Attorney General Becerra Leads Bipartisan Coalition on 340B Drug Pricing Program Requirements

Monday, December 14, 2020
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Multiple large drug manufacturers are refusing to provide mandated drug discounts to healthcare providers that serve low-income and uninsured Americans 

SACRAMENTO — California Attorney General Xavier Becerra today joined Connecticut Attorney General William Tong, Kansas Attorney General Derek Schmidt, and Nebraska Attorney General Doug Peterson in leading a bipartisan coalition of attorneys general urging the U.S. Department of Health and Human Services (HHS) to hold accountable 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. The 340B Drug Pricing Program provides discounts to covered healthcare entities that serve uninsured and low-income patients, and helps these providers keep costs low even as prescription drug prices rise. In today’s letter addressed to Health & Human Services Secretary Alex Azar, the attorneys general argue that by withholding or threatening to withhold these critical discounts, drug manufacturers Eli Lilly & Company, AstraZeneca PLC, Sanofi SA, Novartis Pharmaceuticals, Merck & Co., United Therapeutics Corp., and others, put low-income patients at risk of losing access to affordable medications while communities continue to battle the COVID-19 pandemic. The 340B Drug Pricing Program has strong bipartisan support, and Congress has acted numerous times to ensure drug manufacturers continue to comply with the program’s mandates.

“While Americans grapple with COVID-19, it is critical that we protect access to affordable care,” said Attorney General Becerra. “Discounts afforded under the 340B Drug Pricing Program are more critical now than ever. They ensure that low-income and uninsured patients have access to affordable medication as they deal with the substantial impact of the pandemic. We call on HHS to hold these non-compliant drug manufacturers accountable and provide immediate relief for healthcare centers and the Americans they serve.”

As a condition of having their drugs covered by Medicaid and Medicare Part B, Congress required drug manufacturers to enter into Pharmaceutical Pricing Agreements (PPA) with the HHS Secretary to limit the amount public hospitals, community health centers, and others serving indigent patients have to pay drug manufacturers for medications. These PPAs require the companies to offer each covered medication to providers “at or below the applicable ceiling price”. Instead of complying with their obligations, Eli Lilly & Company, AstraZeneca PLC, Sanofi SA, Novartis Pharmaceuticals, Merck & Co., United Therapeutics Corp., and others have unlawfully refused to provide discounts, potentially depriving Americans who rely on them with essential healthcare resources that they need as the country deals with a public health crisis. Under the 340B Drug Pricing Program, HHS has the authority to address violations of the program by drug manufacturers. For example, HHS may require manufacturers to reimburse covered healthcare centers and/or terminate manufacturers’ PPAs. While HHS has recently published regulations establishing an administrative dispute resolution (ADR) process under which covered entities can file complaints and seek relief, the ADR process is not sufficient to address immediate harm caused by drug companies.

In submitting today’s letter, Attorney General Becerra was joined by the attorneys general of Connecticut, Kansas, Nebraska, Colorado, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia.

A copy of the letter to HHS is available here.

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