeneca, Novo Nordisk, Novartis, Amgen, Bristol Myers Squibb, Merck, AbbVie, United Therapeutics, UCB, and Boehringer Ingelheim.
“These figures are only the tip of a very dangerous iceberg,” said 340B Health President and CEO Maureen Testoni. “Our greatest concern is the impact on patients. With losses such as these, hospital administrators could be forced to reduce or eliminate health care programs, services, and support that are vital to the health of patients and communities. For rural hospitals, a loss of 340B savings can lead to the closure of facilities that are often the only source of care for broad areas of our country. These unlawful actions are weakening the health care safety net and pose a threat to patients. They must stop.”
The 340B program, enacted by Congress nearly 30 years ago, supports the safety net by requiring drug companies that want to participate in Medicaid and Medicare Part B to sign agreements that they will charge no more than the statutory ceiling prices for eligible outpatient drugs. Hospitals, health centers, and clinics use savings from those discounts to care for low-income patients and rural communities without expending any taxpayer dollars.
While the vast majority of the more than 700 drug companies participating in 340B are keeping their promises and following the law, the 12 manufacturers have acted unilaterally and unlawfully to impose limits. The Health Resources & Services Administration (HRSA) has notified companies that their actions are unlawful, ordered them to restore 340B pricing, and referred six cases to the Office of Inspector General at the Department of Health and Human Services to consider imposition of civil monetary penalties. Many of the drugmakers have gone to federal courts to try to block HHS from enforcing its orders, and three district court decisions have pending appeals.
Contact: Richard Sorian at richard.sorian@340bhealth.org or 202-536-2285.