Ranking Member Cassidy Requests Information from Drug Manufacturers as Part of Ongoing 340B Investigation

WASHINGTON - U.S. Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, is requesting information from two drug manufacturers as part of his ongoing investigation into how covered entities use and generate revenue from the 340B Drug Pricing Program.

Under the 340B program, drug manufacturers participating in Medicaid must agree to sell outpatient drugs to covered entities at significantly discounted prices. This allows covered entities to generate savings to stretch scarce federal resources as far as possible.

In 2010, the Health Resources and Services Administration, the agency charged with administration and oversight of the 340B Program, issued new guidance allowing covered entities to enter into agreements with an unlimited number of contract pharmacies. As a result, between 2009 and 2022, the number of contract pharmacies participating in the 340B Program skyrocketed from 789 to 25,775. This expansion has led to disagreements about covered entities' unfettered use of contract pharmacies to dispense 340B drugs.

Beginning in 2020, several drug manufacturers announced restrictions on covered entities dispensing 340B drugs to patients through multiple contract pharmacies, stating the restrictions would cut down on unlawful duplicate discounts and diversion of 340B drugs to ineligible patients. These restrictions limit covered entities' ability to dispense 340B drugs from more than one contract pharmacy.

Given that Eli Lilly and Amgen are among the manufacturers imposing restrictions on covered entities, Cassidy is requesting information to better understand the companies' justifications for the restrictions and how the restrictions affect distribution of 340B drugs.

Since launching his investigation in September 2023, Cassidy has sent letters to participants in the 340B Drug Pricing Program. These include letters to two hospital covered entities, two community health center covered entities, and two contract pharmacies.

Read the full letter to Eli Lilly here and Amgen here.

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