20210524 HRSA Update - HRSA delivers a win for 340B, but covered entities may have to wait for results 

HRSA delivers a win for 340B, but covered entities may have to wait for results 

The 340B world received a big dose of good news this week when the Health Resources and Services Administration (HRSA) notified six drug manufacturers that their practice of not extending 340B pricing to contract pharmacies was in violation of the statute.

In letters sent on May 17, Diana Espinosa, HRSA Acting Administrator, ordered the manufacturers to immediately return to offering 340B pricing to covered entities for drugs dispensed through their contract pharmacies. She also directed the companies to submit plans by June 1 for reselling 340B drugs through contract pharmacies without restriction, and she floated the threat of Civil Monetary Penalties of $5,000 per overcharged transaction in addition to paying refunds for those drugs.

Like our customers, all of us at Sentry are eager to see how the manufacturers respond, beyond the public statements many have issued defending their actions. Recent precedent strongly suggests that at least some of the drug companies are girding for a fight on this issue and will look to either delay complying with the order or file lawsuits and entrench their positions.

The dispute began nearly a year ago when Eli Lilly published notice that it would not offer 340B pricing on its popular drug Cialis when dispensed at contract pharmacies. Since then, AstraZeneca, Novartis, Novo Nordisk, Sanofi and United Therapeutics joined in with various contract pharmacy restrictions of their own.

What it means for covered entities

Sentry has kept the needs of customers front and center. And because we are a data company, we understand the importance of being able to clearly demonstrate the impact these manufacturer restrictions have had on covered entities.

Accordingly, Sentry has been compiling impact reports since September 2020 that have tracked cumulative exclusions from each manufacturer based on claims submitted to us. Those reports are available via request to our customers through their account management teams or the SentryOne Help Team to help support them in their dispute.

What will happen next?

Each of the manufacturers has taken slightly different approaches to the contract pharmacy exclusions, which suggests we could see six different approaches to lawsuits filed in six different courts. We have already seen this week, three of the manufacturers filed motions in relation to the letters. Even if some choose to simply comply, the odds are good that, given the long lead cycle of pricing updates by wholesalers, the process of restarting 340B pricing will drag on past June 1. In addition to wholesaler and manufacturer roles, contract pharmacies and covered entities will need to review missed opportunities and assess how they’re impacted by these past 340B eligible claims, that have not been available. They may also eventually choose to seek reimbursement once 340B prices are available. Several questions remain on what a refund or credit would look like and how covered entities, after close to a year of missed inventory and reimbursement, will be made whole. For now, 340B price availability is not listed for these manufacturers (with the exception of one manufacturer that had previously moved their implementation date), and any ordering today will continue to result in overcharges. The bigger question, who does this dangerous pricing game ultimately impact? Patients.

Nevertheless, HRSA’s move is undoubtedly a positive one and follows a recent string of encouraging moves from the federal government. We continue to monitor the situation closely and are working with our teams on any changes to manufacturer exclusions. And of course, we’ll be providing updates as we have them.