US District courthouse and signage in Baltimore, MD
A federal district judge in Baltimore has paused PhRMA's lawsuit challenging the current 340B program administrative dispute resolution process.

Judge Pauses PhRMA’s 340B Administrative Dispute Resolution Lawsuit

A federal district judge in Baltimore, Md., yesterday stayed the brand drug industry’s lawsuit challenging the December 2020 340B program administrative dispute resolution final rule.

Lawyers for Pharmaceutical Research and Manufacturers of America and U.S. Health and Human Services Secretary Xavier Becerra on Friday jointly asked U.S. District Judge Deborah Boardman to pause PhRMA’s suit. PhRMA says the 340B ADR rule is unconstitutional and illegal. The U.S. Health Resources and Services Administration in November published a proposed rule to make the 340B ADR process, in its words, more accessible and less trial-like. Comments were due Jan. 30.

PhRMA and HHS on Feb. 24 jointly asked Boardman to stay further proceedings in PhRMA’s suit pending completion of the new ADR rulemaking process. In a joint status report with PhRMA that accompanied the joint motion for a stay, HHS said “it is currently unclear how long that process will take.”

Boardman ordered the two sides on Feb. 15 to tell her by Feb. 24 whether HRSA’s new ADR rulemaking, a federal appeals court’s Jan. 30 decision in a related case, and a federal district judge’s May 2021 decision in a second related case had implications for PhRMA’s lawsuit.

The appellate ruling was in drug maker Sanofi’s case defending its conditions on 340B pricing when covered entities use contract pharmacies. Sanofi in the lawsuit, like PhRMA, challenged the current 340B ADR system’s legality. The appeals court in Philadelphia, PA ruled 2-1 in HRSA’s favor that the December 2020 340B administrative dispute resolution final rule was legal.

The district court ruling was in drug maker Lilly’s 340B contract pharmacy lawsuit. Lilly also challenged the 340B ADR process in its contract pharmacy case. The Indianapolis-based district judge in its case granted Lilly’s motion for a preliminary injunction against 340B ADR proceedings, saying it was likely to succeed on the merits of its arguments.

PhRMA and HHS told Boardman they agreed there was no need for now to file supplemental briefs in PhRMA’s case addressing the developments in Sanofi and Lilly’s cases.