Tuesday, July 09, 2013

EXCLUSIVE: HRSA’s Secret Letter about Amgen’s 340B Neulasta Distribution Strategy

Well, pierce my ears and call me drafty!

In response to my Freedom of Information Act Request, the Health Resources and Services Administration (HRSA) provided me with its previously-undisclosed letter to the Safety Net Hospitals for Pharmaceutical Access (SNHPA) regarding Amgen’s distribution strategy for Neulasta. For background, see With a Top Secret Letter, HRSA Blesses Amgen’s New 340B Distribution Plan.

As a public service, I am including the full letter below.

Unfortunately, Commander Pedley’s letter doesn’t reference any specific regulation, rule, notice, guideline, law, FAQ, letter, or presentation. Apparently, the 340B drug discount program relies on little more than the unaccountable whims of an ever-burgeoning bureaucracy. The letter is also sadly consistent with the Obama administration's make-it-up-as-we-go-along approach to health care policy. Just my $0.02, but this is no way to run the fast-growing, multi-billion dollar 340B drug discount program, especially since the program is already being used in questionable ways.

Click here to download the letter to SNHPA's general counsel as a PDF.


  1. Very interesting. Where can I get the regulations for manufacturers for setting up a network.

  2. I presume you are asking about developing a 340B distribution strategy that is similar to Amgen's program.

    As I understand the situation, there has been no rulemaking or formal regulations regarding the so-called "discrimination" claimed by SNHPA. As one compliance expert told me: "The whole program is pretty much sub-regulatory now."

  3. Adam, Ever-burgeoning bureaucracy? Have you decided to adopt the Romney campaign's declaration against facts dictating positions? You are right about the sub-regulatory status of much of the program's rules (to its detriment), but that issue exists in part because the OPA is the opposite of burgeoning. Never-burgeoning, actually. The Office is understaffed and underfunded, so oversight -- rooted in the formal rulemaking that you (and the hospitals) seek -- is seriously lacking, as noted by the GAO. Please keep up the 340B discussion, but do it with all of the facts and with the credibility you've earned over the years by relying on documented sources and insightful (and inciteful) commentary. Yes, 340B needs rules (and those are in the works), but it needs funding and staff to write and enforce those rules on both sides of the program. As it is, to put it in terms you might be more comfortable with, the OPA could be drowned in a bathtub.

  4. Reggie,

    My statement stands as written. Bureaucracy refers to the administrative system, not just headcount or funding. HRSA and OPA keep expanding/modifying the 340B program through notices, clarifications, private letters, etc.

    Just look at the contract pharmacy boom, created by a 2010 policy change made without the normal notice/comment rulemaking process. If the agency is so woefully understaffed, then perhaps it should have been much more circumspect before expanding the contract pharmacy program.

    Come to think of it, perhaps "adhocracy" is the more appropriate term. ;)


  5. Adam,

    Fair point on the ill-considered pharmacy expansion, though a "boom" in contract pharmacy registrations has been conflated -- based on little evidence -- with a boom in actual 340B claims. Fifty shades of Walgreens around a hospital does not mean 340B volume has grown 50x or even 5x.

    However, you have a convenient definition of bureaucracy that allows you to include all regulated activity (and in this case, according to your allegation, all poorly regulated activity as well). Maybe you're suggesting that we all are part of the ever-burgeoning bureaucracy; if so, you're Orwellian redefinition of a commonly understood term is apt. (What's next? Compulsory broccoli?)

    Finally, a manufacturer sought and received approval for a 340B allocation system that gives them much greater control over distribution and pricing of its product, over the objection of a group citing the agency's rules. And you're upset? I'm envisioning the Alice in Wonderland post you'd write if you came across such an argument in another context. Screencap of Tom Petty's Don't Come Around Here No More video and heavy doses from the hookah-smoking caterpillar: "When logic and proportion have fallen sloppy dead, and the white knight is talking backwards, and the red queen's off with her head, remember what the dormouse said, feed your head, feed your head."

  6. Don't do me like that. To be clear, I won't back down from my concern that other manufacturers have no guidelines or regulations regarding distribution networks, because there are no "agency rules." We're all just free fallin'.

    For the record, Drug Channels has no official editorial policy regarding broccoli.