Major drug makers Eli Lilly and Merck are going to war with 340B contract pharmacies by installing new requirements and in some cases refusing to provide their products.
The advocacy group 340B Coalition, a group of healthcare advocates and providers, wrote to the Department of Health and Human Services last week objecting to several moves made by manufacturers Eli Lilly and Merck.
The group was furious Lilly declined to provide a discount for three formulations of the erectile dysfunction drug Cialis if the product is sent to a contract pharmacy, and that Merck wants pharmacies to provide claims data.
“If this is allowed to stand, there would be nothing preventing Lilly from extending this policy to hundreds of very expensive drugs that qualify for 340B pricing, including critical drugs like Humalog,” the letter dated July 16 said.
The 340B program requires manufacturers to give drug discounts to safety-net hospitals in exchange for participation in Medicaid.Sometimes a 340B hospital will use a contract pharmacy to dispense drugs obtained through the program.
But the number of contract pharmacies has grown exponentially in recent years and drawn scrutiny from the federal government.
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A Government Accountability Office report released in 2018 found weaknesses in the oversight of such contract pharmacies.
The federal watchdog found that the Health Resources and Services Administration, which oversees 340B, did not fully assess compliance with a prohibition on duplicative discounts on 340B drugs.
A concern over duplicate discounts caused Merck to ask 340B covered entities to submit contract pharmacy claims data for any commonly dispensed drugs made by the company, 340B Health’s letter said.
“The request goes well beyond inquiries that manufacturers often engage in to address compliance concerns,” the letter added. “Threats of ‘further action’ absent cooperation from covered entities with such an overly broad request is not supported under the 340B statute.”
The group also slammed Eli Lilly’s move to restrict sales to 340B contract pharmacies as illegal.
“There is no provision under the [340B] statute that allows Lilly to deny 340B pricing to a covered entity, or to require that a drug purchased by a covered entity be shipped only to locations that the manufacturer has approved,” the letter said.
Both Lilly and Merck did not immediately return requests for comment as of press time.
The moves were the latest controversy to envelop the drug discount program, which has grown in popularity in recent years. Hospitals successfully sued the Trump administration to halt a nearly 30% cut to the discounts.
The coalition was also concerned about the broader implications of the moves.
“We are concerned that the actions of these global manufacturers, if allowed to stand, will set dangerous and negative precedent for the 340B program,” the letter said.