Novartis, a New Jersey pharmaceutical company, has sued the State of Maine over new regulations imposed earlier this year on a federal discount drug program for certain health care providers.
Originally introduced as LD 1018 and ultimately enacted as part of the biennial budget, this initiative sought to strengthen the federal 340B Drug Pricing Program in Maine.
Set to take effect in late September, this measure would prohibit pharmaceutical companies from limiting discount drug providers’ ability to form partnerships with local pharmacies.
According to the American Hospital Association, 340B requires drug manufacturers participating in Medicaid “to sell outpatient drugs at discounted prices to health care organizations that care for many uninsured and low-income patients.”
This program was first established in 1992 to serve as a “safety net” against rising drug costs for facilities providing care in poorer areas to low-income patients.
The cost savings accrued as a result of these discounted prices is supposed to then be used toward providing no- or low-cost care to the patients they serve.
The Pharmaceutical Research and Manufacturers of America, however, has cited numerous media reports accusing hospitals and clinics of abusing 340B to purchase cheap medications and sell them at full price, pocketing the difference.
“Wealthy hospitals work with [pharmacy benefit managers] and other middlemen to exploit the 340B program by buying medicines at steep discounts and charging massive markups, imposing higher costs on patients, employers and taxpayers,” Stami Turk, the association’s spokesperson, said in a statement earlier this year.
Those who supported Maine’s recent regulation of the program, on the other hand, suggested that pharmaceutical companies were attempting to skirt 340B by restricting which pharmacies were allowed to participate in the program.
According to the Portland Press Herald, 30 other states have similar regulations aiming to block this kind of maneuvering by drug companies.
Novartis — a New Jersey based pharmaceutical company — has filed a lawsuit against Maine Attorney General Aaron Frey alleging that the state’s new 340B regulations are illegal, arguing that the program is under the purview of the federal government, not the states.
The company further alleges that certain hospitals and clinics are abusing the 340B program in order to obtain cheap medications.
“The 340B program has recently ballooned from a niche safety-net program affecting a small minority of health care providers into the largest health care program most people have never heard of,” according to the lawsuit.
They go on to argue that the growth of the program “has been fueled by the birth of a cottage industry of middlemen (pharmacy benefit managers) that help health care providers exploit the 340B program,” the lawsuit said.
A spokesperson for the Maine Attorney General’s Office has reportedly told members of the press that they do not comment on pending litigation.
Sen. Donna Bailey (D-York), the lawmaker who sponsored the original bill aiming to regulate 340B, has suggested that this lawsuit is an attempt to “undo” the state’s work and “increase their own profits at the expense of health care providers and the patients who rely on these essential cost saving programs.”
“I am hopeful and confident that our efforts to lower the cost of care for Maine people will be upheld,” Sen. Bailey told WMTW.
“We believe Maine’s law is sound and we’re confident it will survive challenge as these laws have been upheld in Arkansas, Mississippi, Louisiana (the model for our law – though not exactly) and many other states,” Jeffrey Austin, vice president of government affairs and communications for the Maine Hospital Association, said in a statement.
“We will oppose efforts by Pharma to discriminate against our pharmacy partners, particularly the smaller, local pharmacies that are disproportionately harmed by discrimination,” he added.
When this issue was before the Legislature earlier this year, it was unanimously approved by lawmakers before being recalled from the governor’s desk once it was folded into the biennial budget.
“We will not stand idly by as drug companies wreak havoc on this critical program at the expense of those who need it most,” Rep. Jack Ducharme (R-Madison), one of the bill’s supporters, said earlier this year, according to a contemporaneous news article.
While this bill was before the Legislature, groups such as the Maine Hospital Association urged lawmakers to protect them from “attacks” by pharmaceutical companies by passing these regulations.
A representative from the Healthcare Purchaser Alliance of Maine, however, suggested that despite the importance of the program, the savings generated by the program are not always passed onto patients in the intended manner.
This representative went on to argue that lawmakers should look toward improving program transparency before enacting the now-approved regulations.
Novartis filed their lawsuit against Attorney General Frey in Maine district court earlier this month. The expected schedule for these proceedings is not yet known.
