Let the Civil Monetary Penalties Begin

By 340B Matters

The Biden administration has finally acted against a reprehensible cabal of pharmaceutical companies unlawfully overcharging safety-net healthcare providers in the federal 340B Drug Discount Program.

On May 17, Diane Espinosa, acting administrator of the Health Resources and Services Administration, advised the Shameful Six drug manufacturers that they would face significant financial consequences if they don’t start selling discounted medications to safety-net providers by June 1, as required by law. “Continued failure to provide the 340B price to covered entities utilizing contract pharmacies, and the resultant charges to covered entities of more than the 340B ceiling price, may result in [civil monetary penalties],” she wrote to Derek Asay, senior director of government strategy for Eli Lilly.

The penalty can be up to $5,000 per incident of non-compliance with statutory 340B discounts. These penalties could easily add up to tens of millions of dollars for each drug company. Eli Lilly has led the pack of greedy drug giants, each of whom also received a letter from Espinosa. The others are Novo Nordisk, Sanofi, AstraZeneca, United Therapeutics and Novartis. All have refused to supply lower pricing to providers that contract with local pharmacies to dispense medications.

We applaud Health and Human Services Secretary Xavier Becerra for taking a strong stand on 340B and encourage him to levy the threatened fines on any manufacturer who continues to flagrantly violate the law. The companies in question have filed court motions to stay the June 1 deadline and appear blindly committed to a losing strategy. The government told the court the effort to stop HRSA from doing its job is “improper, logically incoherent and should be denied.” The judge agreed.

Let the economic pain begin.

It’s worth noting that no other big pharmaceutical company has publicly supported the actions of the Shameful Six. Giants like Pfizer, Bayer, Johnson & Johnson, Bristol Myers and Amgen are following the law on 340B and should be commended for it. Perhaps even more revealing, Big Pharma’s anti-340B lobby group AIR340B has remained silent on the controversy.

What does it say about the legitimacy of these six companies’ actions when even AIR340B sits mum? They have chosen a foolhardy and expensive road. Financial analysts and shareholder advocates should question their executives on making such a costly decision.