Section 340B of the Public Health Service Act requires drug manufacturers to sell covered outpatient drugs to covered entities at or below a defined 340B ceiling price. In 2010, HRSA issued guidance permitting covered entities to contract with a single contract pharmacy and then extended that guidance to permit covered entities to contract with multiple contract pharmacies for 340B drugs.

In July 2020, a number of drug manufacturers announced they would stop replenishing certain drugs to 340B contract pharmacies and limit distribution to covered entities and their child sites only.

Following months of push-back from the 340B community and the American Society of Health-System Pharmacists (ASHP), HRSA found that six drug manufacturers knowingly charged a covered entity more than the ceiling price for covered outpatient medication distributed through a contract pharmacy.

On May 17, 2021, HRSA acting administrator Diana Espinosa sent letters to these six pharmaceutical manufacturers stating that HRSA has determined that their policies placing restrictions on 340B program pricing to covered entities that dispenses drugs through a contract pharmacy have resulted in overcharges and are in direct violation of the 340B statute. The drug manufacturers were ordered to immediately begin offering covered outpatient drugs at the 340B ceiling price to covered entities through their contract pharmacy arrangements. Intentionally charging a covered entity more than the ceiling price for a covered outpatient drug may be subject to a Civil Monetary Penalty (CMP) not to exceed $5,000 for each instance of overcharging. That penalty would be in addition to repayment of the overcharge.

In June 2021, a federal judge in U.S. District Court for the District of Delaware delivered a ruling focused on the fact that 340B does not address whether a covered entity must have an in-house pharmacy for purchasing discounted drugs from manufacturers, or whether the covered entity may use an outside, third-party pharmacy to make purchases. Because the 340B statute is ambiguous, the government’s interpretation is not the only permissible reading of the statue.

While the district court decision will not resolve the present dispute over the availability of 340B pricing for drugs purchased by covered entities through contract pharmacies, government attorneys are monitoring the ongoing developments to help covered entities understand the availability of 340B pricing.

The Value of a CPS Partnership 

CPS Solutions, LLC (CPS) partners with covered entities nationwide to promote 340B program performance excellence. Our consultants are up to date with the latest news and events affecting covered entities and their ability to receive maximum value from their program.

Interested in learning more about how CPS 340B Solutions can help your covered entity ensure you are maximizing 340B savings?

[1] 340B Drug Pricing Program | Official web site of the U.S. Health Resources & Services Administration (hrsa.gov). Accessed 9.13.21.

[2] Court Sides with Drug Manufacturers in Ongoing 340B Litigation | Blogs | Health Care Law Today | Foley & Lardner LLP. Accessed 9.13.21.