Community health centers split their 340B dispute resolution petition against drug manufacturers Eli Lilly, Sanofi, and AstraZeneca into two—one against Lilly alone, the other against Sanofi and AstraZeneca together.

After HRSA Notification, NACHC Refiles 340B Dispute Complaints Against Drug Manufacturers

Community health centers on Tuesday split their 340B dispute resolution petition against drug manufacturers Eli Lilly, Sanofi, and AstraZeneca into two—one against Lilly alone, the other against Sanofi and AstraZeneca together—to let federal officials commence proceedings against Sanofi and AstraZeneca. When or even whether ADR proceedings against the two companies begin is unknown.

In March, a federal district judge granted Lilly’s motion for a preliminary injunction stopping the U.S. Health and Human Services Department (HHS) from initiating 340B administrative dispute resolution (ADR) proceedings against the company. The court ruled that Lilly was likely to win its argument that HHS violated notice-and-comment requirements when it finalized the rule establishing the ADR process.

The National Association of Community Health Centers (NACHC) alleges that Lilly, Sanofi, and AstraZeneca illegally refuse to offer the association’s members outpatient drugs at or below the 340B ceiling price when members dispense drugs to patients through contract pharmacy arrangements. It filed a single, joint ADR petition against the three manufacturers in January. Ryan White Clinics for 340B Access (RWC-340B) simultaneously filed an ADR petition on behalf of affiliated health centers against AstraZeneca only.

Lilly, Sanofi, and AstraZeneca, meanwhile, have each sued HHS and HRSA over HRSA’s finding in May that each company’s restrictions on 340B pricing when covered entities use contract pharmacies violates the 340B statute.

NACHC and RWC-340B’s ADR petitions both languished, partially because the Biden administration upon taking office withdrew the Trump administration’s last minute appointees to the eight-member ADR board (six voting and two ex-officio non-voting members). HHS Secretary Xavier Becerra made his picks for the board in late June.

U.S. District Senior Judge Sarah Evans Barker’s injunction against ADR proceedings against Lilly also seems to have cast a shadow over proceedings against Sanofi and AstraZeneca.

NACHC disclosed in a court filing late last month that a HRSA official told NACHC on Aug. 5 that, due to the preliminary injunction shielding Lilly from ADR proceedings, HRSA could not “move ahead with any ADR process involving Lilly” and would “not take any further action related to NACHC’s current petition at this time.”

In each of its two new ADR petitions, NACHC said it submitted one amended claim against Lilly and another against Sanofi and AstraZeneca “to comply with HRSA’s August 5, 2021 request that NACHC separate its claims against Lilly from its claims against AstraZeneca and Sanofi so that the 340B panel may proceed with adjudication of the latter.” (Click here for NACHC’s refiled petition against Lilly and here for its petition against Sanofi and AstraZeneca.)

It is anyone’s guess whether HRSA Acting Administrator Diana Espinosa appoints a three-member ADR panel to consider and reach a decision about NACHC’s claims against Sanofi and AstraZeneca.

For example, RWC-340B’s separate ADR petition is against AstraZeneca only. And unlike NACHC’s original petition, RWC-340B’s is unencumbered by the injunction against ADR proceedings granted to Lilly. Nor is AstraZeneca challenging the ADR process in its lawsuit against HHS and HRSA.

Despite those differences, HRSA has not yet appointed an ADR panel and commenced proceedings against AstraZeneca in RWC-340B’s petition. One possible reason is because HRSA has conducted an investigation and sent a letter to the company on May 17 informing it that it violated the 340B statute.

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