The U.S. Health Resources and Service Administration (HRSA) early this month invited community health centers to “resubmit a new” 340B administrative dispute resolution (ADR) petition against drug companies that deny or restrict 340B drug discounts when contract pharmacies are involved, health centers and the government told a federal district court on Tuesday. The National Association of Community Health Centers (NACHC) told the court it intends to resubmit 340B ADR petitions “within the next week.”
The action is being driven by a different federal court’s order in March putting the ADR process on hold with respect to just one company—Eli Lilly. NACHC in January filed a single ADR petition that lodged claims against three companies—Lilly, AstraZeneca, and Sanofi. NACHC’s disclosure in the Aug. 24 status report that it accepted HRSA’s invitation to resubmit separate ADR petitions could be a way for NACHC and HRSA to isolate NACHC’s judicially frozen 340B claims against Lilly from NACHC’s 340B claims against AstraZeneca and Sanofi, in theory clearing the way for ADR proceedings to begin against those two.
According to the status report, on Aug. 5 an official in HRSA’s Office of Pharmacy Affairs told NACHC’s lawyers in an email that, due to the preliminary injunction shielding Lilly from ADR proceedings, HRSA could not “move ahead with any ADR process involving Lilly” and would “not take any further action related to NACHC’s current petition at this time.” The status report said the email concluded with the invitation to NACHC to resubmit a new petition. The status report indicates that NACHC accepted HRSA’s invitation after getting an assurance from HSRA on Aug. 24 that doing so would not mean that NACHC would lose its original Jan. 13 filing date.
When or even whether any ADR proceedings take place on the contract pharmacy dispute is an open question. Federal regulations establishing the 340B ADR process were supposed to have been finalized in the fall of 2010. The U.S. Health and Human Services Department (HHS) published its 340B ADR final rule last December, a decade overdue, after NACHC and Ryan White Clinics for 340B Access (RWC-340B) filed separate federal lawsuits to force HHS and HRSA’s hand. In January, on the first day possible, NACHC on behalf of its members filed its consolidated ADR petition against Lilly, AstraZeneca, and Sanofi. RWC-340B on behalf of affiliated covered entities filed a petition against AstraZeneca only. Those petitions have languished ever since.
All the activity stems from Lilly, AstraZeneca, Sanofi, and five other manufacturers’ decisions since last summer to stop offering 340B pricing when covered entities use contract pharmacies or to require entities to turn over their contract pharmacy claims data to get 340B pricing.
First last December, and then again in May, HRSA put the six companies that have been denying 340B pricing the longest—Lilly, AstraZeneca, Sanofi, Novartis, United Therapeutics, and Novo Nordisk—on notice that their actions violated the 340B statute. In May, HRSA ordered the companies to stop what they were doing immediately and repay covered entities for overcharges, or risk being socked with big civil monetary penalties.
The six companies are suing HRSA, arguing that the 340B statute does not compel them to offer 340B pricing when covered entities use contract pharmacies. Lilly, Sanofi, and Novo Nordisk additionally in their lawsuits claim that HRSA’s 340B ADR final rule is illegal, unconstitutional, or both. Pharmaceutical Research and Manufacturers of America (PhRMA) also is suing HRSA over the ADR final rule.
Some 340B stakeholders think that HHS and HRSA might be slow walking the 340B ADR process out of caution due to the manufacturers and PhRMA’s lawsuits. Others think that, with the change in presidential administrations in January, HHS and HRSA are now more confident about their power to invoke the 340B statute to challenge manufacturers’ denials of 340B pricing, instead of first having to wait for 340B ADR proceedings to play out. Hospital groups have been arguing against the use of the ADR process to resolve the contract pharmacy impasse and other 340B covered entity groups applauded HRSA for sending out demand letters to the manufacturers.
RWC-340B and the federal government on Tuesday also filed a joint status report with the federal district court in Washington, D.C., in RWC-340B’s parallel lawsuit that led to HHS issuing the ADR final rule in December. Like NACHC and the government in NACHC’s suit, RWC-340B and the government agreed to stay RWC-340B’s lawsuit to let entities affiliated with the group pursue ADR claims against AstraZeneca. The status report in this case simply recapped recent activity regarding 340B contract pharmacy since the two parties’ last report to the court in June.
The parties in both the NACHC lawsuit and the RWC-340B lawsuit propose filing their next status reports on or before Oct. 25.
