September 29, 2022

Manchin, Braun Urge HHS to Crack Down on Pharmaceutical Companies Violating Affordable Medications Program

Washington, DC – U.S. Senators Joe Manchin (D-WV) and Mike Braun (R-IN) urged U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra to crack down on the actions of numerous pharmaceutical companies who continue to violate the 340B Drug Pricing Program that helps provide medicines to low-income West Virginians and Hoosiers. There are 37 hospitals in the state of West Virginia and 58 hospitals in the state of Indiana that participate and rely on the 340B Program.

The Senators said in part, “We write to ask that you and the Department of Health and Human Services (HHS) and its Office of the Inspector General (OIG) take immediate action to stop a series of alarming and escalating actions taken by several of the largest U.S. drug manufacturers and other stakeholders against our safety-net providers who participate in the 340B drug pricing program.  These actions are causing significant harm to safety-net providers participating in the 340B program and the millions of West Virginians and Hoosiers who rely on 340B covered entities for their care.”

“The 340B Program helps West Virginia hospitals serving vulnerable patients and communities manage rising prescription drug costs,” said West Virginia Hospital Association (WVHA) President and CEO Jim Kaufman. “This Program is making a big difference by ensuring access to care for residents in the Mountain State, and it’s helping to achieve savings at a time when hospitals are continuing to manage the aftermath and aftershocks of the most significant public health crisis in a century. Historic workforce shortages, broken supply chains, inflation, and low reimbursement have all presented challenges for West Virginia hospitals and 340B is an essential savings program that enables our hospitals to provide services to patients that they would not be able to access otherwise.”

“Our members are grateful to Senator Braun and Senator Manchin for leading in support of health care providers in Indiana and West Virginia, as well as those across the country on this urgent issue. The 340B drug pricing program is critical for hospitals and other entities that serve low-income patients. Given the current financial difficulties that our members are facing, further erosion of the 340B program threatens access to care in communities across Indiana,” said Brian Tabor, President of the Indiana Hospital Association.

The 340B Drug Pricing Program was created in 1992 to require drug companies who participate in the Medicaid program to provide discounted drugs to certain healthcare providers that serve vulnerable populations. During the COVID-19 pandemic, at least six drug companies took steps to deny access to discounted drugs for 340B covered entities that use contract pharmacies, which HHS has determined is in violation of the 340B statute. These actions are restricting access to medications for patients who need them the most, especially as the ongoing COVID-19 pandemic presents additional barriers for access to vital medications and care. These changes are also negatively affecting West Virginia and Indiana health centers and healthcare providers, who use the much-needed savings from the 340B Drug Pricing Program to stretch scarce federal resources and to pass benefits onto patients in the form of low-cost drugs and expanded access to essential patient care. The 340B Drug Pricing Program has significantly grown in size over the past decade and is now the second largest government drug program after Medicare and Medicaid. It is important that we maintain the utmost oversight, transparency and accountability for all participants in the program. This bipartisan effort is a critical first step in holding bad actor hospitals and pharmaceutical manufacturers who have taken advantage of the program accountable to ensure that it will always be there to meet the needs of patients who rely on it.

The full letter is available below or here.

Dear Secretary Becerra:

We write to ask that you and the Department of Health and Human Services (HHS) and its Office of the Inspector General (OIG) take immediate action to stop a series of alarming and escalating actions taken by several of the largest U.S. drug manufacturers and other stakeholders against our safety-net providers who participate in the 340B drug pricing program.  These actions are causing significant harm to safety-net providers participating in the 340B program and the millions of West Virginians and Hoosiers who rely on 340B covered entities for their care. 

There are 37 hospitals in the state of West Virginia and 58 hospitals in the state of Indiana that participate and rely on the 340B Program. For example, hospitals like West Virginia University Health System and Indiana University Health use their 340B savings to support patient care for vulnerable individuals, through critical programs such as bedside pharmacy discharge delivery and counseling. 340B also allows the health system to maintain a mobile lung cancer screening unit, as well as diabetes support groups. For some rural hospitals, 340B helps keep their doors open.

First, as you are aware, in summer 2020, nine drug companies started unlawfully denying 340B discounts to hospitals, health centers, and clinics that contract with community pharmacies to dispense drugs to their patients. Since this time, there has been overwhelming bipartisan opposition to these actions, and last year, HHS issued a strongly written advisory opinion (AO) concluding that these actions violate the 340B statute.  The restrictions imposed by drug companies on 340B discounts are causing alarming financial losses for safety-net hospitals, health centers, and other 340B providers as more companies impose such limits and increasingly target discounts on costly specialty drugs, HHS OIG needs to fully enforce the law against all drug manufacturers who unlawfully overcharge safety net health care providers.

We appreciate efforts HHS has taken thus far, including the Health Resources and Services Administration (HRSA) sending enforcement letters to nine drug manufacturers and referring the actions of seven companies to the HHS OIG to evaluate whether to impose penalties. The OIG is authorized to impose certain penalties against manufacturers that knowingly and intentionally overcharge 340B hospitals and health centers. We urge the OIG to conclude its review as soon as possible and take any necessary action against manufacturers that are in violation of federal law.

We also urge HHS to review further enforcement actions against the remaining nine drug companies that have implemented restrictive policies, but have not yet been notified they are violating federal law nor been subsequently referred to the OIG. It is critical that both HHS and OIG enforce the law and penalize manufacturers who are overcharging 340B providers and dissuade more manufacturers from implementing similar policies.

Since these denials began in the summer of 2020, Congress has written multiple bipartisan letters strongly opposing these actions, including letters to HHS calling for swift enforcement actions against manufacturers that overcharge covered entities participating in 340B. However, despite calls for enforcement and the actions HHS has already undertaken, the problem has gotten worse.

While we wait for the OIG to assess further action, more drug manufacturers have implemented policies restricting access to 340B pricing. A survey conducted in March 2022 showed that the estimated annualized impact of manufacturer overcharges has more than doubled since 2021. These actions are unlawfully denying hospitals’ drug savings they rely on to serve patients living with low incomes. The longer they are allowed to continue, the more harm this causes providers’ ability to care for patients most in need.

Thank you for your consideration in promptly addressing these critical and time sensitive issues.  We look forward to working with you to protect and preserve the 340B program and the many patients who rely on it for quality care in West Virginia, Indiana, and the rest of the country.