July 340Buzz bonus edition: Pharma stirs the pot

July 340Buzz bonus edition: Pharma stirs the pot

This month, we bring you a bonus 340Buzz report in addition to our monthly blog post. Three pharma companies have attempted to stir the pot when it comes to what’s within their rights regarding the 340B program.

Merck and Sanofi release manufacturer notice demanding 340B data from covered entities

In late June, Merck began sending letters to covered entities seeking access to all contract pharmacy claims data for Merck products, ostensibly to minimize inadvertent Medicaid duplicate discounts – which occur when pharma companies provide a drug at a discounted 340B rate to hospitals and pay rebates to state Medicaid programs for the same drug. More recently, Sanofi also sent a similar letter, but more specifically with consequences spelled out should entities not provide data.

“We are asking all 340B covered entities to share 340B program contract pharmacy claims data for Merck products. Merck will use this data to match against rebate claims it receives to ensure it isn’t paying duplicate Medicaid discounts and duplicate discounts on Medicare Part D and commercial utilization through our contracts with commercial payers,” the letter reads. It then asks covered entities to register with a third-party organization – 340B ESP – by August 14, which will allow the hospitals to upload their claims data.

Of course, the problem with the requests is that covered entities are not legally required to provide their contract pharmacy claims data to pharma companies, and that there are already state policies – as well as HRSA audits – in place to make sure that Medicaid duplicate discounts do not occur.

Of particular concern is the apparent attempt to strong-arm covered entities into complying. “Absent significant cooperation from covered entities, Merck may take further action to address 340B program integrity, which may include seeking 340B program claims information in a manner that may be less collaborative and substantially more burdensome for covered entities,” the letter notes. While Sanofi says they “will no longer be eligible to place bill to/ship to replenishment orders for Sanofi products dispensed through a contract pharmacy”.

“This request goes well beyond inquiries that manufacturers often engage in to address compliance concerns. Threats of ‘further action’ absent cooperation from covered entities with such an overly broad request is not supported under the 340B statute,” said 340B Health president and CEO Maureen Testoni in a letter to hospitals about Merck.

Sentry agrees wholeheartedly with 340B Health’s position, and the 340B Coalition, on this issue. We anticipate that there may be some level of legal pushback from covered entities and/or hospital associations in the coming months.

Eli Lilly cuts ties with 340B contract pharmacies

Earlier this month, Eli Lilly issued a manufacturer notice to covered entities, published by HRSA, stating that the pharma company would stop offering 340B pricing for the drug Cialis (tadalafil) when the drug is purchased by a 340B covered entity to be dispensed through a contract pharmacy.

“Contract pharmacies will not be eligible to receive these formulations of Cialis at the 340B ceiling price,” the notice reads. “Covered entities that do not have an in-house pharmacy may contact 340B@lilly.com regarding the exception process to designate a contract pharmacy location.”

Effectively, if pharma companies stop selling drugs at 340B rates for contract pharmacies, uninsured patients will only be able to fill prescriptions for those drugs at in-house hospital pharmacies, thus eliminating a vast proportion of covered entities’ potential 340B savings, as well as eliminating patients’ ability to be provided a drug at an alternative location for a discount. In rural areas, this limitation would restrict 340B usage, because patients who must drive miles to receive care would face an additional barrier to accessing 340B.

“We believe this violates the law’s requirement that participating manufacturers must offer their products ‘at or below’ the 340B ceiling price to all eligible covered entities,” said Testoni in the same letter to hospitals in which she addressed the concerns about Merck. “We also believe this would result in an overcharge of covered entities that warrants the imposition of civil monetary penalties against manufacturers under the 340B statute and HRSA regulations … We believe that refusals to offer drugs at 340B prices are clearly aimed at curtailing the 340B program and must be stopped.”

Sentry is concerned that if this action goes unchallenged, Eli Lilly and other pharmaceutical companies could expand this policy to life-saving drugs as well, such as those for asthma or diabetes. Unfortunately, however, Eli Lilly’s decision does not technically violate the 340B Drug Pricing Provision as written; it only goes against a HRSA guidance on contract pharmacies issued in 2010, which Eli Lilly says is not enforceable.  However, in addition to the guidance, there are also 340B statutes and regulations that Eli Lilly’s move violates.

340B Health reached out to HRSA’s Office of Pharmacy Affairs (OPA) on this matter, and OPA’s response read, in part:

“In general, contract pharmacies are a mode for dispensing 340B drugs and serve a vital function in covered entities’ ability to serve underserved and vulnerable populations. Manufacturers that refuse to honor contract pharmacy orders would have the effect of significantly limiting access to 340B discounted drugs for many underserved and vulnerable populations who may reside in geographically isolated areas and rely on a contract pharmacy as a critical point of access for obtaining their prescriptions. HRSA strongly encourages all manufacturers to sell 340B priced drugs to covered entities through contract pharmacy arrangements … HRSA’s current authority to enforce certain 340B policies contained in guidance is limited unless there is a clear violation of the 340B statute. Without comprehensive regulatory authority, HRSA is unable to develop enforceable policy that ensures clarity in program requirements across all the interdependent aspects of the 340B program.”

Your voice matters

It is possible that there could be a series of lawsuits around the actions of Merck, Sanofi and Eli Lilly in the coming weeks. The 340B Coalition has sent a letter, signed by eight 340B covered entity representatives, to HHS Secretary Alex Azar requesting these actions by manufacturers be stopped, as an initial step in the process. Additionally, some associations have asked that covered entities proceed with caution on voluntary requests until further actions can be taken with the government to stop these overly burdensome requests that may snowball and be detrimental to the future of the 340B program.

Sentry encourages our customers to work closely with their legal counsel, government relations and compliance staff to fully understand the requests that are being made to your organizations. Additionally, your voices and stories are impactful and can shine a light on the burden being placed on your organizations — this means that opinion editorials and meetings or letters to congressional leaders and regulatory agencies that could intervene, such as HRSA, are crucial.

Should you have any questions related to how Sentry may support you with your data needs or assistance with sharing your story, please contact your account management team. Sentry recognizes our customer innovations in patient care annually resulting from 340B; this year in particular, with COVID-19, entities have provided alternative methods for prescription drugs, delivery of services, and most importantly, access to care. These new manufacturer strategies hinder patient access to both care and prescription drugs. We will continue to provide updates as more information is available. As always, we stand to protect the 340B program with you.