HHS cracks down on As­traZeneca, Eli Lil­ly, No­var­tis, No­vo Nordisk and Sanofi for lim­it­ing ac­cess to dis­count­ed drugs un­der the 340B pro­gram

Last sum­mer, some of the world’s top drug­mak­ers took mat­ters in­to their own hands and tried to halt the bal­loon­ing of a fed­er­al health pro­gram that re­quires the com­pa­nies to of­fer steep dis­counts on their prod­ucts to con­tract phar­ma­cies work­ing with hos­pi­tals that pri­mar­i­ly treat low-in­come pa­tients.

Com­pa­nies like No­var­tis and Eli Lil­ly raised con­cerns that the pro­gram, known as 340B, had grown be­yond what it was ini­tial­ly tasked to do. They al­so ex­plained how the pro­gram was lin­ing the pock­ets of these hos­pi­tals. The hos­pi­tals, mean­while, de­nounced the uni­lat­er­al moves by the drug­mak­ers to stop of­fer­ing the low­ered prices to con­tract phar­ma­cies and com­plained to HHS’ Health Re­sources and Ser­vices Ad­min­is­tra­tion (HRSA), which runs the 340B pro­gram.

Di­ana Es­pinosa

On Mon­day, HHS took the side of the hos­pi­tals.

HRSA Act­ing Ad­min­is­tra­tor Di­ana Es­pinosa sent iden­ti­cal let­ters to As­traZeneca, Eli Lil­ly, No­var­tis, No­vo Nordisk, Sanofi and Unit­ed Ther­a­peu­tics, ex­plain­ing how the ad­min­is­tra­tion has de­ter­mined that their poli­cies that place re­stric­tions on 340B pro­gram pric­ing re­lat­ed to con­tract hos­pi­tal phar­ma­cies are in di­rect vi­o­la­tion of the 340B statute.

“Noth­ing in the 340B statute grants a man­u­fac­tur­er the right to place con­di­tions on its ful­fill­ment of its statu­to­ry oblig­a­tion to of­fer 340B pric­ing on cov­ered out­pa­tient drugs pur­chased by cov­ered en­ti­ties,” Es­pinosa’s let­ter says. “Fur­ther­more, the 340B statute does not per­mit man­u­fac­tur­ers to im­pose con­di­tions on cov­ered en­ti­ties’ ac­cess to 340B pric­ing, in­clud­ing the pro­duc­tion of claims da­ta.”

Es­pinosa al­so ex­plained how if the com­pa­nies claim their re­stric­tive ac­tions are to pre­vent di­ver­sions and du­pli­cate dis­counts, there’s a mech­a­nism by which they can ad­dress these con­cerns with an au­dit and sub­mit­ting a claim through an Ad­min­is­tra­tive Dis­pute Res­o­lu­tion process.

The let­ters al­so tell the com­pa­nies that they “must im­me­di­ate­ly be­gin of­fer­ing” cov­ered out­pa­tient drugs at the 340B ceil­ing price to cov­ered en­ti­ties through their con­tract phar­ma­cy arrange­ments, re­gard­less of whether they pur­chase through an in-house phar­ma­cy.

Sanofi said in an emailed state­ment that it sup­ports the core ob­jec­tive of the 340B pro­gram to in­crease ac­cess to out­pa­tient drugs for unin­sured and vul­ner­a­ble pop­u­la­tions.

“How­ev­er, waste and abuse in the form of du­pli­cate dis­counts – when man­u­fac­tur­ers pay Med­ic­aid re­bates on 340B-priced drugs – has be­come in­creas­ing­ly preva­lent in re­cent years with over 30% of Health Re­sources and Ser­vices Ad­min­is­tra­tion (HRSA) au­dits of cov­ered en­ti­ties in 2018-2019 find­ing Med­ic­aid du­pli­cate dis­count­ing,” the com­pa­ny said. Sanofi last Oc­to­ber launched an ini­tia­tive to lim­it the use of con­tract phar­ma­cies and col­lect lim­it­ed, de-iden­ti­fied, claims da­ta on 340B-priced drugs dis­pensed by con­tract phar­ma­cies.

