CSRXP: ASTRAZENECA LEADS BIG PHARMA IN BRAZEN ASSAULT ON CRITICAL 340B PROGRAM, MUST BE HELD ACCOUNTABLE

Brand Name Drug Company Shirks Requirement to Provide Affordable Medications to Covered Providers as Industry Complains About High Discounts Partially Driven by Its Own Price Hikes

Washington, D.C. – The Campaign for Sustainable Rx Pricing (CSRxP) issued a statement Thursday criticizing AstraZeneca for becoming the second Big Pharma giant to brazenly stop recognizing legally mandated prescription drug discounts for covered entities under the 340B program, by targeting providers who rely on community-based pharmacies to deliver needed medications to their patients.

“Big Pharma is escalating its assault on a program that provides access to care and critical health services  for at-risk Americans, including those who are low-income and who live in rural areas, at the height of a public health crisis and must be held accountable,” said CSRxP executive director Lauren Aronson. “AstraZeneca’s brazen attack on the 340B program comes just one month after Eli Lilly made a similar announcement and just weeks after the company hiked prices on 18 prescription drugs in its portfolio, demonstrating a pattern of egregious disregard for Americans’ access to affordable medicines during the pandemic.”

“Big Pharma’s complaints about rising discounts in the 340B program are all the more ludicrous given the role of the industry’s own price-hiking practices in the growth of those discounts,” Aronson continued. “A significant reason why 340B discounts have increased is because the law requires increased discounts if a drug company hikes prescription drug prices at rates exceeding inflation, which has been an across the board standard for Big Pharma.”

“Big Pharma’s assault on health care providers who serve many of America’s most vulnerable is unacceptable and violates both the intent and letter of the law which established the 340B program,” Aronson added. “Secretary Azar and the Administration must act to hold Big Pharma accountable for its assault on this critical program.”

BIG PHARMA’S PRICE HIKES INCREASE 340B DISCOUNTS

Big Pharma’s rhetoric targeting the 340B program points to high discount rates, but fails to acknowledge that the industry’s own price hikes are a key driver of larger discounts:

• The 340B program requires an “additional discount to offset price increases greater than inflation.” (Robert King, Drugmakers getting bolder in fight over 340B drug discounts, FierceHealthcare, 8/26/20)

• In Anticipation Of Generic Competition For Its Blockbuster Anti-Ulcer Drug Prilosec, AstraZeneca, “Introduced And Pushed Doctors To Prescribe” A New Drug “Which Was Only Slightly Chemically Different From Prilosec But Had 13 Years Of Patent Protection Left.” The Report Estimates The One-Year Cost Of This Product Hop To Be Almost $2.4 Billion. “The anti-ulcer drug Prilosec was, at one time, the top drug by sales in the United States. In 2000, before its scheduled patent expiration the following year, Prilosec sales reached $4.1 billion (NIHCM Foundation, 2001). In anticipation of generic competition for its blockbuster product, AstraZeneca, Prilosec’s manufacturer, introduced and pushed doctors to prescribe its new anti-ulcer drug, Nexium, which was only slightly chemically different from Prilosec but had 13 years of patent protection left. A lawsuit alleging that AstraZeneca engaged in anticompetitive behavior with Prilosec and Nexium was dismissed in early 2008 when a district court found that AstraZeneca “did not eliminate consumer choice” (Callan, 2015). But antitrust experts have pointed out that the court’s reasoning ignores “the realities of drug markets,” where a prescription for a single-source brand drug removes the option of a generic version (Carrier and Shadowen, 2016).” (Alex Brill, “The Cost of Brand Drug Product Hopping,” Matrix Global Advisors, 9/20)
• As AstraZeneca Faced Generic Competition To Its High Cholesterol Drug Crestor, Its “Price Was Increased Several Times Before The Generic Came Out … Including By About 15 Percent Right Before.” “AstraZeneca’s AZN, -0.08% drug Crestor, another of the drugs featured in the report, is a popular but expensive drug that treats high cholesterol. In 2016, when the drug first got a new generic rival, the branded product cost about $300 a month without insurance coverage. The price was increased several times before the generic came out … including by about 15% right before. (AstraZeneca said it could not comment because it was not involved in the study.)” (Emma Court, “Big Pharma Games The System To Make Generic Drugs More Expensive,” MarketWatch, 8/3/18)
• AstraZeneca’s Pricing Strategy Served To Create “A New, Higher Baseline Price When The Generic Hits The Market.” (Tori Marsh, “Prices For Brand Drugs Spike Before A Generic Is Released. Here’s Why.,” GoodRx, 7/27/18)
• After Increasing Drug Prices By As Much As Nine Percent, On A 2018 Earnings Call, Soriot Insisted The Company Was “Sensitive” To Drug Pricing Concerns And Said It Had Raised “Wholesale Prices Earlier [That] Year By ‘Very, Very Modest’ Amounts.” “During an earnings conference call, the AstraZeneca chief executive disclosed the company would not raise prices in the U.S. for the rest of year. Other drug makers have taken the same step in response to pressure from the Trump administration, but he insisted this was ‘our plan … all along’ … He maintained AstraZeneca was sensitive to the problem by raising wholesale prices earlier this year by ‘very, very modest’ amounts, ‘between 1 and 3 percent’ which, he said, was ‘in line with inflation.’” (Ed Silverman, “When Modest Is Actually Excessive: AstraZeneca Spins Its Price Hikes,” STAT News, 7/26/18)

• Since 2014: Prescription drug prices have risen 33 percent — or 20 times faster than the rate of inflation.
• In July 2020: Despite calls to suspend traditional mid-year price hikes while millions of Americans grappled with economic uncertainty caused by the COVID-19 crisis, Big Pharma increased prices on more than 65 brand name drugs.
• In January 2020: Big Pharma hiked prices on more than 600 drugs by an average of 5.2 percent.
• In July 2019: Big Pharma hiked prices on 104 drugs by an average of 13.1 percent.

ABOUT THE 340B PROGRAM

The 340B program was established by Congress to ensure health care providers serving America’s most vulnerable patients, including those with low incomes and living in rural communities, are able to acquire medications at a discount established by statute and invest the savings in care for patients and communities in need. In exchange, drug companies receive taxpayer-funded coverage for their products through the Medicaid and Medicare Part B programs.

In 2010, the Health Resources & Services Administration (HRSA), which oversees the 340B program, issued guidance explicitly stating that under HRSA’s interpretation of the statute drug companies must honor 340B discounts for covered entities purchasing medications to be dispensed to their patients through contract pharmacies.

Learn more about the 340B program HERE.

Learn more about market-based solutions to hold Big Pharma accountable and lower prescription drug prices HERE.