Florence Pan headshot
U.S. District Judge Florence Pan signaled her displeasure with NACHC and the federal government for missing a Sept. 3 deadline for a legal filing.

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Federal Judge Asks About Overdue Status Report in 340B Dispute Resolution Case

A federal district judge in Washington, D.C., yesterday ordered community health centers to answer why she should not dismiss their lawsuit against federal health officials over the administrative dispute resolution process for the 340B program.

Judge Florence Pan of U.S. District Court for the District of Columbia wanted to know why the National Association of Community Health Centers (NACHC) and the U.S. Health and Human Services Department (HHS) did not file a joint status report on or before Sept. 3 as Pan required them to do on June 6.

“The parties were directed to submit a status report on or before September 3, 2022. But no status report has been filed,” Pan said in an three-sentence order yesterday that appears in the case docket. “Accordingly, plaintiff is ordered to show cause, on or before September 13, 2022, why this case should not be dismissed for failure to prosecute.”

NACHC yesterday quickly answered that the two sides “inadvertently selected” a Sept. 3 weekend filing date for the joint status report to Pan.

“On August 26, 2022, before leaving for vacation, counsel for defendant HHS proposed filing the required status report on Tuesday, September 6, 2022, the next business day following the Labor Day holiday,” NACHC told Pan. “Undersigned counsel for NACHC submitted a draft joint status report for HHS counsel’s review on Friday, September 2, 2022, but agreed to coordinate filing on Tuesday, September 6, 2022, given the Saturday filing date and HHS counsel’s vacation. Counsel for NACHC received HHS’s authorization to file the report shortly after this court’s order to show cause. Counsel then promptly filed the report, which indicates the parties’ agreement that the case should remain stayed for an additional 90 days to permit NACHC—on behalf of its covered entity members—to pursue claims in the 340B administrative dispute resolution process.”

NACHC apologized to Pan “for any burden or inconvenience to the court caused by the delay in filing and, having promptly remedied the issue in collaboration with HHS counsel, respectfully submits that dismissal for failure to prosecute is unwarranted.”

Pan had not yet responded to NACHC’s answer as of this morning.

As they told Pan in their last joint status report in June, the two sides repeated in their new status report yesterday that they are still waiting for the ADR panel in NACHC’s dispute with AstraZeneca and Sanofi to rule on the companies’ motions to dismiss NACHC’s ADR petition seeking relief for alleged overcharging. (NACHC also named drug manufacturer Lilly in its ADR petition, but a different federal district in March 2021 enjoined HHS from enforcing its ADR regulations against Lilly.)

Ryan White Clinics for 340B Access (RWC-340B) and HHS meanwhile filed their latest joint status report to Pan on Sept. 2.

RWC-340B, like NACHC, sued HHS in October 2021 to force the department to publish long-delayed regulations establishing a 340B ADR process. HHS published the rules in December 2021 and a month later RWC-340B filed an ADR petition against AstraZeneca over the company’s denial of 340B pricing when covered entities use contract pharmacies. Like NACHC’s case against HHS, RWC-340B’s case against the department is on hold to let the ADR process play out.

In January 2020, AstraZeneca filed a motion with the ADR panel assigned to hear RWC-340B’s petition “requesting indefinite stays of the ADR proceedings pending the outcome of 340B-related district court litigation and the conclusion of any further ADR rulemaking proceeding by HHS,” RWC-340B and HHS told Pan in their new joint status report.

“To date, the ADR panel has not ruled on the motion to stay filed by AstraZeneca,” they said.

Meanwhile, they said, the U.S. Health Resources and Services Administration (HRSA) still has not proposed a new ADR regulation. A proposed rule has been pending White House Office of Management and Budget approval to be published since November 2021.

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