On December 1, 2020, drug manufacturer Novo Nordisk Inc. announced that, effective January 1, 2021, it “will no longer facilitate ‘bill-to/ship-to’ distribution of 340B product to a contract pharmacy of any of the six ‘hospital’ covered entity types.”  Hospital covered entities that do not “maintain an on-site pharmacy at either a parent or child location” may contact Novo Nordisk to designate a single contract pharmacy to continue to receive 340B discounts.  This new policy does not apply to federal grantees or sub-grantees participating in the 340B program.

Novo Nordisk’s new policy is particularly concerning because it is one of only three manufacturers that distribute insulin products in the U.S.  The other two manufacturers, Eli Lilly and Sanofi, already restrict access to 340B prices at contract pharmacies.  Although Eli Lilly made an exception for its insulin products, the four conditions that covered entities are required to meet are widely considered by covered entities to be impractical and create exposure under Federal fraud and abuse laws.  Neither Novo Nordisk nor Sanofi offer an exception for their insulin products.

Novo Nordisk justified its new policy by stating that contract pharmacies “are not themselves covered entities”.   Covered entities do not dispute this fact but believe that it misses the point.  They assert that contract pharmacies are acting as their agents and that they have a right under state law to direct manufacturers to ship 340B drugs to their contract pharmacy agents so that the drugs can be dispensed on their behalf.  HRSA recognized a covered entity’s right to use contract pharmacies on this basis in a 1994 Final Notice and again in the 1996 contract pharmacy guidelines.

Another drug manufacturer, United Therapeutics, sent letters to covered entities in late November announcing that contract pharmacy orders placed on or after November 20, 2020 will be denied unless “the contract pharmacy was utilized by the covered entity for a valid 340B purchase of a United Therapeutics Corporation covered outpatient drug during the first three full quarters of the 2020 calendar year.”  The letter also states that United Therapeutics will not accept 340B contract pharmacy orders placed on or after May 13, 2021, unless the covered entity agrees to provide, on an ongoing basis, “claims data associated with all 340B contract pharmacy orders of United Therapeutics Corporation’s covered outpatient drugs.”  According to its website, United Therapeutics is a publicly traded biotech company that develops treatments for rare diseases and only distributes five drugs in the U.S. through an already limited distribution network.  United Therapeutics is allowing covered entities that do not have their own on-site pharmacy to apply to designate one contract pharmacy to accept orders for 340B drugs.  Covered entities must select a contract pharmacy that is already part of United Therapeutics distribution network.  For more information, please visit www.UTAssist.com.

Please visit the RWC-340B website at www.RWC340B.org for a chart with the latest information about drug manufacturer actions, stakeholder responses, and RWC-340B’s lawsuit to protect the 340B contract pharmacy program.