After a year of controversy, the Health Resources and Services Administration notified six large drug makers that they will violate the law by ending discounts to a federal program providing discounted medicines to hospitals and clinics serving mostly low-income populations.
At issue is the 340B drug discount program, which requires drug makers to offer discounts that are typically estimated to be 25% to 50% — but could be much higher — on all outpatient drugs to hospitals and clinics that serve low-income populations. There are approximately 12,400 so-called covered entities, including 2,500 hospitals, participating in the program.
Last year, the drug makers began eliminating discounts and argued they were justified in order to curtail duplicate billings, product diversions, and ineligible rebates. In some cases, companies took this step if hospitals or clinics buy medicines and then ship them to retail and specialty pharmacies for patients to pick up or for delivery, instead of dispensing the drugs through their own in-house pharmacies.