The federal government late yesterday filed notice that it is appealing a federal judge’s joint ruling in two cases last month that halted enforcement actions against two drug companies that deny 340B pricing when hospitals and other health care providers use contract pharmacies.
The U.S. Justice Department filed the one-sentence notices of appeal in Novartis and United Therapeutics’ (UT) 340B contract pharmacy lawsuits on Dec. 28.
Judge Dabney Friedrich of the U.S. District Court for the District of Columbia on Nov. 5 set aside the U.S. Health Resources and Services Administration’s (HRSA) May 17 letters telling Novartis and UT their restrictions on 340B contract pharmacy were illegal and resulted in overcharges that must be repaid, or the companies could face civil fines.
Friedrich ruled that the 340B statute does not prohibit drug makers from attaching any conditions to 340B sales. But, she said, the statute does not permit all such conditions. Any new enforcement action against Novartis and UT would need to be based “on a new statutory provision, a new legislative rule, or a well-developed legal theory that Section 340B precludes the specific conditions at issue here,” Friedrich said.
A Novartis spokesperson said this morning, “The D.C. District Court’s decision rejected the government’s conclusion that the Novartis contract pharmacy policy is unlawful under the 340B statute. We believe the ruling validates our view of the 340B statute and that our contract pharmacy policy is fully consistent with the statutory requirements governing the program. Novartis remains firmly committed to the 340B program. As always, we look forward to continuing to work with all stakeholders to ensure that the program operates within its intended framework, and to address long-standing oversight and accountability concerns that threaten its mission.”
We have reached out to UT for comment.
Novartis and UT have not appealed Friedrich’s decision, which is largely viewed as favorable to the companies.
Drug manufacturers Novo Nordisk and Sanofi are appealing Judge Freda Wolfson of the U.S. District Court for the District of New Jersey’s joint ruling, also handed down on Nov. 5, that those companies’ 340B contract pharmacy policies violate the 340B statute. But Wolfson declined to decide whether the 340B statute permits covered entities to use multiple or unlimited contract pharmacies. The judge vacated the government’s May 17 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.”
Eli Lilly is appealing a third federal judge’s 340B contract pharmacy ruling handed down on Oct. 29. U.S. Senior Judge Sarah Evans Barker of the District Court for the Southern District of Indiana ruled that while HRSA’s May 17 findings against Lilly were not contrary to law, unconstitutional, or violative of notice and comment procedures, they were arbitrary and capricious and thus violative of the federal Administrative Procedure Act (APA). Barker said, “The fairest and most reasonable interpretation of the 340B statute would not authorize drug manufacturers to impose unilateral restrictions on the distribution of the drugs that ‘would frustrate Congress’ manifest purpose’ in enacting the statute.”
Hospital group 340B Health recently collected signatures from about 850 health systems and hospitals on a letter to U.S. Health and Human Services Secretary Xavier Becerra asking him to appeal the joint ruling in the Novartis and United Therapeutics’ cases.
“We are pleased the government has agreed,” 340B Health President and CEO Maureen Testoni said last night. “The 340B hospital community applauds HHS for continuing its strong defense of the 340B law and its authority to enforce that law against noncompliant drug companies.”
