A federal appeals court in Philadelphia this morning is hearing arguments in AstraZeneca, Novo Nordisk, and Sanofi’s lawsuits challenging federal agency findings that the drug companies’ 340B contract pharmacy policies are illegal and must stop or the firms could be punished with huge civil fines.
We plan to report later today about the two-hour-long hearing before the U.S. Third Circuit Court of Appeals which is scheduled to begin at 10:00 a.m. Eastern.
The government is challenging a federal district judge’s February 2022 decision that the U.S. Health Resources and Services Administration’s May 2021 340B program notice to AstraZeneca did not comply with the Administrative Procedure Act.
Noting that the 340B statute does not mention pharmacies, the judge based at the federal district court of Delaware, ruled that the program’s legislative history “indicates that Congress did not clearly intend for drug manufacturers to be required to facilitate sales of covered drugs for dispensing by an unlimited number of contract pharmacies.” He also held that HRSA never offered a credible explanation why AstraZeneca’s policy of allowing covered entities just one contract pharmacy if they lacked an in-house pharmacy would have complied with HRSA’s 1996 contract pharmacy guidance but not its 2010 guidance, a December 2020 Department of Health and Human Services legal advisory opinion, nor HRSA’s 2021 violation letter.
Sanofi and Novo Nordisk’s cases were consolidated for argument and decision at the district court level. A federal district judge in New Jersey in November 2021 upheld the federal government’s finding that the two companies cannot unilaterally impose restrictions on offers of 340B pricing to covered entities and that their policies must cease. She also, however, vacated the government’s May 2021 findings that the companies owe credits or refunds to covered entities and face civil monetary penalties “to the extent that such determinations may depend on the number of permissible contract pharmacy arrangements under the 340B statute.”
Sanofi and Novo Nordisk are appealing the judge’s findings that:
- the 340B statute permits contract pharmacy arrangements
- the companies may not attach strings to offers of 340B pricing
- the companies’ conditions on 340B pricing constitute overcharging in violation of the 340B statute
- the federal government’s May 2021 letters telling the companies that their policies are illegal and must stop are not an unconstitutional taking of the companies’ property.
Sanofi also is appealing the judge’s denial of its motion to declare the 340B administrative dispute resolution (ADR) process illegal.
The government told the Third Circuit Court that the lower court was wrong to throw out 340B program violation findings against the companies on the grounds it is unclear whether there is a limit on how many 340B contract pharmacy arrangements a provider may have.
Today’s hearing was preceded by one two weeks ago in federal circuit court in Chicago in Eli Lilly’s 340B contract pharmacy lawsuit, and another three weeks ago in federal circuit court in Washington, D.C., in Novartis and United Therapeutics’ consolidated 340B contract pharmacy lawsuits.