U.S. Justice Department (DOJ) lawyers asked federal district courts in Indiana and New Jersey this week to condemn, not condone, drugmakers Eli Lilly and Sanofi’s “extra-statutory self-help efforts to rewrite” the 340B statute “under the guise of ‘program integrity’” and thereby “deny covered entities access to the discounts to which they are statutorily entitled.”
DOJ is defending the U.S. Health and Human Services Department (HHS) in separate lawsuits filed by Lilly, Sanofi, and drug companies AstraZeneca and Novo Nordisk. All four companies want federal judges to set aside HHS’s Dec. 30 advisory opinion that drug makers must provide 340B discounts when covered entities use contract pharmacies to dispense drugs. Lilly and Sanofi also want judges to declare HHS’s 340B administrative dispute resolution (ADR) system unconstitutional and illegal.
In separate, but largely identical motions in the Lilly and Sanofi cases, DOJ asked federal judges either to dismiss the two companies’ claims against HHS as lacking merit, or to summarily rule in HHS’s favor. DOJ is scheduled on May 11 to file a similar motion in Novo Nordisk’s suit against HHS. That motion is likely to borrow language from DOJ’s motions in the Lilly and Sanofi cases this week.
DOJ said Lilly and Sanofi’s “abruptly imposed restrictions” on 340B pricing “have caused upheaval by severely curtailing access to the discounts to which covered entities are entitled.” It also accused both companies of repeatedly and wrongly claiming in court filings that HHS is requiring them to directly provide 340B drug discounts to contract pharmacies.
“None of these statements is true,” DOJ said. “Contract pharmacies cannot purchase 340B-discounted drugs, but rather can only fill prescriptions written by covered entities for their own patients using 340B-discounted drugs purchased by the covered entities, and then pass along the profit generated back to the covered entities (less a fee for the service provided). That is as Congress designed the program.” It said Lilly’s and Sanofi’s “mis-portrayal of these relationships” permeates their claims.
DOJ said HHS’s 340B contract pharmacy advisory opinion was not reviewable. Even if it was reviewable, Lilly and Sanofi’s claims would still fail for multiple reasons, including that the advisory opinion is an interpretative—not legislative—rule exempt from notice and comment requirements. DOJ also said both companies’ claims against the advisory opinion would fail because the companies’ obligation to offer 340B pricing to covered entities is imposed by the 340B statute, not the advisory opinion.
DOJ also disagreed with Lilly and Sanofi’s arguments that the 340B ADR final rule is both unconstitutional and illegal.
Last month, U.S. District Judge Sarah Evans Barker granted Lilly’s motion for a preliminary injunction stopping HHS from implementing or enforcing the 340B ADR regulations against the manufacturer. The judge said if the rule was invoked with respect to Lilly “and was later determined to have been promulgated without an adequate, fair opportunity for advance notice and comment,” Lilly would likely “suffer irreparable injury for which there is no adequate remedy.”
DOJ, in its motions in both the Lilly and Sanofi cases, said HHS “fully complied with notice-and-comment requirements in promulgating the ADR rule.”
Arguments Monday in AstraZeneca Lawsuit
In a related development, a federal district judge in Delaware will hear oral arguments by webcast next week Monday, April 26, on whether to let six hospital groups participate as third parties in AstraZeneca’s lawsuit against HHS over the government’s 340B contract pharmacy requirements.
American Hospital Association (AHA), 340B Health, America’s Essential Hospitals, the Association of American Medical Colleges (AAMC), Children’s Hospital Association (CHA), and ASHP (American Society of Health-System Pharmacists) also want courts to let them intervene in Lilly, Sanofi, and Novo Nordisk’s lawsuits over 340B contract pharmacy, but strictly with respect to the HHS advisory opinion.
DOJ opposes letting the groups intervene in all four cases. Lilly and AstraZeneca opposed the hospital groups’ involvement in their cases. Sanofi does not object to their involvement in its case, so long as the groups limit their participation to matters pertaining to HHS’s advisory opinion. Novo Nordisk took no position on the groups’ motion to intervene in its suit.
