Fines For 340B Drug Companies?

Action by Congress could be seen as thunder and flurry.

A strange thing happened recently. A bipartisan letter was sent from a group of U.S. House representatives. In the letter sent to Health and Human Services (HHS) Secretary Xavier Becerra, 181 representatives asked that HHS conclude its review of the drug companies refusing to give 340B discounts to providers using contracted pharmacy services.

Legally, the Office of Inspector General (OIG) for HHS could impose penalties of up to $6,000 per claim for knowingly overcharging providers. 

It would seem that the wind is at the back of providers in the 340B battle, after the Supreme Court ruled in favor of providers on the June 15 on the cuts the Centers for Medicare & Medicaid Services (CMS) made to Medicare payments for certain drugs. While legally this seems to make sense, I want to point out the differences in the issues in the June 15 ruling and the current dispute. In the June 15 ruling, the issue were Medicare payment rates and how those rates were determined.

In the current case, HHS has the hurdle of arguing that drug providers “knowingly and intentionally” overcharged providers when, from their perspective, they are following the regulations as they interpret them. HHS, in referring the drug companies to the OIG, would have to prove that they know their position is without merit and they are simply doing it anyway.

Short of finding a whistleblower in the drug company ranks this seems impossible. Not only would you have to find one whistleblower, HHS in making a referral to the OIG would have to prove that all seven companies in identified in its letter had colluded in coming to the same conclusions.

I also think it is safe to say in the current environment trying to guess what the Supreme Court will do on any issue is extremely difficult.