Lilly yesterday filed notice that it is appealing a federal district judge's decision in its 340B contract pharmacy lawsuit.

In What Could be the First of Many Challenges, Lilly Appealing U.S. District Court’s 340B Contract Pharmacy Ruling

Drug manufacturer Eli Lilly late yesterday filed notice that it is appealing a federal district judge’s Oct. 29 ruling partially in Lilly’s favor and partially for the federal government on the legality of Lilly’s denials of 340B ceiling prices when covered entities use contract pharmacies.

If the government does not challenge Lilly’s basis for appealing, the case will be heard by the U.S. Seventh Circuit Court of Appeals in Chicago. It would be the first of the seven cases by manufacturers challenging the government’s position on 340B contract pharmacy to reach an appeals court.

Lower courts have now ruled in Lilly, Novartis, Novo Nordisk, Sanofi, and United Therapeutics’ cases. A judge in New Jersey filed a joint opinion in Sanofi and Novo Nordisk’s cases on Friday. A judge in Washington, D.C., filed a joint opinion in Novartis and United Therapeutics’ cases later the same day.

So far, only Lilly has filed a notice of appeal. Boehringer Ingelheim’s suit against the government just got underway last month. The parties in AstraZeneca case are waiting for the judge to rule. The two sides have a deadline tomorrow to file a joint status report “regarding any case developments.”

Lilly’s notice of appeal is just one sentence long. A memorandum spelling out what about U.S. Senior District Judge Sarah Evans Barker’s judgment it is appealing and why will come later.

“Lilly has appealed portions of the decision where we believed the court erred as to certain claims,” a company spokesperson said this morning. Quoting from Baker’s decision, Lilly’s statement continues:

As we have been seeing for some time, the status quo of the 340B program remains unworkable and unsustainable, with “inconsistent messaging” preventing the program from being “implemented fairly for all concerned.” Resolution of remaining legal issues will undoubtedly benefit efforts to build a sustainable 340B program that ensures patients benefit fully from 340B discounts.

The government has not yet said whether it too will appeal the parts of Baker’s judgment that went against it.

Baker held in the government’s favor that the U.S. Health Resources and Services Administration’s May 17 letter determining that Lilly has broken the law “neither exceeds the agency’s statutory authority nor is contrary to law.” She also said “the fairest and most reasonable interpretation of the 340B statute” would not let manufacturers unilaterally restrict drug distribution in ways that frustrate 340B’s purpose.

Baker, however, set aside and vacated the government’s violation letter on the grounds that HRSA did not acknowledge or explain its change in position regarding its ability to enforce contract pharmacy arrangements. She sent the letter back to HRSA “for further consideration/action consistent with” her decision.

The government could issue a revised letter and/or new contract pharmacy guidance, or it could appeal. The first option is complicated because HRSA would have to issue something consistent not just with Barker’s decision, but also with the two joint decisions in Sanofi and Novartis’ cases and in Novartis and United Therapeutics’ cases.

One part of Lilly’s case before Barker still is not final—the company’s request for a permanent injunction against 340B administrative dispute resolution (ADR) proceedings against it for denying community health centers 340B pricing when they use contract pharmacies. Barker in her ruling last month said Lilly and the government had agreed that a final decision on the legality of the ADR final rule could be issued separately at a later date.

The National Association of Community Health Centers (NACHC) on its members’ behalf and Ryan White Clinics for 340B Access (RWC-340B) on its own behalf and that of several affiliated health centers have filed separate lawsuits against HRSA in an effort to jump start the ADR process.  Meanwhile, Pharmaceutical Research and Manufacturers of America (PhRMA) is suing the government in an effort block the ADR from moving forward.

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