A federal judge yesterday denied drug maker Novartis’ request to speed up a hearing on its request that the judge block the government from punishing the company over its denials of 340B pricing when health care providers use contract pharmacies

Judge Rejects Novartis’ Request to Speed Up Hearing in 340B Contract Pharmacy Lawsuit

A federal judge yesterday denied drug maker Novartis’ request to speed up a hearing on its request that the judge block the government from punishing the company over its denials of 340B pricing when health care providers use contract pharmacies.

Novartis is one of six drug companies suing the U.S. Health and Human Services Department over HHS’s findings in May that the companies’ denials of 340B discounts involving contract pharmacy are illegal and must be stopped immediately and remedied. On Wednesday, Sept. 22, HHS’s Health Resources and Services Administration (HRSA) referred all six companies to the HHS Office of Inspector General. OIG can impose hefty civil monetary penalties (CMPs) on manufacturers for knowingly and intentionally charging a 340B covered entity above the 340B ceiling price for a drug.

Lilly notified the judge in its case on Wednesday about its referral to OIG. Novartis, Novo Nordisk, and Sanofi told their judges about their referrals on Thursday and AstraZeneca and United Therapeutics (UT) told their judges yesterday.

U.S. District Judge Dabney Friedrich is assigned to both Novartis and UT’s cases and has scheduled a hearing on all pending motions for Oct. 12.

Novartis’ notice, so far, is the only one to prompt a judge to respond.

Novartis’ Notice to Judge

In its Sept. 23 notice to Friedrich, Novartis accused the government of acting improperly and fundamentally unfairly in referring it to OIG for possible imposition of CMPs. “This is precisely the government action that Novartis sought to enjoin in its pending motion for preliminary injunction, which is scheduled for argument in October,” the company said. Novartis also said the government’s move subverts Friedrich’s “ability to hear and decide this dispute on a reasonable timeline.”

Novartis asked the judge to hold a telephone conference call with all parties to the lawsuit to discuss HRSA’s referral of Novartis to OIG. The company also suggested “that the government should rescind the OIG referral as to Novartis until at least such time as the Court issues a ruling on the pending motions. If the government is unwilling to agree to that request, Novartis requests that the Court move up the hearing on its preliminary injunction motion to next week.”

U.S. Justice Department (DOJ) lawyers responded in court papers on Sept. 23 that HRSA’s referral of Novartis to OIG “is merely the first step in a separate investigatory process that may be initiated and conducted by OIG.”

“The administrative process that OIG is required to follow before it may issue a final, effective decision imposing penalties on a manufacturer for knowing and intentional overcharges under the 340B Program cannot be completed in the 19-day period between now and the October 12, 2021, motions hearing,” DOJ said.

DOJ’s filing describes in detail a four-stage process OIG must go through before CMPs can be imposed against a manufacturer for illegally denying 340B pricing, including a possible hearing before an administrative law judge and possible judicial review by a federal appeals court.

Judge Friedrich yesterday denied Novartis’ request for a conference call, citing DOJ’s statement that there was no way the CMP process could be completed by the time of the Oct. 12 hearing.

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