Hospitals sue HHS, say it's letting drugmakers skirt 340B program rules

Five national hospital organizations sued HHS last week, citing its "failure" to make drugmakers pay 340B discounts to hospitals that dispense their drugs through community pharmacies. 

Since September, six drugmakers have announced policies to stop giving 340B hospitals discounts on drugs dispensed through community pharmacies, arguing it causes them to pay duplicate discounts. Hospitals say it is illegal for drugmakers to create such policies since they deny hospitals drug discounts mandated by law. 

The lawsuit says that "despite frequent communications with HHS urging it to enforce the law and block these actions, the department has yet to do so. The 340B law does not permit drug companies to condition discounts on the locations where patients obtain these drugs."

The lawsuit asks the court to order HHS to require that drugmakers provide 340B discounts on drugs dispensed at community pharmacies, issue refunds to hospitals that were denied discounts and order HHS to refer the drugmakers to the HHS Office of Inspector General to assess penalties. 

"The 340B program plays a critical role in helping eligible hospitals provide a wide range of comprehensive services and low-cost drugs to vulnerable patients and communities, many of which have been the hardest hit by the COVID-19 pandemic," said Rick Pollack, president and CEO of the American Hospital Association. "This lawsuit will require the department to take actions that we’ve long called for against drug companies that are disregarding the law by limiting the distribution of certain 340B drugs to eligible hospitals. It’s time to stop these illegal actions from drug companies and protect vulnerable patients and communities."

The American Society of Health-System Pharmacists and three hospitals —  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 — are also named plaintiffs in the lawsuit in addition to the five hospital groups, which are: 

  • American Hospital Association
  • 340B Health
  • America's Essential Hospitals
  • Association of Medical Colleges
  • Children's Hospital Association

"Hospital and health system pharmacists have seen firsthand how critical the 340B program is in serving low-income patients in rural and urban areas throughout our country," said Paul Abramowitz, PharmD, ASHP's CEO. "Our patients depend on this program, which ensures that our most vulnerable populations have access to the care they need. Now more than ever, as we navigate a public health emergency, it is essential that the program be implemented as Congress intended it."

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