Appeals court upholds ruling allowing drug manufacturers to limit distribution of discounted drugs in 340B program

Court upholds ruling allowing drug manufacturers to limit distribution of discounted drugs in 340B program

In a recent ruling, the U.S. Court of Appeals for the District of Columbia upheld a lower court decision that sided with drug manufacturers in their ability to limit the distribution of discounted drugs in the 340B program. The ruling, issued on May 21 by Circuit Court Judge Gregory Katsas, found in favor of Novartis Pharmaceuticals Corporation and United Therapeutics Corporation over the Department of Health and Human Services and the Health Resources and Service Administration.

The 340B program allows healthcare providers to benefit from discounted drugs through insurance reimbursements that exceed the marked-down cost of the drugs. However, pharmaceutical companies have argued that there is abuse in the system from diversion and duplication when pharmacies distribute the drugs.

Manufacturers have imposed their own contractual terms on providers, such as limits on the number of pharmacies to which they make shipments, in an effort to combat this abuse. The government argued that this practice violates the statute, but the appeals court agreed with the manufacturers.

Section 340B of the Public Health Service Act requires drug manufacturers to sell certain drugs at discounted prices to healthcare providers that serve vulnerable populations. The program has seen significant growth in recent years, with the number of covered entities and contract pharmacies participating in the program increasing substantially.

While some healthcare organizations have expressed disappointment with the court’s decision, others have emphasized the importance of protecting the 340B program and ensuring that it continues to benefit at-risk patients and underserved communities.

As the legal battle over the distribution of discounted drugs in the 340B program continues, the Biden administration and healthcare advocates are closely monitoring the situation to ensure that the program remains intact and continues to serve those in need.