Florida Medicaid Puts Big Pharma on Notice

By 340B Matters

The best solution to a national problem occasionally surfaces far from Washington, DC. After months of overcharges to safety-net healthcare providers during a national pandemic, a top Florida Medicaid official has called out a key drug company in a letter that is likely to rattle the manufacturer’s bottom line if it doesn’t change course.

Deputy Secretary Beth Kidder asked Eli Lilly CEO David Ricks to stop blocking discounts to hospitals and clinics in the federal 340B Drug Discount Program. Lilly unilaterally declared last summer that providers using contracted pharmacies to distribute medications will no longer receive lower-priced drugs as required by law. It is likely that Kidder also fired off the salvo to five other companies that have followed Lilly’s example: AstraZeneca, Sanofi, Novartis, United Therapeutics, and Novo Nordisk.

“These recent actions threaten to impact the health of Florida residents,” wrote Kidder. Her request carries unique weight because pharmaceutical companies participate in the 340B program in order to be eligible to sell billions of dollars of products to state Medicaid programs. Florida Medicaid has nearly four million individuals on its insurance rolls.

Judging from her letter, Kidder is a very unhappy customer. Her office has the power to drop the offending companies from Florida Medicaid’s prescription formulary. She can easily take her business elsewhere. To underscore that point, Kidder copied Lilly’s regional sales manager on her letter.

Medicaid directors and state hospital associations across America should take note. Kidder is the current President of the National Association of Medicaid Directors. All Medicaid directors should be aware of how important 340B is to maintaining a strong state healthcare safety net. And each state’s Medicaid chief has the market leverage to force the recalcitrant drug companies back in line. It’s an approach that is long overdue.

It won’t be hard for Medicaid leaders to find new suppliers with therapeutically equivalent drugs. For example, AstraZeneca’s cholesterol medication Crestor could be replaced by Pfizer’s Lipitor, Eli Lilly’s anti-depression medication Prozac could be replaced by Pfizer’s Zoloft, AstraZeneca’s diabetes medication Farxiga could be replaced by Janssen’s Invokana, and Novartis’ pulmonary drug Seebri could be supplanted by Glaxo Smith Klein’s Incruse Ellipta.

Rightly so, the Florida Hospital Association applauded Kidder’s action in a public statement. With so much at risk for so many safety-net providers around the country, it is imperative that national stakeholder advocacy organizations like 340B Health, the American Essential Hospital Association and state hospital associations immediately activate their members to call upon Medicaid Directors in every state to follow Kidder’s lead and send similar letters to the six rogue pharmaceutical companies.

When that happens, the rest of the pharmaceutical industry will be forewarned about the decision they need to make: join Eli Lilly and company and take the risk of being shut out of the Medicaid market – or continue to comply with federal laws governing 340B and become the beneficiaries of an epic mistake by their competitors.

As for Eli Lilly and the other five outlier companies, shareholder value dictates there is only one prudent decision: they should immediately comply with the 340B law before it’s too late and abandon their risky gambit.