A federal judge has upheld HHS authority to oversee and regulate proposals to the 340B Drug Pricing Program, rejecting efforts of several major pharmaceutical companies to impose rebate-based discount models without government approval, Bloomberg Law reported May 16.
In a ruling issued May 15, U.S. District Judge Dabney Friedrich found the U.S. Health Resources and Services Administration, a division of HHS, did not act unlawfully when it declined to approve rebate-based pricing models from drugmakers including Eli Lilly, Bristol Myers Squibb, Novartis AG and Sanofi.
The companies sought to shift from providing upfront discounts to post-sale rebate models for medications provided to hospitals and clinics serving low-income and uninsured patients.
The court rejected the claim that HRSA’s refusal to greenlight rebate models amounted to an unlawful deal, with the judge noting the agency is still reviewing several proposals. Judge Friedrich also denied requests from healthcare advocates to bar rebate models under the 340B statute.
In response to the ruling, drugmakers expressed some disappointment, but noted the court acknowledged rebate models are not barred under the 340B statute.
“While we are disappointed in the court’s decision overall, we appreciate that the opinion recognized that the 340B program is rife with abuse,” a Sanofi spokesperson said in a statement with Bloomberg. “We also applaud the court for ordering that HRSA address some of these flaws raised by Sanofi when reconsidering our 340B credit model.”
Maureen Testoni, president and CEO of 340B Health praised the ruling stating, “We are pleased this opinion recognizes the immense harm unilateral drugmaker rebate schemes would cause safety-net hospitals and the patients in need whom they serve. Allowing these rebate schemes to proceed without government approval would have enabled drugmakers, not the government, to control how providers use 340B and upend the way it has operated for more than 30 years.”
Bruce Siegel, MD, president and CEO of America’s Essential Hospitals said, “We thank the D.C. District Court for stopping drug manufacturers from unilaterally implementing profound 340B Drug Pricing Program changes that would force providers caring for underserved patients to float loans to manufacturers. The HRSA has rightfully seen through these proposals, which undermine hospitals’ ability to fulfill program intent. They are not attempts to improve compliance, but rather money grabs to reduce access to discounts.”
