Where Is the HHS Inspector General?

By 340B Matters

So far, seven of the world’s largest drug manufacturers have been referred to the Department of Health and Human Services Office of Inspector General for blatantly breaking the law regarding the 340B Drug Discount Program. The situation has cost affected hospitals and clinics $6 billion and counting.

Under the 340B law, these big drug manufacturers voluntarily agreed to provide drug discounts to clinics and hospitals that are part of America’s healthcare safety net — the places that Americans go for medical attention when they can’t pay for it. Why would they willingly sell their drugs at a lower, albeit still profitable, price to these providers? Because if they do, the government lets drug makers hawk their products into the highly lucrative Medicaid and Medicare markets.

Recently, certain drug companies decided they wanted to have their cake and eat it too. They’re refusing to provide the legally mandated discounts to safety-net hospitals and clinics that contract with local pharmacies. The seven offending companies are: Boehringer Ingelheim, AstraZeneca, Eli Lilly, Novartis, Novo Nordisk, Sanofi, United Therapeutics. In all, 16 huge drug companies are flouting the law. And in total, they sell about $83 billion in drugs to the Medicaid and Medicare markets annually.

The Department of Health and Human Services referred the scofflaw manufacturers to the agency’s inspector general to levy penalties against them. But more than six months later, not a single manufacturer has been hit with fines, as required under 340B rules.

What’s going on?

HHS has the authority to impose civil monetary penalties on manufacturers that “knowingly and intentionally” overcharge a 340B healthcare provider more than the 340B ceiling price. Those fines can reach $5,000 for each offense.  The situation could not be more flagrant. The companies in question have publicly announced they will not supply discounted drugs to a large number of hospitals and clinics.

Boehringer is the latest company to be referred to the OIG, who has been sadly invisible on the issue. America’s healthcare first responders desperately need to be made whole, but the agency is so far ignoring them.

On May 2, Sen. Charles Grassley (R-IA) sent a letter to the OIG’s office about penalties against the drug makers: “I’ve heard from Iowa hospitals and pharmacists about how drug manufacturers have ended 340B Program pricing at contract pharmacies and placed administrative burdens on health care providers. It’s important to understand what the inspector general is doing to take action following referrals by HRSA.”

Justice delayed is justice denied. The OIG’s inaction is punishing our country’s healthcare safety net at the same time it faces unprecedented stress from a deadly global pandemic.

Further delays continue to undermine the rule of law. America’s healthcare safety-net needs to know that the federal government is holding the seven companies accountable, and that when Secretary Becerra told Congress, “You violate the law, you pay the consequences,” he really meant it.

HHS must levy monetary penalties on these law-breaking drug companies now.