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May 18, 2021

HRSA Issues Cease and Desist Letters to Manufacturers Restricting Use of Contract Pharmacies

On May 17, 2021, the Health and Resource Service Administration (HRSA) issued letters to six pharmaceutical manufacturers requiring the entities to immediately cease an ongoing practice of withholding 340B pricing to covered entities utilizing contract pharmacies. Manufacturers have defended these restrictions as a way to prevent diversion and duplicate discounts for 340B drugs. After a review of these practices, however, HRSA rejected the policy as a violation of the 340B statute. HRSA cited specific mechanisms within the statute that allow manufacturers to address any concerns of abuse in the program, noting that the statute does not permit industry-wide, universal restrictions. Federal litigation on the issue is ongoing.