There have been multiple recent developments in drug manufacturers' lawsuits challenging the legality of 340B contract pharmacy requirements.

340B REPORT SPONSOR SPOTLIGHT

Multiple Developments in 340B Contract Pharmacy Lawsuits

Sanofi Slams Government’s Contention of Harm to Covered Entities

Drug maker Sanofi last week updated its lawsuit challenging federal 340B contract pharmacy requirements to poke holes in the government’s introduction of, in the government’s words, “over six thousand pages of complaints from covered entities” about Sanofi’s alleged overcharges for 340B covered outpatient drugs. Sanofi’s July 6 brief also favorably cited U.S. Chief District Leonard Stark’s decision last month in the AstraZeneca case to set aside and vacate HHS’s advisory opinion, and U.S. District Judge Sarah Evans Barker’s March 16 decision in Lilly’s case to grant Lilly a preliminary injunction against 340B ADR proceedings against it.

Last month, the government said in a brief in Sanofi’s lawsuit that, as of January 2021, the company’s restrictions on 340B pricing when covered entities use contract pharmacies “represented an average lost savings to covered entities of $43.4 million monthly.” It also included in the brief examples of “proof” HRSA has gathered “of the real-world implications of Sanofi’s changes and the substantial harm to covered entities its restrictions have wrought.”

Sanofi told the court last week that HRSA “committed a fundamental error by never providing Sanofi with an opportunity to respond to covered entities’ complaints about [Sanofi’s] integrity initiative.”

“Such complaints cannot automatically be accepted at face value,” it said.

“For the most part, the administrative record contains short, boilerplate complaints from covered entities,” Sanofi said. “HRSA never shared these complaints with Sanofi or asked Sanofi for its response.”

“The administrative record is also notable for what it does not contain,” Sanofi said. “The complaints do not show (nor does the government contend) that covered entities maintain title to drugs shipped to contract pharmacies under the standard replenishment model. The administrative record does not contain any evidence demonstrating that contract pharmacies function as agents of covered entities. And a covered entity’s submission of one of these generally boilerplate complaints does not demonstrate that it ever actually purchased eligible outpatient drugs at above-ceiling prices as a result of Sanofi’s integrity initiative.”

“Had HRSA given Sanofi an opportunity to respond to these complaints…Sanofi would have demonstrated that the complaints frequently misrepresent Sanofi’s program and do not establish that Sanofi has overcharged covered entities under the statute.” HRSA’s ADR process, it said, “cannot provide Sanofi with a lawful adjudicative process in which to defend the integrity initiative.”

AstraZeneca Calls HRSA’s Demand Letter Flawed, Asks Judge to Vacate It

AstraZeneca last Friday amended its complaint against HRSA’s 340B contract pharmacy requirements to challenge the legality of HRSA’s May 17 finding that the company is in violation of the 340B statute.

It said HRSA’s letter, like HHS’s now withdrawn and vacated advisory opinion before it, unlawfully interprets the 340B statute to require manufacturers to deliver discounted drugs to an unlimited number of contract pharmacies. The court hearing its case, it noted, ruled last month that AstraZeneca’s position that the statute requires covered entities to dispense 340B purchased drugs only through in-house pharmacies is “permissible.”

“Both the advisory opinion and the May 17 letter are thus extensions of the same ‘flawed’ legal conclusions that this Court has previously identified, and they threaten the same harm,” the company said. “Specifically, they threaten potentially hundreds of millions of dollars in penalties per month if AstraZeneca does not immediately reverse its policy—on top of any credits or refunds to covered entities that the agency might seek to compel AstraZeneca to make.”

The company asked the court to

  • declare that the May 17 letter violates the Administrative Procedure Act because it is in excess of statutory authority
  • set aside and vacate the letter
  • declare that AstraZeneca is not required to deliver 340B discounted drugs to an unlimited number of contract pharmacies
  • enjoin HHS and HRSA from taking any action to enforce or implement the May 17 letter’s conclusions through the 340B program administrative dispute resolution (ADR) process, civil monetary penalty actions, or otherwise.

Both parties are scheduled to file additional briefs on July 23 and Aug. 6. U.S. Chief District Leonard Stark will hear oral arguments on Sept. 14.

Lilly To File Challenge to Government Demand Letter Tomorrow

Drug maker Eli Lilly has a Wednesday deadline to file a brief challenging HRSA’s May 17 letter finding the company’s 340B contract pharmacy policy in violation of the 340B statute. Lilly is seeking a preliminary injunction to stop HRSA from enforcing its findings. It also has asked the court to rule summarily in its favor. The government filed its brief in opposition to Lilly on June 25. U.S. District Judge Sarah Evans Barker has scheduled a July 30 hearing on all pending motions in the lawsuit.

Novo Nordisk Urges Judge To Follow Lead in AstraZeneca Case

Novo Nordisk last week filed a brief in its lawsuit in federal court in New Jersey addressing HRSA’s May 17 letter and the June 16 ruling in AstraZeneca’s lawsuit.

Consistent with the ruling in the AstraZeneca case, “this court should strike down the government’s May 17 letter” as well as its withdrawn Dec. 30 advisory opinion,” Novo Nordisk said. “The court should declare that the 340B statute does not require manufacturers to transfer their 340B drugs to contract pharmacies. In addition, the court should enjoin the government from enforcing either its May 17 letter or the withdrawn December 30 decision or taking any other administrative action that seeks to impose an extra-statutory obligation on manufacturers to transfer their drugs to commercial pharmacies.”

Novartis and United Therapeutics Case Could Be Consolidated

The government filed a brief on June 28, and Novartis filed a brief on July 9, in Novartis’s suit challenging the legality of HRSA’s May 17 finding that the company’s contract pharmacy policy violates the 340B statute. As noted above, the judge hearing this case and UT’s case has asked Novartis, UT, and the government to weigh in by tomorrow on whether the two cases should be consolidated.

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