A federal district judge this week let six hospitals groups and a drug industry vendor file amicus briefs in Sanofi's 340B contract pharmacy lawsuit.

Hospital Groups and Drug Industry Vendor File Briefs in Sanofi’s 340B Contract Pharmacy Suit

A federal district judge this week gave six hospital groups and a drug industry services provider permission to separately offer their expert advice in drug manufacturer Sanofi’s 340B contract pharmacy lawsuit.

In a friend-of-the-court brief, the hospital groups accused Sanofi of understating the harm caused by its restrictions on 340B pricing when hospitals use contract pharmacies. They also accused Sanofi of overstating the reasonableness and benevolence of its unilaterally imposed conditions on hospitals.

Sanofi’s policy of requiring hospitals to upload contract pharmacy drug claims data to its vendor 340B ESP to be able to get 340B pricing on drugs dispensed by contract pharmacies “add[s] to the workload of hospitals that continue to deal with the unprecedented challenges of the [COVID-19] pandemic,” the groups said. “This places additional personnel and financial burdens on hospitals that are not authorized by the statute.”

The hospital groups also said Congress never authorized drug companies to unilaterally stop providing 340B discounts to prevent duplicate 340B discounts and rebates on the same drugs. “Rather, Congress provided them and HHS with the authority to address suspected duplicate discounts through audits,” the groups said.

The groups—American Hospital Association, 340B Health, America’s Essential Hospitals, Association of American Medical Colleges, Children’s Hospital Association, and American Society of Health-System Pharmacists—asked in mid-June to be allowed to file their brief in support of the federal government in the case. U.S. District Judge Freda Wolfson finally granted their motion to do so on Tuesday.

Wolfson on Tuesday also granted 340B ESP Business Development Lead Aaron Vandervelde’s motion made back in May to file a friend-of-the-court brief in the case. Sanofi uses 340B ESP to collect 340B hospitals’ contract pharmacy claims data under its 340B pricing restrictions.

Vandervelde, who also serves as Managing Director at Berkeley Research Group, said in his brief:

  • 340B program compliance audits conducted between 2012 and 2019 “demonstrate that contract pharmacies have been and continue to be a primary source of duplicate discounts and diversion.”
  • “Outsized profit margins on 340B purchased drugs…create incentives for covered entities and their contract pharmacies to utilize more drugs and drugs with a higher list price.”
  • “It is unclear whether profiting from 340B purchased drugs is consistent with the original intent of the 340B program.”
  • The inventory replenishment model prevalent in 340B contract pharmacy “effectively turned 340B eligibility determination and inventory management into an accounting exercise that allowed for a restatement of the acquisition price of the drug to the discounted 340B price and creation of enhanced profitability of the prescription.”
  • The government “has yet to issue guidance outlining how covered entities are to prevent duplicate discounts on managed Medicaid utilization and does not currently audit covered entities for duplicate discounts in managed Medicaid utilization.”

Vandervelde was granted permission to file a similar amicus brief in AstraZeneca’s 340B contract pharmacy lawsuit but denied permission to do so in Eli Lilly’s case.

The six hospital groups have been allowed to file amicus briefs in the Novartis, United Therapeutics, Lilly, and AstraZeneca cases. They have told the judge in Novo Nordisk’s case that they plan to file a motion to be named amici in that case, too.

The National Association of Community Health Centers and Ryan White Clinics for 340B Access have been allowed to file friend-of-the-court briefs in the Novartis, Lilly, and AstraZeneca lawsuits.

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