AbbVie has lost a legal challenge seeking to block a Mississippi law that requires it to provide discounted medicines to some pharmacies serving low-income communities.
The US Court of Appeals for the 5th Circuit denied the drugmaker’s request for a preliminary injunction against a state law that implements the 340B drug rebate model mandated by the Department of Health and Human Services (HHS), designed to support access to medicines for uninsured and under-insured people.
The 340B requirement has become a bone of contention for the pharma industry, which claims that the programme has long since strayed away from its primary purpose of ensuring ‘safety net’ access to medicines for vulnerable people, particularly when it comes to dispensing by third-party or ‘contract’ pharmacies.
In 2020, companies started to offer discounts on drugs dispensed through health systems’ in-house pharmacies only – excluding community and contract pharmacies – on the grounds that these dispensers are playing the system to drive profits.
The allegation is that some recipients of the discounted medicines charge both uninsured patients and insurance companies higher prices, pocketing the difference.
AbbVie group companies have sought to block a state law (HB 728) requiring it to provide the discounts to contract pharmacies in a lawsuit brought by the Mississippi Hospital Association, the Rural Hospital Alliance and the American Society for Health-system Pharmacists, but its attempt has been turned down (PDF).
The appeals court said it was siding with the lower court because AbbVie “has not shown a substantial likelihood of success on the merits of this claim.”
This is now the second appeals court to uphold a state law protecting access to 340B discounts after a ruling in an earlier dispute in Arkansas, although a federal court in 2023 sided with Sanofi, AstraZeneca, and Novo Nordisk on the issue.
There are signs that the industry’s resistance to 340B in its current form is starting to gather momentum, fuelled by a recent Congressional Budget Office (CBO) report (PDF) which found that the 340B programme “encourages behaviours – including the prescription of more and higher-priced drugs, the expansion of services, and the integration of hospitals and off-site clinics – that tend to increase federal spending.”
Last week, Republican lawmakers introduced the 340B Access Act, which aims to address exploitation within the programme with transparency requirements for hospitals as well as measures to ensure pharmacy benefit managers (PBMs) appropriately reimburse 340B drugs and limit third-party administrator fees.
Lines form up on ‘rebate model’ battleground
Meanwhile, a bipartisan group of lawmakers has asked HHS to cancel a forthcoming pilot of a new model for 340B that would replace upfront discounts with after-the-fact rebates – an idea that has sparked litigation between pharma and the federal government in the past.
The 163 politicians have written a letter (PDF) to HHS Secretary Robert F Kennedy Jr, asking him to either cancel the pilot or “impose stronger guardrails to ensure the 340B program is not entirely dismantled.”
They note that various pharma groups, including Bristol Myers Squibb, Eli Lilly, Johnson & Johnson, Novartis, and Sanofi, have already attempted to unilaterally impose rebate models on certain products “despite a clear lack of statutory authority,” and said they were concerned that this could “severely damage community health centres, safety net hospitals, and other providers.”
Another letter signed by nearly 5,000 hospitals, health systems, and other healthcare organisations – this time directed to the Federal Trade Commission (FTC) and Department of Justice – has asked the authorities to look into the rebate model, which they claim has become a mechanism to restrict access to 340B discounts and a “potential ongoing antitrust conspiracy.”
Photo by Pieter van de Sande on Unsplash
