Novartis sued HRSA yesterday to stop it from enforcing its interpretation of the 340B statute's contract pharmacy requirements, and from imposing civil monetary penalties against Novartis for alleged violations. | Shutterstock

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BREAKING: Novartis Sues HRSA in Defense of its 340B Contract Pharmacy Policy

Novartis Pharmaceuticals has sued the U.S. Health Resources and Services Administration (HRSA) over the agency’s May 17 letter telling the company its restrictions on 340B pricing to covered entities that use contract pharmacies are illegal.

Novartis told 340B Report late this afternoon it sued HRSA yesterday May 31 in U.S. District Court for the District of Columbia “to prevent the agency from enforcing its interpretation of the 340B statute, which Novartis believes is erroneous, and imposing civil monetary penalties (CMPs). We are confident that the Novartis 340B contract pharmacy policy is in full compliance with the 340B statute and all binding regulations.”

The company declined to provide a copy of its legal complaint. The complaint also was not immediately available via the federal judiciary’s PACER case database, which was offline late this afternoon. We will share a copy as soon as we obtain one.

Novartis was one of six manufacturers that received letters from HRSA two weeks ago informing them their 340B contract policies violate the 340B statute and have resulted in overcharges. HRSA told them they must immediately begin offering their drugs at the 340B ceiling price to covered entities through entities’ contract pharmacy arrangements, and credit or refund all covered entities for overcharges. Failure to comply could result in civil monetary penalties of up to $5,883.00 for each instance of overcharging, HRSA said. It gave each company until today to “provide an update on its plan to restart selling, without restriction, 340B covered outpatient drugs at the 340B price to covered entities with contract pharmacy arrangements.”

The other companies are Eli Lilly, AstraZeneca, Sanofi, Novo Nordisk, and United Therapeutics. Lilly, AstraZeneca, Sanofi, and Novo Nordisk all previously sued HRSA and the U.S. Health and Human Services Department over HHS’s Dec. 30 legal advisory opinion concluding that the “340B statute requires manufacturers to offer their products for purchase by covered entities at or below the 340B ceiling price, not qualified, restricted, or dependent on how the covered entity chooses to distribute the covered outpatient drugs.” Lilly and AstraZeneca also are challenging the legality and constitutionality of HRSA’s 340B administrative dispute resolution (ADR) regulations.

A federal district judge on Thursday gave Lilly a 10-day extension, until June 10, to submit its plan to HRSA.

A spokesperson for AstraZeneca told 340B Report today “that HRSA granted AstraZeneca an extension to respond.”

Novartis told 340B Report it “submitted a letter to HRSA on Thursday to clarify our policy, which was described incorrectly in their letter dated May 17, 2021, and which we are confident is in full compliance with the 340B statute and all binding regulations. In the letter we asked them to withdraw their statement about imposing civil monetary penalties until we have a chance to explain our policy to them. They did not respond prior to the deadline.” Novartis said it filed its suit against HRSA as a result.

“We continue to provide 340B discounts to all Federal grantee covered entities, such as community health centers and Ryan White HIV/AIDS clinics,” Novartis said. “These facilities follow an established regulatory infrastructure that encourages them to share 340B program savings with the vulnerable populations that they serve.”

“We also continue to honor all 340B hospital contract pharmacy arrangements where the pharmacy is located within a 40-mile radius of the covered entity hospital, consistent with Federal policy regarding hospitals and off-site affiliates,” the company said. “We do not limit the number of contract pharmacies within the 40 mile radius. Additionally, if a hospital covered entity brings special circumstances to our attention and asks for an exemption, we work with the hospital to ensure appropriate access to a contract pharmacy.”

“We will continue to work alongside all stakeholders to ensure the vital 340B program can exist in the framework it was intended for—to serve the uninsured and vulnerable within our communities,” Novartis said.

Sanofi acknowledged our request for information about whether or how it responded to HRSA’s request for a compliance plan by the end of today. It has not yet told us whether or how it responded.

Novo Nordisk and United Therapeutics have not responded to requests for information about their responses to today’s deadline.

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