340B pharmacy case ruled in favor of drugmakers

A federal appeals court ruled in favor of three drugmakers Jan. 30 in a case over requirements of whether they should give 340B drug pricing discounts to contract pharmacies. 

HHS filed suit against Sanofi, AstraZeneca and Novo Nordisk with allegations of denying drug pricing discounts stipulated by Section 340B of the Public Health Service Act, which requires pharmaceutical companies to discount outpatient drug sales to healthcare organizations that serve uninsured and low-income patients. 

HHS lost.

"Congress never said that drugmakers must deliver discounted Section 340B drugs to an unlimited number of contract pharmacies," the court wrote in opinion. "So by trying to enforce that supposed requirement, the government overstepped the statute's bounds."

After HHS said 340B hospitals and other covered entities could use more than one outside ("contract") pharmacy in 2010, the number of contract pharmacies has increased twentyfold, according to court documents.

Advocates for HHS' argument say limiting discount privilege to these pharmacies worsens health equity. 

"Amid high prescription drug prices and limited federal resources, 340B hospitals rely on access to discounts through community and specialty pharmacies to care for their patients in need," Maureen Testoni, president and CEO of 340B Health, said in a statement. "Continued barriers to that access will weaken the healthcare safety net, harm patients with low incomes and those living in rural areas, and drive drug prices even higher."

America's Essential Hospitals said the ruling allows drugmakers to continue "unconscionable and harmful restrictions" that "jeopardizes access to lifesaving medications for disadvantaged patients."

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