A federal circuit court has suspended Lilly’s 340B contract pharmacy lawsuit on technical grounds and might send it back to a lower court.

Appeals Court Signals it Might Send Lilly’s 340B Lawsuit Back to Lower Court

A federal circuit court on Tuesday halted drug manufacturer Lilly and the federal government’s appeals of a district judge’s late October ruling in Lilly’s 340B contract pharmacy lawsuit, on technical grounds. It’s the second time the case has run into the same ditch at the appellate level.

The 7th U.S. Circuit Court of Appeals said on Jan. 4 its preliminary review of the record indicates that U.S. Senior District Judge Sarah Evans Barker’s Oct. 29 order in Lilly’s case “may not be a final appealable judgment…or at the very least may not be ready for appellate review.”

It suspended the filing of briefs “pending further court order.”

The circuit court said almost the same thing on Nov. 16, less than a week after Lilly appealed. At that time, the court told both sides to file briefs on whether Lilly’s appeal could move forward. Lilly told the court that nothing barred it from going ahead. The government said it might be appropriate for the court to send the case back to Barker to spell out the rights that both sides have under her decision.

Barker held in the government’s favor that the U.S. Health Resources and Services Administration’s (HRSA) May 17 letter determining that Lilly has broken the law “neither exceeds the agency’s statutory authority nor is contrary to law.” She also said “the fairest and most reasonable interpretation of the 340B statute” would not let manufacturers unilaterally restrict drug distribution in ways that frustrate 340B’s purpose.

Barker, however, set aside and vacated the government’s violation letter on the grounds that HRSA did not acknowledge or explain its change in position regarding its ability to enforce contract pharmacy arrangements. She sent the letter back to HRSA “for further consideration/action consistent with” her decision.

The federal government filed its own appeal of aspects of Barker’s decision on Dec. 28. In its order this week, the circuit court announced it would hear and decide Lilly and the government’s appeals in tandem.

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