Federal officials relied “on sound statutory interpretation and sufficient evidence” when it concluded in May that United Therapeutics (UT) broke the law when it conditioned access to 340B pricing on its products, government lawyers told a federal district judge yesterday.

In Strongly Worded Brief in United Therapeutics Case, Feds Defend 340B Contract Pharmacy Actions

Federal officials relied “on sound statutory interpretation and sufficient evidence” when it concluded in May that United Therapeutics (UT) broke the law when it conditioned access to 340B pricing on its products, government lawyers told a federal district judge in the District of Columbia yesterday.

The court should reject UT’s challenge to the U.S. Health Resources and Services Administration’s (HRSA) May 17 letter informing UT that its actions resulted in overcharges and violated the 340B statute, the U.S. Justice Department (DOJ) said in an Aug. 10 filing in UT’s lawsuit against HRSA and the U.S. Health and Human Services Department (HHS).

DOJ told the court that, last December, UC Davis Medical Center told HRSA that 340B prices on UT drugs were unavailable for orders placed through contract pharmacies. The hospital told HRSA its patients are spread across a 65,000 square mile area and rely on pharmacies close to home, DOJ said. “Ronald Reagan UCLA Medical Center and Santa Monica UCLA Medical Center submitted similar complaints,” DOJ said.

“Incontrovertible Evidence”

“UT fails to grapple with the incontrovertible evidence that its actions require certain covered entities to purchase 340B-eligible drugs well above the statutory ceiling price in violation of the 340B statute, and its contrary reading of the statute conflicts with the statutory text and subverts congressional intent,” DOJ told the court. “UT fails to confront the fact that its refusal to deliver its drugs to pharmacies capable of dispensing them on behalf of the covered-entity purchaser renders its ‘offer’ to sell drugs meaningless in practice in many instances.”

DOJ’s filing last week was in response to UT’s motion for summary judgement last month. UT told U.S. District Judge Dabney Friedrich on July 17 that HRSA’s decision that the company’s restrictions on 340B contract pharmacies are illegal “contravenes the plain text” of the 340B statute. HRSA’s decision also is arbitrary and capricious on multiple grounds, UT said.

UT is one of seven drug companies either denying 340B pricing on their products when covered entities use contract pharmacies or requiring entities, as a condition for continued 340B pricing, to turn over their contract pharmacy claims data so claims can be checked for payment of duplicate 340B discounts and Medicaid, Medicare Part D, and commercial rebates.

Last Nov. 18, UT told covered entities that, starting Nov. 20, 2020, it would accept 340B contract pharmacy orders only if the entity used the pharmacy “for a valid 340B purchase” of a UT covered outpatient drug during the first three full quarters of 2020. Entities buying UT products for the first time, and that lacked an in-house pharmacy, could designate a single contract pharmacy, UT said.

UT initially said that, starting May 13, 2021, it would accept 340B contract pharmacy orders from entities only if the entity provided, on an ongoing basis, contract pharmacy claims data for the company’s products. On May 11, 2021 UT pushed back its claims data requirement’s start date to Sept. 1.

On May 17, HRSA sent UT and five other manufacturers denying 340B discounts letters informing them that their policies are in direct violation of the 340B statute.

The seventh drug company denying 340B pricing on its products, Boehringer Ingelheim announced its new policy on June 30 and implemented it on August 1.

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