United Therapeutics sued HHS and HRSA on June 23 over 340B contract pharmacy requirements.

Sixth Drug Manufacturer Sues HHS and HRSA Over 340B Contract Pharmacy

Drug manufacturer United Therapeutics (UT) has sued the federal government over its 340B contract pharmacy requirements, saying it is being forced “to engage in a program that enriches national pharmacy corporations at UT’s direct expense and at the expense of the intended beneficiaries of Congress’s program.”

UT joins fellow drug makers AstraZeneca, Eli Lilly, Novartis, Novo Nordisk, and Sanofi, each of which is individually suing the U.S. Health and Human Services Department (HHS) and the U.S. Health Resources and Services Administration over HRSA’s 340B contract pharmacy policies.

The six companies, to varying degrees, are denying 340B pricing on drugs shipped to contract pharmacies. Boehringer Ingelheim (BI) is due to become the seventh, on Aug. 1. If BI follows through with the contract pharmacy restrictions it announced on July 1, HRSA probably will order it to stop, and BI probably will sue the government, too.

UT sued HHS and HRSA on June 23, without a public announcement. Its filing came to light on Friday, July 9 in a short, unsigned order in Novartis’s 340B contract pharmacy lawsuit. Judge Dabney Friedrich of the U.S. District Court for the District of Columbia is hearing both cases. Friedrich ordered the two companies and the government to confer, and then tell him by no later than this Wednesday, June 14 if he had their consent to consolidate the cases.

In addition to the judge’s order about potentially consolidating the Novartis and UT cases, there were developments in recent days in Lilly, AstraZeneca, Sanofi, and Novo Nordisk’s 340B contract pharmacy lawsuits.

UT’s Policy, in Context

Last Nov. 18, UT told covered entities that, starting Nov. 20, 2020, it would accept 340B contract pharmacy orders only if the entity used the pharmacy “for a valid 340B purchase” of a UT covered outpatient drug during the first three full quarters of 2020. Entities buying UT products for the first time, and that lacked an in-house pharmacy, could designate a single contract pharmacy, UT said.

UT initially said that, starting May 13, 2021, it would accept 340B contract pharmacy orders from entities only if the entity provided, on an ongoing basis, contract pharmacy claims data for the company’s products. On May 11, 2021 UT pushed back its claims data requirement’s start date to Sept. 1.

In late December 2020, the HHS general counsel issued an advisory opinion stating that the 340B statute requires drug manufacturers to offer their products for purchase by covered entities at or below the 340B ceiling price, “not qualified, restricted, or dependent on how the covered entity chooses to distribute the covered outpatient drugs.”

On May 17, HRSA sent UT and the five other manufacturers denying 340B discounts on drugs letters informing them that their policies are in direct violation of the 340B statute. UT asked for and got a second letter from HRSA on May 28 clarifying its findings.

On June 16, the federal district judge hearing AstraZeneca’s contract pharmacy lawsuit held that the HHS advisory opinion was “legally flawed.” HHS withdrew the opinion two days later. HHS said HRSA’s May 17 letters informing the six companies that they were violating the 340B statute “operated independently” from the opinion. On June 30, the judge in AstraZeneca’s case set aside and vacated the advisory opinion.

UT’s Lawsuit

“This case is about a federal program that has run off the rails,” UT said in its complaint filed last month against HHS and HRSA.

The 340B program’s main purpose “was to assist…covered entities and their patients financially; Congress anticipated that the covered entities would pass on the drug discounts to the vulnerable patient populations they serve,” the company said. “UT is committed to supporting the goals that Congress enacted the 340B statute to advance, and its current policy is crafted with that aim in mind. But HRSA cannot legally force UT to engage in a program that enriches national pharmacy corporations at UT’s direct expense and at the expense of the intended beneficiaries of Congress’s program.”

UT told the court that HRSA’s May 17 letter informing the company it was violating the 340B statute, and HRSA’s May 28 follow-up letter to UT, “were premised” on the Dec. 30 HHS advisory opinion that the judge in AstraZeneca’s case struck down.

UT said HRSA’s letters violate the 340B statute and the Administrative Procedure Act in multiple respects. It argued, for example, that the letters are unlawful because HRSA has never validated that contract pharmacies are, in fact, agents of covered entities. It likewise argued that HRSA assumes without factual support that covered entities retain title to 340B-purchased drugs in contract pharmacy inventory replenishment systems. “HRSA cannot compel manufacturers to participate in a contract pharmacy replenishment scheme if HRSA cannot perform, and authorize manufacturers to perform, statutory audits on contract pharmacies and other third parties who are using undisclosed algorithms to determine which drug purchases are entitled to 340B discounts,” UT said.

UT asked the court to declare that:

  • HRSA’s May 17 and May 28 determinations that UT has violated the 340B statute are unlawful
  • the 340B statute does not require pharmaceutical manufacturers to provide 340B discounted drugs to contract pharmacies
  • UT’s contract pharmacy policies comply fully with the 340B statute and do not subject UT to civil monetary penalties.

UT also asked the court to vacate and set aside HRSA’s two violation letters, and to grant “temporary, preliminary, and permanent injunctive relief barring [HHS and HRSA] and any entities acting in concert with them from initiating and/or pursuing any enforcement actions against UT in connection with UT’s contract pharmacy policies.”