AstraZeneca wordmark building-mounted sign
The federal government wants an appeals court to rule that drug manufacturer AstraZeneca may not unilaterally dictate how many contract pharmacies a 340B covered entity may use to dispense 340B drugs.

Feds Urge Appeals Court to Overrule Lower Court in AstraZeneca’s 340B Contract Pharmacy Lawsuit

The federal government told a federal appeals court in Philadelphia yesterday it should use “the familiar tools of statutory interpretation” to hold that drug manufacturer AstraZeneca may not unilaterally dictate how many contract pharmacies a 340B covered entity may use to dispense 340B drugs.

Government lawyers yesterday filed their opening brief in the U.S. Third Circuit Court of Appeals in their challenge to a federal district court’s decision in February striking down and vacating the U.S. Health Resources and Services Administration’s (HRSA) May 2021 letter telling Astra its 340B contract pharmacy policy was illegal. Astra’s deadline to respond has not yet been set but likely will be in the latter half of July.

The government told the appeals court it is not relying on a legal doctrine known as Chevron deference to claim that courts should defer to HRSA’s conclusion that Astra’s policy violates the 340B statute. Conservatives on the U.S. Supreme Court have hinted very strongly they want to overturn the Chevron doctrine. They were expected to do so, but did not, in the court’s decision earlier this month striking down Medicare Part B drug reimbursement cuts for many 340B hospitals in 2018 and 2019. They court could overrule or narrow the Chevron doctrine in two or more other cases expected to be decided in the next week or two.

The government told the Third Circuit that this is a case of straightforward statutory interpretation. “Those tools of interpretation show that drug manufacturers may not refuse to offer the 340B price to covered entities that rely on multiple covered pharmacies to dispense the drugs that the covered entities purchase,” the government said.

HRSA’s non-binding 340B guidance “consistently interpreted the statute as prohibiting drug manufacturers from creating extra-textual barriers to a covered entity’s ability to obtain drugs at the 340B price,” it said. 

“Nor was the evolution of HHS’s guidance regarding the number of contract pharmacies left unexplained,” the government said. “On the contrary, HHS explained that its guidance had evolved in light of its experience with a pilot program for using multiple contract pharmacies, its evaluation of the corresponding data, and its response to comments it received on the new proposal.”

HRSA, it said, gave a satisfactory explanation for its action consistent with the Administrative Procedure Act’s requirements, the government said.