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.

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Strategic partnerships have long been an important contributor to how drugs are discovered and developed. For decades, big pharma companies have been forming alliances with biotech innovators to increase R&D productivity, expand geographical reach and better manage late-stage commercialization costs.

Noël Brown, Managing Director and Head of Biotechnology Investment Banking, and Greg Wiederrecht, Ph.D., Managing Director in the Global Healthcare Investment Banking Group at RBC Capital Markets, are no strangers to the importance of these tie-ups. Noël has over 20 years of investment banking experience in the industry. Before moving to the banking world in 2015, Greg was the Vice President and Head of External Scientific Affairs (ESA) at Merck, where he was responsible for the scientific assessment of strategic partnership opportunities worldwide.

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How Chi­na turned the ta­bles on bio­phar­ma's glob­al deal­mak­ing

Fenlai Tan still gets chills thinking about the darkest day of his life.

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The Rett syndrome gene therapy drug made by AveXis — the biotech that was bought, kept separate, then renamed and finally absorbed by Novartis into its R&D division — has been dropped by the biopharma.

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FDA is much worse than its reg­u­la­to­ry peers at proac­tive­ly dis­clos­ing da­ta, re­searchers find

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Ugur Sahin, AP Images

As pres­sure to share tech­nol­o­gy mounts, BioN­Tech se­lects Rwan­da for lat­est vac­cine site

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The GlaxoSmithKline vet has now inked a deal that somewhat straddles the line between the two strategies.

Teaming up with Mabylon out of Zurich, SciNeuro is now looking to test the hypothesis that the human immune system can play a role in fighting neurodegenerative diseases by discovering and developing human autoantibodies against neurological “targets of mutual interests.” The new partners offered TAR DNA binding protein-43 (TDP-43) and apolipoprotein E (APOE), which are linked to ALS and Alzheimer’s, as examples.

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October is both breast cancer awareness and liver disease awareness month. While there’s no doubt which condition draws more attention during the month, Salix wants to change that.

Salix, Bausch Health’s gastroenterology arm, piloted its first chronic liver disease report and physician survey with results out this week aimed at raising awareness and dispelling stereotypes.

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Katie Fanning, Mozart Therapeutics CEO

Mozart Ther­a­peu­tics makes its of­fi­cial de­but, jump­ing in­to the hot Treg R&D field with some big-name in­vestors back­ing it

Treg cells have been getting more and more attention recently among autoimmune specialists. There’s been Jeff Bluestone’s Sonoma, the $157 million launch of GentiBio this summer and Egle Therapeutics — which launched just last week — to name a few.

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