A federal judge yesterday, acting in a lawsuit filed by AstraZeneca, vacated HHS's December 2020 advisory opinion that the 340B statute compels drug manufacturers to offer 340B pricing when covered entities use contract pharmacies to dispense covered drugs to patients.

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Judge Rejects Government’s Contention that AstraZeneca’s 340B Lawsuit Is Moot

A federal district judge in Delaware yesterday rejected the U.S. Health and Human Services Department’s (HHS) position that its withdrawal of its December 2020 advisory opinion on 340B contract pharmacy rendered drug manufacturer AstraZeneca’s claims against the opinion moot.

In a three-page order handed down June 30, U.S. Chief Judge Leonard Stark set aside and vacated the advisory opinion, in which HHS concluded that the 340B statute compels drug manufacturers to offer 340B pricing when covered entities use contract pharmacies. Earlier last month, Stark held that the government’s position was “legally flawed,” but he stopped short of striking the opinion down. Yesterday, he did so.

“Although HHS withdrew the opinion, HHS has made it clear that its position on the 340B statute has not changed,” Stark wrote. “Because HHS and its sub-agency, HRSA [U.S. Health Resources and Services Administration], intend to act in accordance with the withdrawn opinion, this litigation is not moot.”

Stark granted AstraZeneca’s motion for summary judgement on its claim that the advisory opinion is arbitrary and capricious.

He denied the company’s motions for summary judgement that HHS failed to observe notice and comment procedures, and acted in excess of its authority, in issuing the advisory opinion. Stark also denied the government’s motions in opposition to AstraZeneca’s motions. He did so, however, without prejudice, meaning that either side can refile its motions at some later date.

Stark directed the two sides “to meet and confer regarding how this case will now proceed.” He gave them until next week Tuesday, July 6, to submit a joint report outlining a proposed schedule for future filings and briefings.

On May 17, HRSA sent letters to AstraZeneca and five other manufacturers informing them that their restrictions on 340B pricing when covered entities use contract pharmacies “have resulted in overcharges and are in direct violation of the 340B statute.”

Stark’s ruling yesterday did not address HRSA’s violation letter to AstraZeneca. In a June 21 joint report to the judge, the two sides said they agreed that the case should continue and that the court should decide the legality of the letter. HHS argued in that report that HRSA’s letters to the drug makers do not rely on the advisory opinion, and HRSA’s enforcement actions against AstraZeneca and the other companies would not be impeded if Stark vacated the advisory opinion.

Three other drug manufacturers—Eli Lilly, Sanofi, and Novo Nordisk—also are suing HHS over the advisory opinion. Whether, or how, Stark’s decision to vacate the opinion will affect those cases is unknown. A fourth manufacturer, Novartis, is suing HHS over the May 17 violation letter it got from HRSA.

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