Third Circuit Holds That Drug Manufacturers Are Not Required to Deliver Discounted Drugs to More Than One Contract Pharmacy Under the 340B Program

Stephen J. Shapiro published a client alert, “Third Circuit Holds That Drug Manufacturers Are Not Required to Deliver Discounted Drugs to More Than One Contract Pharmacy Under the 340B Program.” 

On January 20, 2023, the Third Circuit held that drug companies may refuse to deliver discount drugs under the 340B program to more than one contract pharmacy for each covered entity. The first of three appellate courts considering the topic to issue a ruling, the Third Circuit lays the groundwork for future developments in the law.

The 340B program, created by Congress in 1992, requires drug manufacturers that wish to participate in Medicare and Medicaid to offer certain outpatient drugs at discounted prices to qualifying healthcare providers known as “covered entities.” Covered entities typically provide medical care to low income or rural patient populations. When a provider at a covered entity prescribes a qualifying drug to a patient who has insurance, the covered entity can earn a profit where the amount of the insurance reimbursement for the prescription exceeds the discounted price the covered entity paid for the drug.

Click here to read the full alert.