The Justice Department filed a brief siding with pharmaceutical manufacturers in the long-running 340B contract pharmacy dispute. The reversal could let drugmakers sharply limit where safety-net hospitals and clinics access federally mandated drug discounts.
The 340B program, created under the Public Health Service Act, requires manufacturers to sell outpatient drugs at steep discounts to covered entities like federally qualified health centers, children’s hospitals, and Ryan White clinics. The fight has centered on whether pharma can restrict those discounts when drugs are dispensed through contract pharmacies rather than a covered entity’s own on-site pharmacy.
Under the prior administration, the DOJ and HHS consistently argued that manufacturers couldn’t unilaterally impose those restrictions. Manufacturers pushed back anyway.
Now the DOJ has switched sides. It means the federal government, which created and administers 340B, is telling courts that pharma’s restrictive policies are legally defensible. Covered entities that rely on 340B revenue to cross-subsidize care for uninsured patients don’t just lose a court fight. They lose the government as an ally.
Worth watching: Health Resources and Services Administration (HRSA) guidance on contract pharmacies has been in limbo since the administration change. If the DOJ’s position hardens into formal rulemaking, the era of broad contract pharmacy access under 340B may be ending.
James Okafor