In the latest twist in a closely watched legal battle, a U.S. judge ruled Wednesday that a federal agency incorrectly threatened AstraZeneca (AZN) with penalties for curtailing discounts to a controversial prescription drug discount program that serves mostly low-income patients.
At issue is the 340B program, which requires drugmakers 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, a number that has grown substantially in recent years.
In 2020, several drugmakers began eliminating some discounts when hospitals or clinics bought medicines and then shipped them to contracted retail or specialty pharmacies for patients to pick up or for delivery, instead of using their own in-house pharmacies. The drugmakers alleged using contract pharmacies led to abuses, such as duplicate billings, product diversions, and ineligible rebates.
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