A federal district judge in Indianapolis last week responded to a higher court’s directive and entered an amended partial final judgement in drug manufacturer Lilly’s 340B contract pharmacy lawsuit. It is not clear whether the judge did enough to satisfy the higher court, however.
She agreed with Lilly for the second time that a Dec. 30, 2020, federal government advisory opinion on 340B contract pharmacy in general and a May 17, 2021, government enforcement letter about Lilly’s policy specifically were arbitrary and capricious and therefore illegal.
But she disagreed with Lilly for the second time on other key points. The enforcement letter did not violate federal statutory notice-and-comment requirements, she repeated. It did not exceed the government’s authority under the 340B statute because the law, “correctly construed, does not permit drug manufacturers, such as plaintiffs, to impose unilateral extra-statutory restrictions on their offer to sell 340B drugs to covered entities utilizing multiple contract pharmacy arrangements,” Barker said. The enforcement letter was not an unconstitutional government taking of private property and was not an unconstitutional condition on the receipt of benefits, she said.
Barker set aside and vacated both the U.S. Health and Human Services General Counsel advisory opinion and the enforcement letter that the U.S. Health Resources and Services Administration (HRSA) sent to Lilly and sent the enforcement letter back to HRSA “for further action as defendants may determine consistent with these rulings.”
Barker was acting at the direction of the U.S. Seventh Circuit Court of Appeals. Lilly and the government both appealed Barker’s October 2021 decision. Earlier this month, the Seventh Circuit Court sent the case back to Barker and told her “to enter a judgment that fully and completely implements its decision, declaring specifically and separately the respective rights of the parties.” The appeals court had indicated earlier that Barker’s October 2021 decision might not have been sufficiently final to let the case move forward.
It is not clear whether Barker tied up enough loose ends to satisfy the Seventh Circuit Court.
As part of its lawsuit, Lilly also challenged the legality of HRSA’s 340B administrative dispute resolution (ADR) final rule. In March 2021, Barker granted Lilly’s motion for a preliminary injunction stopping HRSA from implementing or enforcing the ADR rule against Lilly. The injunction remains in place. In her October 2021 decision, Barker said she would address the two sides’ cross motions for judgements in their favor regarding the ADR rule “in due course.” That still hasn’t happened.
Lilly and the government have deadlines this Thursday to report back to the appeals court on Barker’s latest action in the case.