340Bs Challenge Drug Shortage Bill’s Elimination of Sterile Injectable Discounts

Originally published by our sister publication Pharmacy Practice News

By Gina Shaw

Representatives of 340B covered entities are calling for modifications to the discussion draft of a bill in the House of Representatives intended to address drug shortages, which contains language that would eliminate 340B discounts on generic sterile injectable drugs by several manufacturers with at least one indication for a serious disease or condition.

340B Health, which represents public and private nonprofit hospitals and health systems that participate in the federal 340B Drug Pricing Program, released a letter that the organization sent to House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.), the lead author of the “Stop Drug Shortages Act.” It is not credible to claim that 340B plays a major role in drug shortages, the group claimed.

“In the broader context, 340B purchases make up only 7% of total U.S. purchases of generic sterile injectables, though this share varies depending on the specific drugs,” said Maureen Testoni, the president and CEO of 340B Health. “This low percentage is not surprising, as these drugs are primarily used in settings that are not eligible for 340B.”

Ms. Testoni added that the 340B program’s share of volume by drug ranges from 0% to 15% for most of these medications, “regardless of whether the drug is in shortage or not in shortage,” she said. “Interestingly, 20% of these drugs had no 340B purchase volume at all.”

For drugs that are sold at the 340B discount, she added, 340B purchases accounted for less than 15% of volume for more than 80% of the drugs, with similar patterns for medication in shortage (83%) and those not in shortage (85%).

(The data cited were derived from a 340B Health analysis of 340B purchase data for 2021 from the Health Resources and Services Administration via a FOIA [Freedom of Information Act] request and data purchased from IQVIA on total U.S. sales across all distribution channels for 2021, with data on drugs in shortage obtained from the University of Utah.)

“340B represents a small share of sales volume for generic sterile injectables,” Ms. Testoni concluded. “Removing them from 340B, as proposed in the legislation, would neither prevent nor resolve drug shortages. Rather, it would serve as an undeserved gift to pharmaceutical companies, as it would increase their revenue without holding them accountable for addressing the root causes of shortages.

“We call on the lawmaker to replace these provisions with more targeted approaches to incentivize higher quality, increased reliability and sufficient capacity of drugs.”

Bill Fails to Address Root Causes

Erin Fox, PharmD, an associate chief pharmacy officer of shared services at the University of Utah Health, in Salt Lake City, who testified before a Senate committee on drug shortages in March 2023, said the bill fails to address any mitigating factors that get at the root cause of shortages, especially quality. 

“Right now, generic drug companies only have prices to compete on, even though the FDA sees differences between the manufacturing facilities and their reliability and quality,” she said. “That’s why FDA has been advocating for quality ratings since 2013.”

Some experts argue that, even if industry groups produce an estimate, it’s impossible for independent researchers or policymakers to conclude what percentage of shortage drugs are generic sterile injectables.

“There are no publicly available data to tell us whether 340B purchases of sterile injectables, or any drug, are a large or small share of the total,” said Sayeh Nikpay, PhD, MPH, an associate professor in the Division of Health Policy and Management at the University of Minnesota School of Public Health, in Minneapolis. “Greater transparency in 340B is really needed.” 

Other stakeholders say the 340B program was never intended to encompass generic drugs. “When 340B was first established in 1992, there were few generic drugs on the market, so there was likely little thought on extending the 340B program to generic drugs. It was mostly a program for brand-name medication,” said Kevin Schulman, MD, a professor of medicine and an associate chair of business development and strategy in the Department of Medicine at Stanford University School of Medicine, in California. “At this point, there is no reason to complicate pricing of generic sterile injectable medications with 340B discounts.”

To address drug shortages of mature generic products, Dr. Schulman added, “we need manufacturers to have transparency into the full market opportunity in the U.S. They already have to run a gauntlet of consolidated distributors and GPOs [group purchasing organizations] driving down pricing of these products. There is no reason to have an additional barrier in terms of 340B pricing in this market.”

As for patients’ access to essential medicines, “it’s hard to understand the policy rationale for how patients with conditions like cancer are served by hospitals making additional profits from the 340B program at the expense of availability of the medicines in the first place,” Dr. Schulman said.

Dr. Fox and Mr. Schulman reported no relevant financial disclosures. Dr. Nikpay reported a financial relationship with Arnold Ventures, the Centers for Medicare & Medicaid Services, National Heart, Lung and Blood Institute and the National Institute for Health Care Management.