The federal government on Tuesday declared 340B administrative dispute resolution (ADR) petitions by covered entities against drug manufacturers AstraZeneca, Eli Lilly, and Sanofi to be “complete,” a sign that claims against two of the three companies—AstraZeneca and Sanofi—are ready for deliberations to begin, attorneys for the petitioners said yesterday.
It could take a while for proceedings against AstraZeneca and Sanofi to commence, however, because there are no ADR board members to hear them.
Meanwhile, there is little chance proceedings against the third company, Lilly, will occur any time soon. A federal judge in Indianapolis last week barred the U.S. Health and Human Services Department (HHS) from implementing or enforcing 340B ADR regulations against Lilly.
RWC-340B Lawsuit Developments
News that the U.S. Health Resources and Services Administration (HRSA) had finished reviewing two ADR petitions against AstraZeneca for completeness was contained in a March 23 report to a federal judge in Washington, D.C.
Two federally qualified health centers—Little Rivers Health Care in Vermont and Family Care Health Centers in West Virginia—are co-plaintiffs with Ryan White Clinics for 340B Access (RWC-340B) in its lawsuit to force the government to act on manufacturers’ denials of 340B pricing on drugs dispensed to contract pharmacies. In January, the two sides agreed to stay proceedings in the suit to let Little Rivers and Family Care pursue claims in the ADR process. In February, Little Rivers and Family Care filed ADR petitions against AstraZeneca.
U.S. District Judge Ketanji Brown Jackson has ordered the two sides to report back periodically about the stay. She also told them to report back within five days of any judge in any lawsuit issuing an injunction against the 340B ADR system. A federal judge in Indianapolis did just that on March 16, in Lilly’s lawsuit against the government over enforcement of 340B contract pharmacy requirements.
In their March 23 joint status report, the government and the RWC-340B plaintiffs said that AstraZeneca has acknowledged to the plaintiffs that it received Little Rivers’ and Family Care’ ADR petitions via certified mail. They said AstraZeneca, however, has not yet filed a written response to either petition, as required under the ADR final rule.
In the report, the two sides also briefly recapped U.S. District Judge’s Judge Sarah Evans Barker’s March 16 preliminary injunction forbidding ADR proceedings against Lilly. They noted that RWC-340B, Little Rivers, and FamilyCare filed a friend-of-the-court brief with the National Association of Community Health Centers (NACHC) in that case supporting the federal government’s opposition to Lilly’s motion for a preliminary injunction.
NACHC Also Receives Notice from HRSA
NACHC, in connection with its lawsuit against the government over enforcement of 340B contract pharmacy requirements, in January filed three ADR petitions on behalf of its members against Lilly, AstraZeneca, and Sanofi. An attorney for NACHC said yesterday that the group, too, got email messages from HRSA on Tuesday, saying simply, “HRSA has done an initial review of your petition and determined your petition is complete.”
ADR Process
According to a description of the steps in the ADR process on HRSA’s webpage, when HRSA receives an ADR petition and supporting documents, it “reviews the petition for completeness and will notify the petitioner of whether the petition will move forward to the ADR Panel for review.”
While HRSA this week provided notifications that petitions are complete, it was silent about whether their petitions will move forward to an ADR panel for review.
A HRSA spokesperson yesterday said the agency had no comment on the petitions’ status.
The Trump administration issued the ADR final rule in December. It directs the HHS secretary to appoint an ADR board with at least six members, from which three-member ADR panels can be formed to review claims and make binding final agency decisions.
In one of its first actions, the Biden administration on Jan. 21 withdrew ex-HHS Secretary Alex Azar’s appointments to the board, which Azar made on the morning of the presidential transition. Azar’s successor, Xavier Becerra, was sworn in last week Friday. It is now up to him to decide whether to make his own appointments. Becerra also must decide the broader question of what to do with the 340B ADR final rule that the Trump administration left behind.
In granting Lilly’s request for an injunction stopping 340B ADR proceedings against it, Judge Barker said “the ADR rule was likely promulgated in a procedurally invalid manner.” She said she assumed HHS will want to issue “a procedurally valid rule” expeditiously, in part to let covered entities file ADR petitions against Lilly protesting its denials of 340B pricing on drugs dispensed by contract pharmacies.
For now, Barker observed that “while petitions have been filed,” to her knowledge “the ADR process is still being finalized and we have been given no indication as to when the ADR board will be named and ADR panels will be assigned and begin the process of reviewing petitions.”
In order for any 340B ADR proceedings to start, Becerra and others in government might first need to make several threshold decisions. These include whether to appeal Barker’s decision to enjoin ADR proceedings against Lilly, whether to rapidly appoint new ADR board members and start reviewing ADR petitions against AstraZeneca and Sanofi, and/or whether to withdraw and reissue the ADR rule (and if so, whether to reissue it quickly without change, or to restart rulemaking from scratch.).
Hospitals groups have been calling on Becerra to use his authority to immediately require the six drug manufacturers to provide 340B pricing and to penalize the manufacturers. They have argued that the ADR process is not meant for a situation where they believe there is clear violation of the 340B law impacting so many providers. They are also concerned about the slow pace of the ADR roll out.
