Another 340B lawsuit gets underway, in Illinois

 Three pharma groups have opened a new front in their legal challenge to the federal 340B drug pricing programme in the US, trying to limit some of the steep discounts it offers on drugs provided to patients via 'safety net' hospitals.

AbbVie, Bristol Myers Squibb, and Novartis have filed separate lawsuits in Illinois, each seeking to overturn a recently enacted state law that allows hospitals and clinics serving under-insured and low-income patients – so-called 'covered entities' – to use contract pharmacies for dispensing medicines provided under the 340B programme.

For some time, the industry has been trying to change 340B's use of upfront discounts on medicines to one in which rebates are paid to hospitals only after medicines have been purchased at normal commercial prices, although those attempts have been knocked back in the courts.

The industry has turned to other strategies, such as trying to limit the 340B definition of a vulnerable patient, which the industry claims is overly broad and allows covered entities to claim discounts for patients with whom they have little contact and may live a long way away.

The lawsuits on the use of contracted pharmacies are an extension of that effort, responding to state-level legislation designed to protect the current contract pharmacy arrangements by requiring drug manufacturers to honour discounted pricing at those locations.

Various lawsuits have challenged laws implemented not only in Illinois but also in Arkansas, Colorado, Delaware, Hawaii, Louisiana, Maine, Maryland, Minnesota, Mississippi, Nebraska, and Tennessee.

Novartis' lawsuit in Illinois states that a contract pharmacy arrangement with a covered entity is "a legal fiction that allows [it] to associate itself with a sale between a pharmacy and one of the pharmacy's customers, under the pretense that the pharmacy was acting on the covered entity's behalf."

It claims that when the original 340B policy was changed from allowing just one contract pharmacy to an unlimited number, the volume of 340B claims skyrocketed, forcing drugmakers to introduce "reasonable limits" on the use of contract pharmacies as conditions of offering 340B pricing.

The Illinois legislation contradicts federal law, it contends, and introduces new requirements on companies that upset the "delicate balance of interests in the 340B programme," allow discounts to be offered through pharmacies located outside the state's borders, and undermine the intent to operate the programme uniformly across the US.

Abuse of the 340B system is a longstanding complaint of the pharma industry, which has previously contended that recipients of the discounted medicines charge both uninsured patients and insurance companies higher prices, pocketing the difference.

https://pharmaphorum.com/news/another-340b-lawsuit-gets-underway-illinois