PhRMA told a federal court in Baltimore, Md., that none of the federal government's legal arguments "can hide the fundamental defects" in the 340B ADR rule.

340B ADR Rule Is Fundamentally Defective, PhRMA Tells Federal Court

Pharmaceutical Research and Manufacturers of America told a federal district judge last week that the federal government has failed to refute PhRMA’s contention that the regulation establishing the 340B administrative dispute resolution (ADR) process “is unconstitutional, procedurally defective, and relies on audit guidelines that are inconsistent with the 340B statute.”

The drug industry trade association sued in federal district court in Baltimore, Md., in January to strike down both the 340B ADR rule and guidelines governing drug manufacturer audits of 340B covered entities. PhRMA’s Oct. 12 court filing was in response to the government’s Sept. 9 brief making its case why the ADR rule is constitutional and why the 340B audit guidelines are legal.

“Defendants argue that the 340B statute is constitutional, but it is the ADR Rule that violates the Appointments Clause,” PhRMA told the court. “They defend the audit guidelines based on impermissible post-hoc rationales and by ascribing to Congress their own jaundiced views of pharmaceutical manufacturers— views with no basis in the text or history of the statute. And defendants repeatedly ignore—and even contradict—the facts in the record before HRSA, suggesting, for example, that manufacturer audits are rare because there are no problems with diversion and duplicate discounts, when the evidence shows that such violations are rampant.”

“None of their arguments can hide the fundamental defects in the ADR Rule,” PhRMA said.

According to the briefing schedule that U.S. District Judge Paul Grimm approved in May, the next step is for Grimm is to set a date for oral arguments.