President Biden has nominated current White House Office of Management and Budget (OMB) General Counsel Sam Bagenstos to be the U.S. Health and Human Services Department (HHS) General Counsel—a post that has had a growing role in defending the 340B program.
Bagenstos, a graduate of Harvard Law School who clerked for the late U.S. Supreme Court Justice Ruth Bader Ginsburg, is an attorney specializing in civil rights issues. He served in the U.S. Justice Department during the Obama administration as the principal deputy assistant attorney general for civil rights. He also holds a faculty position at the University of Michigan Law School and was chair of the Michigan Employment Relations Commission between 2019 and earlier this year.
Bagenstos has argued several cases in front of the U.S. Supreme Court, with a specific focus on the Americans with Disabilities Act.
Bagenstos’ new post requires Senate confirmation. Assuming he is approved, he will be providing legal counsel to HHS, which has become increasingly involved in 340B-related issues.
Bagenstos’ predecessor, Robert Charrow, made headlines last December when he issued a colorful and unequivocal advisory opinion concluding that drug manufacturers are legally obligated to provide 340B discounts when covered entities employ a contract pharmacy or other distribution methods. HHS withdrew the advisory opinion in June two days after a federal judge ruled that Congress was silent about the role that contract pharmacies may play in covered entities’ purchases of 340B drugs. The judge set aside and vacated the opinion in July.
Charrow, a Trump administration appointee, also sent a blistering letter to Eli Lilly and Company last September in response to Lilly’s request to obtain a pre-enforcement advisory opinion regarding its intent to exclude contract pharmacies from 340B.
Charrow not only scolded Lilly for moving forward with the plan in the middle of the COVID-19 pandemic, but also criticized the Indianapolis-based firm for acting in the absence of swift guidance from the Health Resources and Services Administration. He also threatened a False Claims Act lawsuit “in the event Lilly knowingly violates a material condition” of 340B that “results in overcharges to grantees and contractors.”
William Schultz, HHS General Counsel from 2011-2016, is now partner at the law firm of Zuckerman Spaeder in Washington, D.C., has continued to play a big role in how the 340B program is shaped. The Obama administration appointee currently represents major hospital groups in challenging a Trump administration rule that cut 340B reimbursements by nearly 30%. That case will be heard by the Supreme Court in its upcoming term. Schultz also represents hospital groups that have been granted or are seeking friend-of-the-court status in drug manufacturers’ lawsuits challenging the use of 340B contract pharmacies.
