A hospital group, drug manufacturers, and health care lawyers gave 340B Report their views on recent court rulings in five 340B contract pharmacy lawsuits.

Hospitals, Drug Manufacturers, and Lawyers Give their Takes on 340B Contract Pharmacy Rulings

A hospital group says two federal district judges got it right, but one got it wrong, on whether drug manufacturers are legally bound to provide 340B drug discounts for drugs dispensed at contract pharmacies.

In a Nov. 6 statement, 340B Health President and CEO Maureen Testoni said U.S. Senior District Judge Sarah Barker of the Southern District of Indiana and U.S. Chief District Judge Freda Wolfson of the District of New Jersey “have firmly stated that drug companies participating in 340B do not have the right to unilaterally impose restrictions on the provision of price discounts. Those courts have also upheld the government’s ability to enforce the law.”

Barker reached her decision Oct. 29 in a lawsuit involving Eli Lilly’s contract pharmacy policy. Wolfson reached the same conclusion in her decision last Friday, Nov. 5, involving Sanofi and Novo Nordisk’s policies.

Testoni said her group disagrees with Federal District Judge Dabney Friedrich’s Nov. 5 rejection of the government’s position that the 340B statute’s plain meaning, purpose, and structure preclude manufacturers from imposing “any” conditions on 340B pricing. However, she did rule that manufacturers can’t impose “all” conditions. Friedrich, a judge on the U.S. District Court for the District of Columbia, reached those conclusions in a joint decision regarding Novartis and United Therapeutics’ policies.

Drug companies’ denial of 340B discounts for drugs dispensed by contract pharmacies are illegal and “harming safety-net hospitals and the patients with low incomes that they serve,” Testoni said. “Ultimately, these discounts must be restored, and the safety net made whole.”

Novo Nordisk’s Statement

In response to a request for comment, Novo Nordisk said Nov. 6 that it was aware of Judge Wolfson’s ruling in its case the day before but “cannot comment on pending litigation.”

“Novo Nordisk continues to support the 340B drug program so that uninsured and vulnerable patients continue to have access to care, including Novo Nordisk medicines,” a company spokesperson said. “This program, however, has been the subject of significant and well-documented abuses, resulting in program intermediaries profiting from the program. Novo Nordisk instituted a policy change to address these abuses.”

The company pointed out that its restrictions on 340B pricing do not affect community health centers, hemophilia treatment centers, and Indian health centers “which provide essential health services to low-income and vulnerable patient populations.”

Novartis’ Statement

As we previously reported, Novartis told us on Nov. 6 that the company welcomed Judge Friedrich’s Nov. 5 ruling, “which rejected the government’s conclusion that the Novartis contract pharmacy policy is unlawful under the 340B statute. We believe the ruling validates our view of the 340B statute and that our contract pharmacy policy is fully consistent with the statutory requirements governing the program.”

“The ruling is a win for the original intent of the 340B program to support vulnerable patients,” the company said.” We look forward to continuing to work with all stakeholders to ensure that the program operates within its intended framework, and to address long-standing oversight and accountability concerns that threaten its mission.”

HRSA’s Response

HRSA said it had “no comment at this time” on Wolfson’s decision in the Sanofi and Novo Nordisk lawsuits nor on Friedrich’s decision in the Novartis and United Therapeutics’ lawsuits.

Sanofi and United Therapeutics did not respond to requests for comment.

Health Care Lawyers’ Takes

Health care lawyers we spoke to on background this weekend generally agreed that the three judges—Barker and Wolfson in particular—invited HRSA either to issue new 340B contract pharmacy guidance, publish a carefully reasoned policy describing its 340B contract pharmacy expectations, or take unspecified enforcement action against manufacturers that fixes defects in HRSA’s current 340B contract pharmacy policy.

Specifically, Barker wanted HRSA to explain its changed positions regarding its authority to enforce statutory compliance when the alleged violation is entangled with a manufacturer’s failure to comply with HRSA’s non-binding contract pharmacy guidance.

Wolfson said HRSA must “undertake a more complete assessment of the status quo as to contract pharmacy arrangements to determine whether it is permissible under the 340B statute to enforce a one-size-fits-all contract pharmacy policy, or whether more specific and holistic guidance is necessary.”

Friedrich, unlike the two other judges, did not send HRSA’s violation letters to Novartis and United Therapeutics back to HRSA for reconsideration and repair. She simply struck down and vacated them. HRSA, she appeared to say, would have to begin its enforcement from scratch.

“Any future enforcement action,” Friedrich said, “must rest on a new statutory provision, a new legislative rule, or a well-developed legal theory that Section 340B precludes the specific conditions at issue here.”

Some lawyers we spoke to said even if HRSA threads the needle and publishes something that meets those directives, whatever it published would end up back in court.

Similarly, these lawyers say, if 340B administrative dispute resolution (ADR) panels were to apply any such new HRSA guidance or policy statements in findings against manufacturers in 340B contract pharmacy actions, those findings too would be appealed to federal courts.

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