AHA urges FTC, DOJ antitrust probe into 340B rebate models

The American Hospital Association is urging the Federal Trade Commission and the Department of Justice's Antitrust Division to examine new 304B rebate models being implemented by drug companies, arguing that the models might violate antitrust laws.

In a letter dated September 8, the association representing 5,000 member hospitals outlined new rebate models being implemented by a group of competitor drug companies. In such models, drug companies said they would no longer provide 340B discounts at the point of sale but rather require hospitals to pay the full price for drugs and then be paid the discount via a later-issued rebate.

"These drug companies sought to switch from providing 'upfront discounts' on 340B drugs to a model in which 340B hospitals must purchase even the costliest drugs at full price and then submit for a rebate," AHA wrote in the letter to the Federal Trade Commission (FTC) and Department of Justice (DOJ). "If successful, this concerted effort would essentially obligate America's safety-net hospitals to advance interest-free loans to the world's largest and most profitable drug companies."

The 340B drug pricing program was designed to let hospitals treating a disproportionate share of vulnerable populations purchase medications at an upfront discount.

Pharmaceutical companies participating in Medicaid are required to provide the discounts, which AHA has previously stated let hospitals offer charity care to uninsured patients, administer free vaccines, give mental health services in clinics and implement medication management programs.

AHA argued that newly introduced rebate models would be damaging to 340B hospitals.

"We therefore respectfully request that the Federal Trade Commission (FTC) and Antitrust Division of the United States Department of Justice (DOJ) investigate the drug companies' concerted efforts to impose these rebate models within the 340B Program," AHA wrote in its letter.

Specifically, AHA compared the rebate models to practices struck down in Mosaic Health, Inc. v. Sanofi-Aventis U.S., LLC. That case found that the defendant drug companies violated federal and state antitrust law by designing policies that would limit 340B drug discounts for certain diabetes drugs purchased through contract pharmacies.

In this situation, AHA remarked on the timing of rebate model announcements, saying they happened in rapid succession "to an astonishing degree." The timeline -- plus the shared motive, economic benefit and opportunity to conspire -- raises suspicion of parallel conduct, AHA said.

"If successful, this potential antitrust conspiracy will devastate the 340B hospitals that serve America's rural and other underserved populations," the association concluded. "It is therefore time for FTC and DOJ to act. We urge you to investigate this behavior and take the necessary steps to address any and all antitrust violations."

Sara Heath has reported news related to patient engagement and health equity since 2015.