WASHINGTON – Some of the country’s largest pharmaceutical companies have stopped giving federally-mandated drug discounts to hospitals and clinics that care for poorer Americans, a move that prompts the Secretary of Health, Alex M. Azar II, to demand the restoration of the broken prices or to punish the companies.
The companies – including two that are partnering with the Trump administration on coronavirus vaccines – began cutting their participation in the federal drug pricing program over the summer, saying some hospitals and clinics were operating it to improve their own results. They say that the individual patients are not injured.
But hospitals, clinics and pharmacies serving the poor say the change violates federal law and has been devastating – both to patients and to their own budgets – amid an economic recession brought on by the worst pandemic in 100 years. They say the cuts are illegal and now is not the time to cut discounts that help them better serve the poor.
On Monday, a bipartisan group of state attorneys general, including Xavier Becerra of California, who is President-elect Joseph R. Biden Jr.’s choice for health secretary, wrote a clearly worded letter to Mr. Azar, l ‘calling either to demand rebates or impose fines on drug manufacturers. Twenty-eight states and the District of Columbia signed.
“The health secretary needs to step in here and make sure prescription drugs are provided to people who need them right now amid a pandemic,” said Attorney General William Tong of Connecticut, who heads the effort with Mr. Becerra. . “It really amazes me that companies don’t seem to understand that people need access to healthcare and prescription drugs, literally, to live.
A spokeswoman for Mr Azar declined to comment, citing an ongoing dispute. Several associations representing hospitals and clinics have sued the Trump administration, seeking to force Mr. Azar to act.
The problem is the future of the so-called 340B drug pricing program created by Congress in 1992. It forces pharmaceutical manufacturers to offer deep discounts on drugs to certain health centers and hospitals that depend on support from the drug industry. taxpayers – including Ryan White and federal HIV / AIDS clinics. qualified health centers – to have their medications covered by Medicaid.
These hospitals, clinics and their affiliated pharmacies pass the discounts on to consumers who do not have insurance or adequate insurance to pay for their drugs. But for insured patients, hospitals, clinics and pharmacies are reimbursed by insurance programs at higher levels and are supposed to use the savings to expand services to the poor.
The goal is “to stretch scarce federal resources as much as possible, reach more eligible patients, and provide more comprehensive services,” the Health Resources and Services Administration, which manages the program, says on its website.
William von Oehsen, a lawyer representing a Ryan White clinic association in a lawsuit against the government, described the 340B program as a “vital fundraising tool” and said drug companies “must do their part to reduce costs for those providers who are heavily dependent on taxpayer support. “
The pharmaceutical industry, however, never liked the program. A statement on the website of PhRMA, the industry trade group, says the program “needs to be fixed.”
Drugmakers say 340B has grown significantly larger than Congress anticipated, costing them tens of billions of dollars each year in part because of a health resource agency decision about 10 years ago extend discounts to pharmacies that enter into contracts with eligible hospitals and health services. centers.
A report by the Government Accountability Office released in 2018 found that about a third of the 12,000 clinics and hospitals covered use contract pharmacies. The number of pharmacies under contract has grown rapidly, according to the report, from around 1,300 in 2010 to nearly 20,000 in 2017.
“The does not provide for contract pharmacies,” said Derek Asay, senior government strategy adviser at Eli Lilly, who notified the health resources agency in July that it would reduce its participation in the program, starting with the prescriptions for the drug Cialis, which treats erectile dysfunction.
Mr Asay, who said the program had been “plagued by abuse and integrity issues,” said Lilly decided to cut discounts for nearly all contracted pharmacies. In the case of hospitals or clinics that don’t have in-house pharmacies, he said, the company will make an exception to allow a contracted pharmacy to benefit from discounts.
But Mr Becerra – on whose knees the matter will fall if the Senate confirms him as secretary of health – said in a statement that the drugmakers were acting “illegally” by changing the program without Congress’ consent. Hospital and clinic executives, as well as their lawyers, agree.
Sue Veer, president and CEO of Carolina Health Centers, a network of federally supported clinics, said removing contract pharmacies “would reduce the savings my health centers can keep and reinvest in primary care. , things like behavioral health and addiction programs ”or programs for people with HIV
Lilly’s decision prompted a reprimand from Robert P. Charrow, general counsel for the federal Department of Health and Human Services. Mr. Azar, who heads the department, was President of Eli Lilly from 2012 to 2017.
In a letter sent in September, Mr Charrow noted that the company’s share price had jumped 11% since January, while “most healthcare providers, many of whom are covered entities. ‘Section 340B, were in financial difficulty and needed assistance’ from the federal government. government. He said the timing of Lilly’s price changes was “at the very least insensitive to the recent state of the economy.”
Other pharmaceutical companies – including AstraZeneca and Sanofi, both of which are working in partnership with the government on coronavirus vaccines – have followed Lilly’s lead, each imposing their own set of restrictions.
Sanofi spokeswoman Ashleigh Koss said that while the company “supports the 340B program and its primary goal of improving access to outpatient medicines for uninsured and vulnerable populations,” it refuses to grant discounts. pharmacies that do not wish to provide data ”. necessary to identify and prevent waste and abuse. “
AstraZeneca said in a statement that the company “has changed our approach to help mitigate significant compliance issues that have been well documented in audits” performed by the Government Accountability Office, which audits government programs for Congress.
The companies claim that patients are not harmed. But health officials and the lawyers who represent them say that’s not true.
In an affidavit filed in federal court in connection with Mr. von Oehsen’s lawsuit on behalf of Ryan White Clinics for Access 340B, Daniel Duck, the owner of the Corner Drug Store in Springhill, Louisiana, described a patient who was paying $ 17.30 per month. for insulin as part of the store’s “money-savings program” for customers who qualified for the 340B awards.
But the cost rose to more than $ 1,300 after the drug’s maker, Sanofi, “no longer allowed the drug to be purchased with discounts of $ 340 billion.” Eventually, the patient found a way to get insulin through Medicare for a co-payment of $ 300, which she said she would not be able to afford the following month.
An attorney for Equitas Health, which serves as a contracted pharmacy for a federally qualified health center in Columbus, Ohio, described a similar experience involving four patients who would normally pay four cents for an insulin drug made by Sanofi.
“The retail price of the prescription is $ 400,” lawyer Trent Stechschulte wrote in an email. Combined with a $ 15 preparation fee, he said, it’s a cost patients cannot afford and a level that hurts the finances of hospitals serving the poor.