Big Pharma Companies Facing Anti-Trust Liability in 340B Fight

By 340B Matters

At long last, four top pharmaceutical companies are being sued under federal antitrust law for conspiring to deprive safety-net healthcare providers of lower pricing under the 340B Drug Discount Program.

The suit, brought by Mosaic Health, a system of federally qualified health centers, charges that leading insulin makers Sanofi, Eli Lilly, AstraZeneca, and Novo Nordisk colluded in their nearly simultaneous 2020 announcements to drop 340B pricing for hospitals and clinics that use contract pharmacies to deliver medications to their patients. “The nature and timing of the parallel conduct … set within the context of this industry, is strongly suggestive of conspiracy, rather than of independent action,” says the suit.

The case is a particularly sickening example of the hubris of a small number of drug companies as they seek to maximize profits while undermining health providers’ ability to serve low-income patients. Even more troubling, the four manufacturers charged are direct competitors in the lucrative diabetes drug market.

The collusion has also been extremely convenient for the companies, the suit alleges. “Among the facts plausibly suggestive of an agreement are the following: (i) acting alone in eliminating or restricting the Contract Pharmacy 340B Drug Discounts would have been against any single Defendant’s unilateral self-interest because it would risk market share; (ii) Defendants shared a common motive to raise prices by avoiding the Contract Pharmacy 340B Drug Discount if they could do so jointly (iii) Defendants’ restrictions were historically unprecedented; (iv) indeed, Defendants’ restrictions remain anomalous in the pharmaceutical industry.”

That last point is crucial. According to Mosaic Health, more than 99.6 percent of drug companies continue to offer contract pharmacy 340B drug discounts without restrictions, just as they are required to do by law. Those pharmaceutical manufacturers include some of the largest drug companies: J&J, Abbvie, Roche, Pfizer, GlaxoSmithKline, Bristol Meyers Squibb, and Beyer. All should be commended for doing the right thing and following the law.

The suit also raises the likelihood that the four companies communicated regularly through the Washington, DC lobby firms they hired in common to fight the 340B program: Tarplin, Downs & Young and Williams and Jensen, PLLC.

Mosaic is asking the court to classify the suit as a class action, thereby allowing hundreds of safety-net providers throughout the country to join as plaintiffs. That’s a no-brainer and we hope the judge will comply. The court should also grant the request to force Sanofi, Eli Lilly, AstraZeneca, and Novo Nordisk to pay for damages and cease their anti-competitive behavior by once again providing 340B discount pricing to safety-net providers. The potential financial liability for these four companies is massive, something their shareholders and investors should appraise.

Back in December, 29 state attorneys general wrote to Department of Health and Human Services Secretary Alex Azar demanding his agency stop the illegal denials of 340B discounts to safety-net providers. We urge those attorneys general to now investigate whether Sanofi, Eli Lilly, AstraZeneca, and Novo Nordisk colluded. The Vermont attorney general has also been examining the situation and should consider the anti-trust implications.

The legal stakes are rising quickly.