GlaxoSmithKline recently became the 14th biopharma company to switch up its approach to distributing drugs purchased via the federal 340B program for low-income individuals.

Effective April 1, GSK said it will ship products purchased at the lower, 340B prices exclusively to locations registered as a 340B covered entity or affiliate with that covered entity. This contract pharmacy policy, which will limit the number of entities that receive these reduced prices, will apply to 9 of GSK’s asthma and COPD drugs, including Advair, Ventolin, Breo, Trelegy, Anoro, Incruse, Flovent, Arnuity and Serevent.

Similar to its peers, GSK’s policy allows qualifying 340B covered entities (i.e., those without an in-house pharmacy) to designate a single contract pharmacy location, which has to be registered individually in a federal database.

“The only exceptions to the above include Federal grantees, covered entities that submit claims data and contract pharmacies wholly owned by a 340B hospital or that have common ownership with a health system,” GSK said.

Hospitals immediately called out the move as wrong, as they have previously for 340B changes from Eli Lilly, AstraZeneca, Sanofi, Boehringer Ingelheim, Pfizer, Bristol Myers Squibb, Merck, Novo Nordisk, United Therapeutics, Novartis, UCB, Amgen and AbbVie.

Maureen Testoni, CEO of the hospital-backed association 340B Health, said in a statement, “In choosing to follow the lead of other drug companies that are violating federal law, GlaxoSmithKline will weaken the health care safety net and the patients who rely on it for care, including those with low incomes and those living in underserved rural communities.”

But the federal administration overseeing the 340B program, known as HRSA, is still weighing what to do on requiring pharma companies to comply with its interpretation of the 340B statute, following mixed court decisions.

“We are pleased that two of three recent US District Court opinions involving the 340B Program agree with HRSA that three pharmaceutical manufacturers have unlawfully restricted access to 340B discounted drugs by covered entities that dispense medications through contract pharmacy arrangements – the core finding of HRSA’s May 17, 2021, Violation Letters. HRSA respectfully disagrees with the recent District Court opinion finding that two other manufacturers had not violated the statute, and continues to evaluate its options,” the agency said on its website.

All pharma manufacturers participating in state Medicaid programs agree to provide outpatient drugs to covered entities at significantly reduced prices under the 340B program.

Eligible health care organizations/covered entities receiving these discounts include HRSA-supported health centers, Ryan White clinics and state AIDS drug assistance programs, as well as Medicare/Medicaid disproportionate share hospitals, children’s hospitals, and other safety net providers.

But HRSA has struggled to regulate the drug discount program, both in terms of dealing with the pharma companies challenging what they see as a ballooning program (to almost 10% of the entire US pharma market), and the proliferation of contract pharmacies receiving these steep discounts.

DC Judge Dabney Friedrich made clear in her opinion that drugmakers are right to challenge recently levied fines from HRSA due to the companies’ newly enacted restrictions around these contract pharmacies, writing, “The statute’s plain language, purpose and structure do not prohibit drug manufacturers from attaching any conditions to the sales of covered drugs through contract pharmacies.”