Novartis adds new restriction to 340B discount policy

Novartis has notified 340B hospitals that it will continue to honor contract pharmacy arrangements as long as they're within 40 miles of its parent facility, a change in practice that representatives of safety-net hospitals say would be unlawful.

In August, the drugmaker told member hospitals it would limit 340B discounts to contract pharmacies and would require them to submit Medicare Part D and commercial health claims for patients before the company would provide the discounts. Novartis said the move was intended to avoid paying duplicate discounts. 

In an updated letter sent to hospitals Oct. 30, Novartis said it will continue to honor contract pharmacy arrangements as long as the pharmacies are within a 40 mile radius of its parent facility. Novartis said the new policy is a "more focused, criteria-based approach that we believe will affirm the program's intent to serve the uninsured and vulnerable, while preserving the sustainability of this vital program." 

Novartis said the policy change will ensure the 340B drug discount program benefits the intended communities and is consistent with federal guidelines for hospitals and off-site affiliates. The drugmaker said it won't limit the number of contract pharmacies within the 40-mile radius that are eligible. 

But a group representing 340B hospitals says Novartis' revisions are unlawful.

"The 340B statute is crystal clear. Pharmaceutical companies that participate in Medicaid and Medicare Part B must sell certain outpatient drugs to eligible hospitals at no more than the ceiling price. They are not permitted to put limits on those discounts based on where hospitals are distributing the drugs to their patients," said Maureen Testoni, CEO of 340B Health. "Manufacturers that knowingly and intentionally overcharge for their drugs are subject to civil monetary penalties. It is long past time for the Department of Health and Human Services to put a stop to this unlawful behavior and protect safety-net hospitals and the patients they serve."

Since late June, Novartis, as well as Merck, Sanofi, Eli Lilly and AstraZeneca, have told 340B hospitals they may limit 340B discounts for various reasons. In September, a bipartisan group of 243 members of the House of Representatives sent a letter to HHS Secretary Alex Azar urging him to use his authority to stop drugmakers from blocking safety-net hospitals' access to 340B discounts.

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