Hospital, health center, and HIV/AIDS clinic association have asked a federal district court in Indiana to let them have a role in drug manufacturer Eli Lilly's 340B contract pharmacy lawsuit against the federal government.

Hospitals, Health Centers, and HIV/AIDS Clinics Want Roles in Lilly’s 340B Contract Pharmacy Lawsuit

The hospital groups that last week lost a federal lawsuit in California to make federal health officials enforce 340B contract pharmacy requirements for drug manufacturers have asked a federal court in Indiana to make them parties in opposition to manufacturer Eli Lilly’s lawsuit to block enforcement of the same requirements.

Health centers and HIV/AIDS clinics, meanwhile, have asked the court handling Lilly’s lawsuit to let them file friend-of-the court briefs opposing Lilly’s motions for orders declaring the new 340B administrative dispute resolution (ADR) process illegal and unconstitutional.

Hospital Groups Demand a Say in Lilly’s Case

In a motion filed on Feb. 19, the hospital groups—the American Hospital Association, 340B Health, America’s Essential Hospitals, the  Association of American Medical Colleges, the Children’s Hospital Association, and the American Society of Health-System Pharmacists—said the federal district court in Indianapolis hearing Lilly’s case should let them participate to protect their interests “and to ensure that patients have adequate access to 340B drugs—which it is not apparent the government defendant will sufficiently do—and to defend the correct interpretation of the 340B statute to include the availability of discounts when distribution is through contract pharmacies.”

To date, the U.S. Health and Human Services Department (HHS) “has refused to take any action to stop Lilly from denying [the hospital associations’] members the statutory discounts to which they are entitled,” the groups said.

“At least one or more of each association’s members has been and continues to be significantly harmed by Eli Lilly’s failure to offer 340B drug discounts to 340B covered entities when drugs are dispensed through contract pharmacies,” the associations said.

On Feb. 17, a federal district judge in Oakland, Calif., dismissed the hospital associations’ suit against HHS, in large part on the grounds that alleged 340B program violations should be first adjudicated through the new 340B administrative dispute resolution (ADR) process. Lilly recently amended its lawsuit against HHS to block the 340B ADR process.

Lilly also is suing HHS to stop it from implementing or enforcing its Dec. 30 advisory opinion that manufacturers must offer drugs at 340B price without regard to how a covered entity chooses to distribute the drugs. The hospitals groups said they wished to intervene in the Lilly lawsuit related “only to Lilly’s claims regarding the advisory opinion” and not related to the company’s claims regarding the legality of the ADR process.

“If Lilly were to successfully convince this court to adopt its (incorrect) interpretation of the statute, [the hospital associations’] members would continue to lose access to 340B discounts when their covered outpatient drugs are dispensed from a contract pharmacy,” the hospital groups said. “This would not only encourage the other five drug companies with similar policies to continue their policies, but it would likely encourage other drug companies to adopt the same types of policies. This would significantly, adversely impact the services all 340B covered entities provide to vulnerable populations.”

The groups said the court should let them intervene in the case because “HHS has never taken the position that it can or will enforce the statutes as interpreted. The only thing HHS has done is to issue the ADR regulation that is being challenged in several lawsuits, including this one, and even that process has been unilaterally placed on hold.” They also noted that they sued HHS, asserting that the department acted contrary to law and unlawfully declined to act against Lilly.

Centers and Clinics File Amicus Briefs

Ryan White Clinics for 340B Access (RWC-340B) and the National Association of Community Health Centers (NACHC) this week separately asked the court hearing Lilly’s lawsuit to let them argue why the court should not grant Lilly’s motion for a preliminary injunction against the 340B ADR process. RWC-340B and NACHC both sued HHS to force it to publish and implement long-delayed regulations setting up the ADR system. HHS published the rules on Dec. 14 and began accepting ADR petitions on Jan. 13. Attorneys for RWC-340B and NACHC filed petitions against manufacturers that day on behalf of members. Both groups have stayed their lawsuits to let the ADR system process the complaints.

“Covered entities have only one way to take direct action against drug companies that violate 340B requirements:  ADR,” RWC-340B said in its proposed amicus brief. “The lack of ADR became critically important last summer when Lilly led other drug companies on a campaign to undermine the 340B program by cutting off discounts on drugs shipped to contract pharmacies, which for many covered entities is the only way to access 340B discounted drugs. Enjoining ADR will irreparably harm covered entities by leaving them at the mercy of Lilly and other manufacturers that have adopted similar policies. Covered entities will inevitably have to cut services that are supported by 340B discounts. Patients will lose access to low-cost medications, and some may have to forgo their prescriptions altogether.”

Although no federally qualified health center (FQHC) is a party to Lilly’s lawsuit against HHS, NACHC said in its proposed amicus brief, “all FQHC covered entities will be significantly impacted if the court grants Lilly’s motion.”

“FQHCs would be severely damaged if the court were to enjoin the ADR Rule and process,” NACHC said. “An injunction would strip FQHCs of the only process available to them to seek relief from unlawful drug manufacturer overcharging for critical drugs that, drug manufacturers are required to offer to covered entities for purchase at or below statutory ceiling prices. An injunction would also indefinitely suspend the pending ADR claims NACHC (on behalf of 225 FQHCs) filed against Lilly and other manufacturers for ongoing unlawful overcharging. Such a suspension would compound the harms FQHCs, their patients, staff members, and broader communities are already suffering due to Lilly’s unlawful upending of a decades-long status quo.”

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