Lil­ly said in a state­ment that it “has con­tin­ued to of­fer 340B ceil­ing prices to all cov­ered en­ti­ties, and be­lieves that pa­tients – not large, for-prof­it con­tract phar­ma­cies — should ben­e­fit from those 340B drug dis­counts.” And No­var­tis said it will give the let­ter a thought­ful re­view and re­spond to HRSA.

The oth­er com­pa­nies did not im­me­di­ate­ly re­spond to a re­quest for com­ment, but the bio­phar­ma in­dus­try group PhRMA al­so ex­pressed con­cerns with the 340B pro­gram.

Nicole Lon­go

“We con­tin­ue to have con­cerns with the in­creas­ing num­ber and role of con­tract phar­ma­cies in the 340B pro­gram and the lack of ev­i­dence that their par­tic­i­pa­tion in 340B has im­proved pa­tients’ ac­cess to med­i­cines. The fact is that con­tract phar­ma­cies were nev­er au­tho­rized by Con­gress in statute, nor does the 340B statute re­quire man­u­fac­tur­ers to ship 340B med­i­cines to con­tract phar­ma­cies,” said PhRMA spokesper­son Nicole Lon­go.

“Con­tract phar­ma­cies on­ly ap­pear in sub-reg­u­la­to­ry guid­ance, which can­not im­pose any bind­ing re­quire­ments on the pub­lic and lack the force and ef­fect of law. Past re­ports from in­de­pen­dent gov­ern­ment watch­dogs have shown there is lit­tle to no over­sight of con­tract phar­ma­cies and no way of en­sur­ing cov­ered en­ti­ties are us­ing the pro­gram to the ben­e­fit of Amer­i­ca’s vul­ner­a­ble pa­tients. That’s why we are ad­vo­cat­ing for mean­ing­ful im­prove­ments to the pro­gram that en­sure pa­tients di­rect­ly ben­e­fit from the tens of bil­lions of dol­lars in dis­counts that man­u­fac­tur­ers pro­vide each year,” she added.

Oth­ers rep­re­sent­ing the hos­pi­tal in­dus­try were pleased by the let­ters from HRSA.

“As we have been say­ing for near­ly a year, the 340B statute re­quires drug man­u­fac­tur­ers par­tic­i­pat­ing in the pro­gram to pro­vide dis­count­ed prices to sup­port the care of pa­tients. The de­nial of these dis­counts has dam­aged providers and pa­tients and must stop. It is vi­tal that these com­pa­nies im­me­di­ate­ly be­gin to re­pay the mil­lions of dol­lars owed to these providers,” 340B Health, a non­prof­it mem­ber­ship or­ga­ni­za­tion of more than 1,400 pub­lic and pri­vate non-prof­it hos­pi­tals and health sys­tems, said in a state­ment.

M&A: a crit­i­cal dri­ver for sus­tain­able top-line growth in health­care

2021 saw a record $600B in healthcare M&A activity. In 2022, there is an anticipated slowdown in activity, however, M&A prospects remain strong in the medium to long-term. What are future growth drivers for the healthcare sector? Where might we see innovations that drive M&A? RBC’s Andrew Callaway, Global Head, Healthcare Investment Banking discusses with Vito Sperduto, Global Co-Head, M&A.

15 LGBTQ lead­ers in bio­phar­ma; Paul Stof­fels’ Gala­pa­gos re­vamp; As­traZeneca catch­es up in AT­TR; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

A return to in-person conferences also marks a return to on-the-ground reporting. My colleagues Beth Synder Bulik and Nicole DeFeudis were on-site at Cannes Lions, bringing live coverage of pharma’s presence at the ad festival — accompanied by photos from Clara Bui, our virtual producer, that bring you right to the scene. You can find a recap (and links to all the stories) below.

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AstraZeneca's new Evusheld direct to consumer campaign aims to reach more immunocompromised patients.

As­traZeneca de­buts first con­sumer cam­paign for its Covid-19 pro­phy­lac­tic Evusheld — and a first for EUA drugs

AstraZeneca’s first consumer ad for Evusheld is also a first for drugs that have been granted emergency use authorizations during the pandemic.

