26 Mar Welcome Good News for 340B Drug Discount Program

The U.S. Court of Appeals for the 8th Circuit recently upheld an Arkansas law blocking drug companies from denying 340B discounts to local pharmacies that partner with safety-net healthcare providers.

It’s a welcome piece of good news for a federal program that has endured relentless attacks from Big Pharma over the past few years. 340B requires pharmaceutical companies to sell discounted medications to hospitals and clinics that treat high numbers of low-income patients. In return, manufacturers get to sell products into the extraordinarily lucrative, taxpayer-financed Medicaid and Medicare programs. They hate 340B because it cuts into their oversized profits.

In recent years, many drug companies have illegally refused to provide discounted medications to hospitals and clinics using contracted pharmacies. In response, Arkansas passed a law protecting safety-net providers from this discrimination in the state. Big Pharma sued and argued that the state law was unconstitutional.

In a unanimous decision, the appellate court ruled against the big pharmaceutical manufacturers, dealing them a devastating blow in their efforts to circumvent the requirements of the 340B program.

“Act 1103 does not create an obstacle for pharmaceutical manufacturers to comply with 340B, rather it does the opposite: Act 1103 assists in fulfilling the purpose of 340B,” the opinion states. “…Arkansas is simply deterring pharmaceutical manufacturers from interfering with a covered entity’s contract pharmacy arrangements. There is no obstacle for pharmaceutical manufacturers to comply with both Act 1103 and Section 340B.”

The 8th Circuit judgment is a resounding victory for safety-net hospitals and clinics that depend on the program to help fund a wide range of services for patients. We strongly encourage other states to pass similar legislation to protect 340B.

In other related good news, longtime 340B champion Rep. Doris Matsui (D-CA) has introduced a bill to codify the use of contract pharmacies in the 340B program. Specifically, the measure would:

• Clarify that manufacturers are required to offer 340B discount prices to covered entities regardless of the manner or location in which a drug is dispensed, including if a covered entity uses a contract pharmacy to dispense 340B drugs to the entity’s patients.
• Ensure that manufacturers cannot place conditions on the ability of a covered entity to purchase and use 340B drugs, regardless of the manner or location in which the drug is dispensed, including through contract pharmacies.
• Impose civil monetary penalties on manufacturers that violate these statutory requirements and prohibitions.

We appreciate Rep. Matsui’s leadership in introducing H.R. 7635. We heartily support this legislation and encourage other lawmakers to sign on. Even with states’ efforts, 340B and contract pharmacies need protection at the federal level to thwart Big Pharma’s dark efforts to kill a program that works and costs taxpayers nothing.

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