Key Takeaways
- Novartis will terminate 340B pricing for all STD (Section 318) clinics effective November 3, 2025.
- The company argues that because its drugs are not indicated for STD prevention or treatment, STD grantees are “outside the scope of the grant.”
- This interpretation conflicts with HRSA’s official guidance, which allows STD clinics to purchase any 340B drugs in association with their grant-funded services.
- The move could set a dangerous precedent for other manufacturers to limit 340B access based on disease category rather than service scope.
- Alchemy is actively engaging with HRSA, partners, and affected clinics to challenge and clarify this policy. Stay tuned for more updates!
On October 22, 2025, Novartis Pharmaceuticals quietly sent a letter to sexually transmitted disease (STD) clinics across the country. The letter was sent to STD clinics that participate in the 340B Drug Pricing Program under Section 318 of the Public Health Service Act announcing that it will terminate 340B pricing for all Novartis products effective November 3, 2025.
The reason? According to Novartis, none of its products are “indicated for the treatment or prevention of STDs.” Therefore, the company argues, any STD grantee purchasing its drugs under 340B pricing would be acting “outside the scope of the grant” and in violation of HRSA’s patient definition.
It’s a move that has raised immediate alarm across the 340B community particularly among clinics that depend on the program to stretch limited federal dollars and ensure access to care for vulnerable patients.
What the Letter Says?
In the notice, Novartis writes that:
"Your entity does not qualify for 340B pricing for any Novartis products as an STD covered entity because those products cannot be used to perform services within the scope of its Section 318 STD grant. None of Novartis’ products are indicated for the treatment or prevention of STDs."
The company further warns that continuing to purchase Novartis products under a Section 318 covered entity ID would constitute “improper diversion” to non-patients under 42 U.S.C. §256b(a)(5).
In short: Novartis believes that because its portfolio does not include STD-indicated drugs, no Section 318 clinic can legally purchase any Novartis product at 340B pricing.
Why This Matters?
This is the first known manufacturer to attempt to disqualify an entire category of grantee covered entities from 340B access based on a disease-area interpretation of the “scope of the grant.”
Historically, the “scope of the grant” requirement has been read far more broadly. HRSA’s own FAQ for STD (Section 318) clinics states that:
"STD (318 grantee) clinics that participate in the 340B Program may purchase and dispense any 340B drugs associated with a service for which the covered entity is responsible, including contraceptives, to that patient, to the extent it aligns with the patient definition and is consistent with the scope of the grant." — HRSA Office of Pharmacy Affairs
That distinction is critical: HRSA ties the rule to the service provided under the grant not to whether a specific drug’s FDA label matches the grant’s disease focus.
What’s at Stake for STD Clinics?
If left unchallenged, this policy could have sweeping implications for all STD clinics.
- Loss of 340B savings for all Novartis products regardless of how or why they’re prescribed.
- Precedent for other manufacturers to adopt similar disease-based exclusions for other grantee types (e.g., Ryan White HIV/AIDS, Title X family planning).
- Operational confusion for multi-grant entities that operate multiple covered entity IDs under one roof.
- Reduced patient access to affordable medications, contraceptives, and other critical outpatient drugs that 340B savings help fund.
Many STD clinics rely on 340B savings to subsidize testing, counseling, and outreach for uninsured and underinsured patients. Removing an entire manufacturer’s catalog from their 340B eligibility risks narrowing those essential services.
What STD Clinics Can Do Now?
Review the Letter. Confirm whether your organization (as a Section 318 covered entity) received the notice and identify which NDCs might be impacted.
Understand the Financial and Patient Impact. Take a full inventory of your dispensed drugs over the past 3-6 months to understand the impact of Novartis's drug catalog on your pharmacy dispensations. More importantly, be prepared to quickly run this analysis in the event other drug manufacturers follow suit.
Ask for a Pause. Contact Novartis (Novartis.340B@novartis.com) to request that termination be suspended pending HRSA clarification.
Engage HRSA OPA. Submit a formal inquiry to the Office of Pharmacy Affairs (340Breport@hrsa.gov) attaching the letter and citing HRSA’s published FAQ language.
Coordinate with Partners. Work with other STD clinics in your network combined with coalition, public-health association, or legal counsel to align your response.
What Happens Next?
This story touches on a larger trend: As courts have upheld aspects of manufacturers’ 340B policies in recent years, some companies are testing new limits–moving from contract-pharmacy restrictions to programmatic eligibility reinterpretations.
In the next post in this series, we’ll break down what the law actually says about “scope of the grant,” and how HRSA has defined it for nearly three decades, and why Novartis’s interpretation is on shaky ground.
If your STD clinic received this letter, Alchemy is compiling responses to share with HRSA and state partners. Email me at sid@alchemyhealth.com to contribute to the collective record.
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