The lawsuit against HHS by 340B hospitals is just one of several underway over drug manufacturers’ denials of 340B pricing on drugs dispensed by contract pharmacies. | Source: Shutterstock

HHS Asks Court to Toss Out Hospitals’ 340B Contract Pharmacy Lawsuit

Outgoing U.S. Health and Human Services (HHS) Secretary Alex Azar last week asked a federal district judge to dismiss a lawsuit against him and his department by 340B hospitals over HHS’s enforcement of its 340B contract pharmacy requirements for drug companies. Azar also asked the judge to not let four drug manufacturers participate in the case.

Federal District Judge Yvonne Gonzalez Rogers of the Northern District of California has scheduled a Feb. 23 hearing in the case—by which time Azar will no longer be HHS Secretary, and his designated successor, California Attorney General Xavier Becerra, may not have been confirmed by the U.S. Senate. If or when Becerra is confirmed, he would replace Azar as a named defendant.

The incoming Biden administration is expected in general to treat 340B covered entities more favorably, and manufacturers less favorably, than the Trump administration. However, it has not yet said how it will handle the lawsuit against HHS filed Dec. 11 by American Hospital Association (AHA), 340B Health, America’s Essential Hospitals, the Association of American Medical Colleges (AAMC), the Children’s Hospital Association (CHA), the American Society of Health-System Pharmacists, and three 340B hospitals. The hospital plaintiffs want HHS to require drug manufacturers Lilly, Sanofi, AstraZeneca, Novartis, United Therapeutics, and Novo Nordisk to provide 340B discounts on drugs dispensed at contract pharmacies and issue refunds to hospitals that were refused discounts. They also want the HHS Office of Inspector General (OIG) to assess civil monetary penalties against the manufacturers.

In their motion to dismiss,  U.S. Justice Department (DOJ) attorneys said the new 340B administrative dispute resolution (ADR) system—which began accepting claims on Jan. 13—should handle the matter, not the federal court system. DOJ cited other grounds for dismissal, including that there hasn’t been final agency action for the court to review.

Hospitals Would Let Manufacturers Intervene, With Conditions

The hospital plaintiffs last week filed their response to Lilly, AstraZeneca, and Sanofi’s separate motions in December, and Novo Nordisk’s separate motion this month, to be allowed to participate in the litigation to defend their own interests. Like HHS, Lilly, AstraZeneca, and Sanofi also have filed separate motions to dismiss the case.

The hospital plaintiffs consented to letting the manufacturers intervene, so long as the court “takes steps to ensure that such intervention does not unnecessarily delay resolution of this matter.”

The plaintiffs said that, in a Dec. 30 legal advisory opinion, HHS agreed with them that manufacturers must sell covered outpatient drugs at or below the 340B ceiling price when covered entities opt to use contract pharmacies as their dispensing agents. The plaintiff said that, in forthcoming filings in the case, they will explain why this does not resolve all of the complaints their raise or give them all of the relief they want.

The plaintiffs say that, because the manufacturers’ briefs are “nearly identical,” in the interest of efficiency the court should require them “to file single consolidated pleadings.” They also proposed a schedule for filings and proceeding, running from Jan. 18 through Feb. 23.

Novo Nordisk Sues HHS

The hospital plaintiffs’ lawsuit is just one of several underway over drug manufacturers’ denials of 340B pricing on drugs dispensed by contract pharmacies.

On Jan. 15, drug manufacturer Novo Nordisk sued HHS, joining Lilly, AstraZeneca, and Sanofi in separately suing HHS. Like its fellow manufacturers, Novo Nordisk wants a court to strike down HHS’s Dec. 30 advisory opinion that drug makers must provide 340B discounts when covered entities use contract pharmacies to dispense drugs. (On Jan. 14, we took an in-depth look at Lilly’s legal complaint. We intend to take similar looks at AstraZeneca, Sanofi, and Novo Nordisk’s legal arguments soon.)

RWC-340B Lawsuit Proceeding Paused

Ryan White Clinics for 340B Access and HHS on Jan. 13 jointly asked a federal district court to stay proceedings in RWC-340B’s lawsuit over HHS’s enforcement of its 340B contract pharmacy requirements for drug companies. Several covered entities that RWC-340B represents “promptly intend” to bring claims against drug manufacturers in HHS’s new 340B ADR system, the two sides explained. They asked the court to pause further proceedings through Feb. 15, at which point the two sides would report back “indicating proposed next steps for this matter.”

On Dec. 14, DOJ lawyers representing HHS Secretary Azar asked the federal district judge assigned to RWC-340B’s case to dismiss the action and deny RWC-340B’s requests for a temporary restraining order and preliminary injunction. The arguments echoed those in DOJ’s motion last week to dismiss 340B hospital plaintiffs suit against Azar.

NACHC Lawsuit Proceedings Also Paused

On Dec. 17, the National Association of Community Health Centers (NACHC) and HHS filed a similar joint motion to stay proceedings through Feb. 15 in NACHC’s over HHS’s enforcement of its 340B contract pharmacy requirements for drug companies. On Jan. 13, NACHC on its members’ behalf asked the new 340B ADR system to order drug manufacturers Lilly, Sanofi, and AstraZeneca to lift all “qualifications, limitations, conditions, or restrictions” on its members’ ability to buy drugs at 340B prices through contract pharmacy arrangements.

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