The hospital lobby is asking federal officials to head off expanded data collection policies some drugmakers are implementing for providers participating in the 340B drug discount program.
The change was first broached by Eli Lilly and Company in January, and requires all types of covered entities to provide claims level data for all pharmacy and medical dispensations of most of the company’s drugs, including in-house pharmacy and contract pharmacy dispenses. It went into effect on Feb. 1, with exemptions for a handful of states where such policies are restricted by law.
Earlier this week Novo Nordisk followed suit, issuing a similar notice regarding its own products, with an effective date of April 1. Both organizations had previously been collecting such data on a limited basis, and said the ramp up would help them spot duplicate discounts and compile the data needed to initiate audits when necessary.
Hospitals pushed back on Lilly’s initial change, and are doing so again with Novo’s announcement amid concerns that inaction will encourage more drugmakers to follow their example.
With Lilly, the American Hospital Association (AHA) penned a letter to the Health Resources and Services Administration (HRSA), which oversees the 340B program, petitioning for a block. It warned that the increased reporting would “vastly increase the costs and burdens on 340B hospitals,” and noted that prior compliance with Lilly’s similar requirement for contract pharmacy already takes weeks to months to compile.
“At best, Lilly’s new requirements will be prohibitively costly for 340B hospitals. At worst, they will be unworkable,” the AHA wrote in January. “Either way, they will prevent hospitals from obtaining the 340B discounts they are owed by statute.”
A similar letter was also penned by other hospitals and organizations including America’s Essential Hospitals, which said Lilly was illegally withholding access to the statutory discounts and hadn’t given sufficient notice of the change.
HRSA didn’t take action against Lilly’s policy, a snub the AHA noted in a follow-up letter sent this week regarding Novo’s policy change.
“Respectfully, now that Novo has chosen to impose the same onerous costs on America’s hospitals, HRSA cannot remain silent,” the new letter reads. “ … HRSA’s silence at this critical moment is troubling. We hope that HRSA will take immediate enforcement action, including the use of civil monetary penalties, against both Lilly and Novo to halt their new policies. But if HRSA is not going to take such action, it must let 340B hospitals and other stakeholders know that and explain why these new policies are lawful under the 340B statute.”
Lilly, in its own January letter to HRSA, responded to hospitals’ “unsubstantiated and unfounded complaints” by telling the administration that the “extension” of its prior requirements does not impose new burdens and is consistent with statute and recent court decisions surrounding the program.
“The government has routinely cited manufacturers’ ability to obtain claims data in recent litigation over the 340B program,” Lilly wrote. “Specifically, the ability to obtain claims-level data as a condition of the 340B offer was one of the rationales the government offered, and courts relied on, in denying manufacturers’ proposals to implement a rebate model,” referencing a decision handed down last spring.
Lilly also noted that it would not be using the claims data to adjust the discounted prices hospitals receive, but to monitor for duplicates and improve compliance.
Novo similarly outlined goals of “340B program integrity and transparency” in its notice sent this week. Fierce Healthcare has reached out to the company for further comment.
The Trump administration has largely kept an open ear to drugmakers’ calls for new curbs on potential misuse of 340B’s discounts.
It attempted to implement a pilot program at the top of this year that would have swapped out the programs’ discounts with manufacturer-directed rebates—an approach the pharmaceutical industry said would limit improper or duplicate discounts—but was blocked in court by hospital associations and subsequently dropped the program. The administration is now spinning up a second attempt to implement the rebate pilot, having opened a new public comment period for feedback last month.
More recently, the administration took a step to rein in a state-led push to maintain providers’ flexibility in securing the discounts.
In Colorado, a law that prohibits drugmakers from placing restrictions on covered entities’ contract pharmacy agreements (similar to some passed in other states) was challenged in court by AbbVie and, after a district court’s denied preliminary injunction, appealed to the 10th Circuit. In a first for such litigation, the Justice Department filed last week in support of the drugmaker, arguing that Colorado’s law was preempted by federal statute outlining the program and the federal government’s role in oversight and enforcement.
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