A senior senator has asked the CEOs of both companies to provide information about the limits they are putting on 340B drug pricing for hospitals.
Sen. Bill Cassidy (R-La.), ranking member of the Senate health committee, on Monday wrote to the CEOs of Eli Lilly and Amgen asking for more information regarding the pharmas’ restrictions on drug discounts under the federal 340B program.
Cassidy is looking into what he called “disagreements” between drugmakers and 340B-covered entities—hospitals and other qualified centers receiving the discounted drugs—regarding the use of contract pharmacies to dispense these medicines.
Between 2009 and 2022, the number of these third-party dispensing partners jumped from 789 to 25,775, according to Cassidy, who noted that this reflects the “unfettered use of contract pharmacies” by the covered entities.
In 2020, pharma companies started implementing various restrictions to counteract this rise in the use of contract pharmacies to dispense 340B drugs. Novartis allowed its beneficiary hospitals to only work with third-party distributors located within a 40-mile radius. Others, meanwhile, wanted beneficiaries to work with only one contract pharmacy.
In response to the industry’s 340B restrictions, the Health Resources and Service Administration (HRSA) informed drugmakers that they could not limit their discounts based on how their beneficiaries chose to distribute the drugs. Novartis and United Health, which had also enacted 340B limitations, sued HRSA seeking to have their discount restrictions declared lawful.
In May 2024, the U.S. Court of Appeals for the District of Columbia sided with the industry, noting that 340B “does not categorically prohibit” companies from restricting the distribution of covered drugs.
However, HRSA warned Johnson & Johnson last week that if it refuses to scrap its proposed changes to the 340B drug pricing for hospitals, it risks the termination of participation in the program and monetary fines.
Cassidy has launched an investigation to better understand the industry’s reasons for imposing its restrictions.
In his letter to Amgen CEO Robert Bradway, the senator asked for “all” internal communications related to its decision to impose 340B restrictions, as well as how these changes in policy affected the pharma’s sales under the program. Cassidy is requesting “numerical data and specific examples” of how restrictions led to “fewer duplicate discounts or diversion of 340B drugs to ineligible patients.”
Cassidy also wrote to Lilly CEO David Ricks, pointing out that the pharma’s GLP-1 therapies—especially Mounjaro (tirzepatide)—has experienced “huge growth in the 340B Program.” In 2023, sales for GLP-1 treatments under 340B nearly hit $5 billion, up from $1 billion in 2021. According to Cassidy, under 340B, Lilly only distributes Mounjaro to its direct covered entities and to a single designated contract pharmacy.
Cassidy is also asking Lilly for numerical data of how changes in its 340B policy affected its sales under the program, as well as figures showing that there have been fewer duplicate discounts and diversions of 340B-covered drugs.
The senator requested that Amgen and Lilly provide detailed accountings of their respective participation in 340B starting in 2018. The companies have until Oct. 15 to respond.
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