Congress Urges Action Against Pharma 340B Violators

Lawmakers seek "steep financial fines" for biopharmas not supplying discounted medicines as required by 340B.

Recently, the 340B discount pricing program has created a hornet's nest of pointing fingers and financial opportunities that were never intended to be part of the equation. Created in 1992 to support safety-net clinics (those providing care to uninsured patients) and qualifying hospitals through a discounted medicine program funded by biopharmaceutical manufacturers, the sole purpose was to give vulnerable patients access to necessary medicines.

Due in part to unclear language, lack of oversight, and rules with no enforcement power, parties on all sides – health systems, pharmacies, and biopharma– have been reported as taking advantage of loopholes that enabled them to profit from the program that was set up to help patients in need. The law, as written, does not require patients to benefit directly; absent this distinction, the law fails to outline exactly how the program should work, creating wiggle room for all involved.

It is from this thorny backdrop that the biopharma industry recently came under the 340B scrutiny microscope again. On Friday, July 15, a bipartisan group of the U.S. House of Representatives sent a letter to the Biden administration requesting "steep financial fines" on companies that are refusing to provide the discounted pricing. This is the third letter sent by Reps. Abigail Spanberger (D-Va.) and David McKinley (R-W.V.). Their appeal was sent first in 2020 and in 2021.

Since 2021, 12 more manufacturers have announced policies restricting access to the 340B program, the latest letter states. "These companies’ actions have increased costs for federal grantees and other safety net providers and have reduced patient access to care in vulnerable communities," it reads.

The letter asks the HHS Office of Inspector General (OIG) to conclude its ongoing review (started eight months ago) of seven drug companies that have been referred to it for continued refusals to come into compliance with federal law on 340B discounts. The law authorizes OIG to impose civil monetary penalties of up to more than $6,000 per drug claim on companies that are “knowingly and intentionally” overcharging 340B providers, and the lawmakers said those fines should start taking effect as soon as possible.

Up to 18 biopharma companies have restricted their 340B pricing programs, some stating that the program is growing too large. They are AbbVie, Amgen, AstraZeneca, Bausch Health, Boehringer Ingelheim, Bristol Myers Squibb, Eli Lilly, Exelixis, Gilead, GlaxoSmithKline, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Sanofi, UCB, and United Therapeutics. Not participating in the 340B is against federal law, however, over the past couple of years, court cases have both denied and upheld biopharma companies requests to not offer or to limit their 340B program.

Major drug companies such as AstraZeneca and Eli Lilly have no longer provide 340B-discounted products to contract pharmacies. Merck is suing the Biden administration to avoid potential fines for cutting off 340B contract pharmacies from getting discounted products.