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HHS Issues Opinion Regarding Illegal Attempts by Drug Manufacturers to Deny 340B Discounts under Contract Pharmacy Arrangements

The federal 340B discount drug program is a safety net for many federally qualified health centers, disproportionate share hospitals, and other covered entities. This program allows these providers to obtain discount pricing on drugs which in turn allows the providers to better serve their patient populations and provide their patients with access to vital health care services. Over the years, the 340B program has faced intense scrutiny, particularly by drug manufacturers who are required by federal law to provide the discounted pricing.

Ongoing struggles between covered entities and drug manufacturers continued in 2020 when six manufacturers unilaterally decided to deny 340B discount drug pricing to covered entities utilizing contract pharmacy arrangements. This led to lawsuits filed by the American Hospital Association and a national network of HIV/AIDS clinics in the Fall of 2020. The battle between the covered entities and drug manufacturers took a unique twist on December 30, 2020 when the U.S. Department of Health and Human Services issued Advisory Opinion 20-06, which instructed that drug manufacturers were not legally permitted to deny the discounted 340B pricing to contract pharmacy arrangements. 

The HHS Advisory Opinion made three key conclusions:

  1. The plain language of the 340B Statute requires manufacturers to provide the 340B discounted pricing to covered entities independent of whether the covered entity chooses to utilize a third-party contract pharmacy to dispense the drugs.
  1. The purpose and history of the 340B program indicate that contract pharmacies have always been an integral part of the 340B program and HHS’s longstanding interpretation of the 340B statute and regulations has recognized the legitimate use of contract pharmacies.
  1. Manufacturers are inappropriately attempting to circumvent the 340B program’s standing procedures for resolving disputes between manufacturers and covered entities by unilaterally excluding contract pharmacy arrangements from their 340B discount drug pricing.

While the HHS Advisory Opinion does not have the binding effect of law, it should be noted that HHS, through its Health Resources and Services Administration (“HRSA”), oversees the 340B program. Only time will tell if the Advisory Opinion will persuade drug manufacturers to resume 340B pricing to covered entities utilizing contract pharmacy relationships. Stay tuned for future developments.

If you are interested in learning more about the 340B discount drug program or collaborative strategies to enhance patient care opportunities for 340B covered entities, please contact BMD Healthcare and Hospital Law Member Jeana M. Singleton at jmsingleton@bmdllc.com or 330-253-2001, or any member of the BMD Healthcare and Hospital Law group

For an update on actions the state of Ohio is taking to reduce predatory practices of PBMs, see BMD Healthcare and Hospital Law Member Daphne Kackloudis' article, SB 263 Protects 340B Covered Entities from Predatory Practices in Ohio.

Changes to Physician Assistant Statutes in Florida

In the last year, there have been many changes to the scope of practice and collaboration/supervision requirements for advanced practice providers such as APRNs and physician assistants in the state of Florida. In a previous Client Alert we discussed House Bill 607, which expanded the autonomous practice of APRNs providing primary care services in Florida.

Ohio Senate Bill 49 – Ohio Expands Lien Rights for Design Professionals

Effective September 30, 2021, Ohio granted limited lien rights to design professionals, including architects, landscape architects, engineers, and surveyors. Ohio Governor Mike DeWine signed Senate Bill 49 into law on July 1, 2021. This new law established a statutory right to lien commercial real estate by Ohio design professionals who, until now, could not file a lien for non-payment of professional services. Senator Vernon Sykes, a primary sponsor of Senate Bill 49, stated that the “legislation ensures that architects, engineers and other designers will get paid for their work, regardless of the outcome of their projects . . . It will support hardworking Ohioans by protecting the value of their labor . . ..”

Primary Care Practice Officially Defined in Florida for APRNs Practicing Autonomously

As many providers in Florida are aware, House Bill 607 (the “Bill”), which was passed in February of last year, gives certain APRNs in Florida the ability to practice autonomously. The only catch is that they must work in primary practice. When the Bill was initially passed, there was question as to what was exactly considered primary care, absent a definition from the Florida Board of Nursing. However, as of February 25, 2021, “primary care practice” has officially been defined.

Part II of the No Surprises Act

The Department of Health and Human Services (“HHS”) published Part II of the No Surprises Act on September 30, 2021, which will take effect on January 1, 2022. The new guidance, in large part, focuses on the independent dispute resolution process that was briefly mentioned in Part I of the Act. In addition, there is now guidance on good faith estimate requirements, the patient-provider dispute resolution processes, and added external review provisions.

Safer Federal Workforce Task Force - Guidance for Federal Contractors and Subcontractors

The Safer Federal Workforce Task Force has issued its Guidance for Federal Contractors and Subcontractors (Guidance). Note that the Guidance applies only to “covered contracts,” which are contracts that include the clause (Clause) set forth in Sec. 2(a) of Executive Order 14042 (Ensuring Adequate COVID Safety Protocols for Federal Contractors). The Federal Acquisition Regulatory Council (FARC) is to conduct rulemaking and take related action to ensure that the Clause is incorporated into federal contracts. Until that happens, federal contractors likely will not see the Clause in its contracts. Following is a broad summary of the Guidance.