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AAMC Files 340B Contract Pharmacy Lawsuit Against HHS

December 18, 2020

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CONTACTS
Ivy Baer, Senior Director and Regulatory Counsel

The AAMC, four other hospital organizations, an organization representing hospital pharmacists, and three hospitals filed a lawsuit on Dec. 11 against the Department of Health and Human Services (HHS) over the agency’s failure to enforce requirements of the 340B Drug Pricing Program that drug manufacturers sell drugs to hospitals at 340B prices even when the drugs are distributed by community-based pharmacies, also known as contract pharmacies.

The suit was filed in the U.S. District Court for the Northern District of California. The organizations joining the AAMC are the American Hospital Association, America’s Essential Hospitals, 340B Health, the Children’s Hospital Association, and the American Society of Health-System Pharmacists.

Under the 340B Program, drug companies must offer discounts on outpatient drugs to hospitals and other providers that participate in the program. These discounts provide hospitals with savings that enable them to provide services to vulnerable populations. However, since July, a growing number of drug companies have unilaterally refused to provide discounts to 340B hospitals for drugs dispensed at community-based pharmacies [see Washington Highlights, Nov. 13].

The lawsuit asks the court to order HHS to require drug companies to provide 340B discounts on the drugs dispensed at community-based pharmacies and issue refunds to hospitals that were denied the discounts. In addition, the lawsuit asks for an order requiring HHS to refer the drug companies that violated the 340B law to the HHS Office of Inspector General to assess civil monetary penalties.

In a joint press release announcing the lawsuit, AAMC President and CEO David J. Skorton, MD, said, “The lack of action by HHS to enforce the current statute will hurt low-income, rural, and other underserved patients and communities who will no longer be able to access vital services.”

On Dec. 14, California Attorney General Xavier Becerra, JD, President-elect Joe Biden’s nominee for HHS Secretary, was joined by attorneys general from 26 states and the District of Columbia asking HHS “to hold drug manufacturers that are unlawfully refusing to provide discounts to federally qualified health centers, hospitals, and other providers that serve vulnerable patient populations through the 340B Drug Pricing Program.”

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