July 22, 2022

More drugmakers limiting 304B contract pharmacy sales

This month, Bausch Health became the 18th pharmaceutical manufacturer to restrict 340B drug discounts to contract pharmacies. This is the latest development in a protracted saga involving health systems, pharmaceutical companies, and the Department of Health and Human Services (HHS) over the contentious 340B Drug Pricing Program. At issue is the proliferation of drugs dispensed at retail and mail-order pharmacies that have contracts with 340B covered entities, which include many safety-net hospitals. 340B contract pharmacy sales have exploded in recent years, outpacing the growth of non-340B drug sales by over 20x in retail pharmacies and 7x in mail-order pharmacies from 2017 to 2020. In response to this trend, and based on claims of fraud involving duplicative patient discounts, several of the largest drugmakers have either halted sales to contract pharmacies or imposed restrictions. It’s clear that these restrictions are having a significant impact on contract pharmacy sales: 340B sales through retail and mail-order pharmacies shrank by over 20 percent for pharma companies that imposed restrictions in 2021. This has hurt 340B provider participants’ bottom lines, with the majority of hospitals reporting that they are projecting service cuts in order to recoup significant financial losses. While the Biden administration has signaled support for hospitals, courts have issued conflicting rulings about whether HHS can enforce contract pharmacy discounts. Undoubtedly, the ongoing scrutiny of the 340B program continues to raise questions about whether there are better ways to subsidize the operations of hospitals serving low-income patients.

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