The first DTC ad for a medicine under emergency approval, the Evusheld campaign launching this week aims to raise awareness among immunocompromised patients — and spur more use.

Evusheld nabbed emergency authorization in December, however, despite millions of immunocompromised people looking for a solution and now more widespread availability of the drug.

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Abortion-rights protesters regroup and protest following Supreme Court's decision to overturn Roe v. Wade. (AP Photo/Gemunu Amarasinghe)

Fol­low­ing SCO­TUS de­ci­sion to over­turn abor­tion pro­tec­tions, AG Gar­land says states can't ban the abor­tion pill

Following the Supreme Court’s historic decision on Friday to overturn Americans’ constitutional right to an abortion after almost 50 years, Attorney General Merrick Garland sought to somewhat reassure women that states will not be able to ban the prescription drug sometimes used for abortions.

Following the decision, the New England Journal of Medicine also published an editorial strongly condemning the reversal, saying it “serves American families poorly, putting their health, safety, finances, and futures at risk.”

Joe Wiley, Amryt Pharma CEO

Am­ryt Phar­ma sub­mits a for­mal dis­pute res­o­lu­tion to the FDA over re­ject­ed skin dis­ease drug

The story of Amryt Pharma’s candidate for the genetic skin condition epidermolysis bullosa, or EB, will soon enter another chapter.

After the Irish drugmaker’s candidate, dubbed Oleogel-S10 and marketed as Filsuvez, was handed a CRL earlier this year, the company announced in a press release that it plans to submit a formal dispute resolution request for the company’s NDA for Oleogel-S10.

Sen. Thom Tillis (R-NC) (J. Scott Applewhite/AP Images)

Phar­ma-friend­ly sen­a­tor calls on FDA for a third time to show patent pro­tec­tions should­n't be blamed for high drug prices

North Carolina Republican Sen. Thom Tillis made a name for himself in the 2020 election cycle as the darling of the pharma industry, accepting hundreds of thousands in campaign contributions, even from the likes of Pfizer CEO Albert Bourla.

Those contributions have led Tillis to attempt to re-write patent laws in pharma’s favor, a move which failed to gain steam in 2019, and request for a third time since January that the FDA should help stop “the false narrative that patent protections are to blame for high drug prices.”

EMA signs off on 3 drugs re­cent­ly re­ject­ed by FDA, in­clud­ing Bio­Mar­in's new he­mo­phil­ia gene ther­a­py

The EMA’s human medicines committee on Friday recommended three new drugs for approval or conditional approval, even as their US counterparts have rejected these three for various reasons.

In a major move, CHMP offered a thumbs-up to a conditional marketing authorization for the first gene therapy to treat severe hemophilia A, although the agency cautioned that it’s so far unknown how long the effects of infusion will last.

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When will the FDA re­scind a break­through des­ig­na­tion? New draft guid­ance spells out the com­pli­cat­ed de­tails

Although it’s exceedingly rare for the FDA to rescind a breakthrough designation once it’s granted, there has been a recent uptick — as in 2020 and 2021 combined, the agency rescinded 17 BTDs, compared to just 18 rescinded from 2015 to 2019 combined.

Protagonist Therapeutics saw this reality up close and personal in April after a clinical hold lifted on its experimental blood cancer drug, as the company revealed that the FDA sought to revoke the BTD. The decision, Protagonist says, stems from “observed malignancies” related to the hold, initially imposed in September 2021.

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De­spite a slow start to the year for deals, PwC pre­dicts a flur­ry of ac­tiv­i­ty com­ing up

Despite whispers of a busy year for M&A, deal activity in the pharma space is actually down 30% on a semi-annualized basis, according to PwC’s latest report on deal activity. But don’t rule out larger deals in the second half of the year, the consultants said.

PwC pharmaceutical and life sciences consulting solutions leader Glenn Hunzinger expects to see Big Pharma companies picking up earlier stage companies to try and fill pipeline gaps ahead of a slew of big patent cliffs. Though a bear market continues to maul the biotech sector, Hunzinger said recent deals indicate that pharma companies are still paying above current trading prices.