How drugmaker restrictions on 340B discounts affect hospital pharmacies: 5 systems weigh in

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In July 2020, drugmakers began imposing restrictions on 340B discounts afforded to hospitals participating in the federal drug pricing program. Eight drugmakers have now put a restriction on 340B discounts, some requiring hospitals to submit claims data for patients filling prescriptions through a contract pharmacy and others putting limitations on how far a contract pharmacy can be located from a hospital. 

The 340B program was created in 1992 and requires drugmakers to offer discounts on all outpatient drugs to hospitals and clinics that serve indigent populations. About 2,500 hospitals nationwide participate in the program. 

Five national hospital organizations filed a lawsuit against HHS in December, alleging it failed to force drugmakers to pay the discounts. HHS shortly after released an advisory opinion stating drugmakers should give the discounts to hospitals even if they use contract pharmacies, but in June the agency withdrew the opinion after being sued by AstraZeneca, Eli Lilly and Sanofi. 

On Sept. 22, the Health Resources & Services Administration sent letters to six drugmakers warning them that they may face monetary penalties for refusing to give hospitals the drug discounts.  

Becker's Hospital Review spoke with five health systems on how restrictions to 340B discounts have affected their pharmacy operations. 

Editor's note: Responses were edited lightly for length and clarity and are listed in alphabetical order. 

Elie Bahou, PharmD. Senior vice president and chief pharmacy officer at Providence (Renton, Wash.): This restriction is a major issue because many hospitals do not have their own pharmacies or rely on contract pharmacy relationships to serve patients. These pharmacies dispense adjacent to where qualified outpatients usually reside.

The eight drug companies' actions have effectively reduced the number of dispensing partnerships, which not only impacts 340B pharmacy operations, but patients may need to travel greater distances to get to a pharmacy or pay more for their drugs. These effects are especially felt in small, rural communities.

Providers and pharmacists have been forced to scramble for therapeutic alternatives that may be less effective, while facing patients with anxiety about being able to obtain the drugs they need. Unsurprisingly, many patients do not have the time or capacity to overcome barriers put in the way of practical patient assistance.

Without funding from 340B, hospitals may be forced to cut critical services, including cancer care and infusion services, diabetes care, utilization management efforts, medication adherence, mental health and substance abuse care and pulmonary services.

As originally intended by Congress, hospitals use their pharmacy 340B savings to fund a wide range of pharmaceutical support and vital care services that would otherwise be unavailable to underserved patients and the communities we serve.

Gary Kerr, PharmD. Chief pharmacy officer at Baystate Health (Springfield, Mass.): Our 340B savings are used to support critical pharmacy services in our underserved communities, aimed at improving access to pharmaceuticals and essential wrap-around services. Examples include our Narcan programs with first responders; our pharmacist and technician COVID-19 immunization services; our discharge prescription services that include medication education and assistance with transitions of care; our health center-based diabetes, HIV and pharmacotherapy services; and our embedded specialty pharmacy liaisons at our regional cancer center, children's specialty center and other clinic locations.

Any and all of these programs are at risk as drug discounts are denied, and the impacts are magnified during the global pandemic.

LeeAnn Miller, PharmD. Vice president and chief pharmacy officer at Yale New Haven (Conn.) Health: Several manufacturers have decided to no longer provide 340B discounts, despite patients and entities meeting eligibility requirements. This has detrimental effects, primarily to patients who may otherwise not be able to afford their medication and therefore abandon therapy. 

It also imposes hard costs on our system. The 340B program is designed to provide discounts to our most vulnerable populations. Eliminating patients' access to affordable medications can lead to utilization of higher cost healthcare resources, such emergency department visits and hospitalizations, resulting in higher overall expenses for both patients and healthcare institutions. The added and unnecessary expense this generates reduces hospitals' and hospital pharmacies' ability to invest in new clinical programs for our communities.

Additionally, as patients are denied the lower 340B cost option, many will opt not to fill the medication or look for financial assistance. Hospital pharmacies run medication assistance programs that work to identify funds to reduce the financial burden patients are exposed to from medication costs. When manufacturers deny the 340B discount, it places added burden back on the hospital pharmacy and care teams to find more affordable options and potentially delays patient care.

Wellstar Health System (Marietta, Ga.): Wellstar Health System relies on the discounted drug pricing from the 340B program to provide enhanced community benefits, and our patients have benefited from them. The 340B program helps us direct our resources where our communities' health needs are greatest.

The unlawful restrictions implemented by various manufacturers are contrary to the goals of the program, and prioritize profits over patient care. Our hospitals that are eligible to participate in the program have either not been able to purchase some products through our pharmacy networks or have been forced to pay for those products at wholesale acquisition cost, which is substantially higher than the 340B price. Both scenarios have improperly and unlawfully limited our abilities to expand access to care.

In addition to the financial burden, these unlawful restrictions cause an unnecessary administrative burden. When manufacturers refuse to comply with the program requirements, program participants like Wellstar must file a notice with HRSA. This dispute process takes time and effort, and the manufacturers know that many program participants who are focused on providing clinical care won't challenge the manufacturers' illegal activity.   

We saw our first manufacturer impose restrictions in July 2020. There are now eight manufacturers restricting access to 340B drugs in the contract pharmacy settings. The problem continues to grow despite HRSA confirming that the restrictions are unlawful and violate the 340B statute.

Jonathan Williams, PharmD. Pharmacy director (340B) at Cleveland Clinic: Like other safety-net providers across the country, we are continually working to reduce costs while improving outcomes. The recent removal of discount pricing by manufacturers adversely affects these efforts. In addition, predicating mandatory discount pricing on providers supplying patient data to help manufacturers mediate contract disputes with private insurers is inconsistent with the 340B statute and adds significant administrative burden to covered entities. We support HRSA in its continued efforts to enforce these discount requirements for drug companies.

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