HHS lines up Novartis, Lilly, AstraZeneca and 3 other drugmakers for fines due to drug discount violations
As drugmakers continue to battle President Biden’s HHS in court over alleged 340B drug discount violations, HHS sent letters on Wednesday to six companies informing them that their violations have been referred to the HHS Office of the Inspector General, which can levy $5,000 fines each.
At issue is whether the companies have to offer discount pricing to safety-net providers through certain contract pharmacy partnerships. The companies, including Novartis, Eli Lilly, AstraZeneca, Novo Nordisk, Sanofi, and United Therapeutics, have raised concerns that the 340B drug discount program has grown beyond what it was initially tasked to do, and now lines the pockets of covered hospitals and other providers. The companies also decided to stop offering the lowered prices to some contract pharmacies.
In May, HHS told the companies to comply with its 340B statutory obligations and to immediately begin offering covered outpatient drugs at the 340B ceiling price to covered entities. But Lilly, Novo Nordisk, and Novartis subsequently sued HHS, claiming the statute doesn’t require them to work with such contractors.
Lilly spokesperson Antoinette Forbes told Endpoints News: “We are disappointed to see HRSA’s continued attempt to circumvent the legal process.”
“Nothing in the statute contemplates — let alone requires — that manufacturers agree to ship drugs nominally purchased by covered entities directly to ‘contract pharmacies’ for dispensing to both patients and non-patients of the covered entity alike. And yet that is precisely what HRSA has purported to mandate here,” Novartis said in its suit.
Novartis spokesperson Caryn Marshall also told Endpoints that it’s “confident” its 340B policy “is in full compliance with the 340B statute and all binding regulations.”
But HHS is pushing ahead with the fines regardless, concluding these actions violate the 340B statute, and the OIG now will determine whether the companies are liable for “knowingly and intentionally” overcharging 340B hospitals and other providers.
Others that received the letters maintain that they’re acting in compliance with the law.
Nicolas Kressmann, spokesman for Sanofi, told Endpoints the company has been looking into 340B-priced claims since October 2020 and that it will pay Medicaid and other insurers’ rebate invoices accurately. “We continue to believe this integrity initiative complies with the 340B statute,” he said.
Michael Bachner, spokesperson for Novo Nordisk, added that his company “disagrees with the claims made by HRSA in its letter, which are also the subject of pending litigation commenced by Novo Nordisk and several other manufacturers. We stand behind the policies we have put in place to address the significant and well-documented abuses in the 340B program, resulting in program intermediaries such as for profit contract pharmacies profiting at the expense of patients.”