must specifically enroll in the Prime Vendor Program. 57
Covered entities have gone to court over alleged overcharging for 340B
drugs. 58 In 2011, the U.S. Supreme Court denied a covered entity’s attempt
to assert a private right of action against a drug manufacturer for
overcharging for 340B drugs. 59 In its holding, the unanimous Court found:
Congress did not respond to the reports of inadequate HRSA enforcement
by inviting 340B entities to launch lawsuits in district courts across the
country. Instead, in the ACA, Congress...opted to strengthen and
formalize HRSA’s enforcement authority, to make the new adjudicative
framework the proper remedy for covered entities complaining of
‘overcharges and other violations of the discounted pricing requirements,’
id., at 823, 42 U.S. C. § 256b(d)( 1)( A), and to render the agency’s
resolution of covered entities’ complaints binding, subject to judicial
review under the [Administrative Procedure Act], id., at 827, 42 U.S. C.
§ 256b(d)( 3)( C). 60
As the Supreme Court noted, the ACA addresses the 340B Program’s
history of inadequate government oversight. 61 The ACA requires the
Secretary of HHS to publish “precisely defined standards” for calculating the
ceiling price, verifying the prices, and making them available to covered
entities through a secure web site. 62 Covered entities should take advantage
of these new safeguards to prevent overcharging and should report any
suspected overcharging to OPA.
The Section 340B discount is important mostly for very expensive
pharmaceuticals, which are typically brand name drugs. There is also a
“ceiling price” on generic drugs purchased through the 340B Program. 63
However, the methodology for calculating the ceiling price and market forces
frequently result in the open market price for generics being lower than the
340B ceiling price. 64 Thus, some covered entities may find it desirable to
purchase generics on the open market, thereby eliminating the limitations
(and compliance obligations) inherent in the 340B Program and any
anticipated costs of contracting with an outside pharmacy and/or a 340B
58. See Astra USA, Inc. v. Santa Clara Cnty, Cal., 131 S.Ct. 1342, 1347 (2011).
59. See id.
60. Id. at 1350.
61. See id.
62. See 42 U.S. C. § 256b(d)( 1)( B) (2010).
63. § 256b(a)( 1).
64. JEFFREY R. LEWIS, THE FUTURE OF THE 340B DRUG PRICING PROGRAM: CHALLENGES
AND OPPORTUNITIES 13 (2011).
65. See id. (noting that “covered entities are able to purchase generics on the open market
at less than the 340B ceiling price”).