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Drug companies take action in light of changes to the 340B Drug Program

Merck & Co. is communicating directly with covered entities asking for contract pharmacy claim data to be submitted to Merck via a secure web portal. Merck states the data will be used “to match against rebate claims it receives to ensure it isn’t paying duplicate Medicaid discounts and duplicate discounts on Medicare Part D and commercial utilization through our contracts with commercial payers.”

Covered entities are only required to inform HRSA of billing practices with Medicaid for the prevention of duplicate discounts, not with Medicare Part D nor commercial payors. This request by Merck seems to be asking for more information than typically seen in normal 340B inquiries or requests. Merck has proposed a registration deadline of August 14th, but it is unclear if claims data must be uploaded by this date. Covered entities need to be extremely cautious before they send any data without understanding the potential implications.

Eli Lilly has announced as of July 1, 2020, it will alter its 340B contract pharmacy distribution model for its erectile dysfunction drug, Cialis. Eli Lilly issued a statement, “Contract pharmacies will no longer be eligible to receive these formulations of Cialis at the 340B ceiling price unless an entity does not have its own in-house pharmacy. In those instances, Lilly has an exception process for the covered entities to allow them to designate one contract pharmacy location.”

Eli Lilly has not made changes to any other products in its portfolio at this time and this change will not affect generic equivalent products available.

The entire situation seems to set up a legal battle between HRSA and Eli Lilly over the 2010 contract pharmacy guidelines from HRSA. While this battle occurs, the worry is that other manufacturers will follow Eli Lilly, limiting contract pharmacy access to medications needed by indigent populations. And it appears HRSA may not challenge Eli Lilly on its change in eligibility.

We will continue to monitor both situations and provide updates as they become available. If you have questions, have received a letter from Merck, or have been unable to obtain Cialis for your patients through a contract pharmacy, please reach out to one of our Apexus Certified 340B Experts.

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