United Therapeutics (UT) says federal health officials are “trying to muscle an obligation” on drug manufacturers to honor 340B contract pharmacy arrangements “that simply is not there."

Feds Are “Trying to Muscle” Pharma on 340B Contract Pharmacy, Manufacturer Says in Legal Brief

Federal health officials are “trying to muscle an obligation” on drug manufacturers to honor 340B contract pharmacy arrangements “that simply is not there,” United Therapeutics (UT) said Tuesday in papers filed in federal district court in Washington, D.C.

Nothing in the 340B statute empowers the U.S. Health Resources and Services Administration (HRSA) “to compel manufacturers to sell or ship drugs to every ‘contract pharmacy’ that a covered entity might choose to identify,” UT told U.S. District Judge Dabney Friedrich in a Aug. 31 brief in its lawsuit challenging HRSA’s finding in May that the company’s 340B policies broke the law and resulted in overcharges that had to be repaid. HRSA has threatened to impose civil monetary penalties on UT and five other companies with comparable 340B contract pharmacy policies if the companies do not back down.

UT began cutting off 340B discounts to covered entities last November. It said it would offer 340B pricing to entities on drugs shipped to contract pharmacies only if the entity had used the pharmacy for “a valid 340B purchase” of UT products during the first nine months of 2020.

UT also said that starting May 13, to get 340B pricing on contract pharmacy orders, entities would have to begin supplying their contract pharmacy claims data to a third-party vendor, later identified as 340B ESP. On May 11, UT pushed back its claims submission policy’s effective date to Sept. 1. In late July, it pushed back the effective date again, to Dec. 1.

Based on comments this week by attorneys, consultants, and wholesaler representatives active in the 340B space, UT’s latest postponement was not universally known.

In July 2020, HRSA posted a notice to covered entities from manufacturer Eli Lilly about its decision to stop distributing its drug Cialis to 340B contract pharmacies because “there is no statutory obligation to provide 340B priced product to contract pharmacies.” Since then, HRSA has posted no other manufacturer notices about their cessations of or restrictions on 340B sales involving contract pharmacies.

As a result, there is no authoritative national public compendium of such manufacturer notices.

In an affidavit that accompanied UT’s Aug. 31 legal brief, a company executive described UT’s decision to postpone its 340B contract pharmacy claims submission requirement for a second time and said UT “has submitted a notification to the Health Resources and Services Administration to that effect.”

In its new brief, UT argues that HRSA’s determination that the company has broken the law conflicts with the 340B statute and was arbitrary and capricious. HRSA, it said, has no plausible basis to justify imposition of civil monetary penalties against UT, the company said.

UT asked the court to vacate HRSA’s finding that the company violated the 340B statute, and to grant the company’s motion for summary judgement. The federal government currently is due to file its response on Sept. 21.