The fight over the 340B program between pharmaceutical companies and the United States Department of Health and Human Services (HHS) is heating up. On November 5, 2021, competing rulings were issued in different cases brought by various pharmaceutical companies: one that states drug companies cannot unilaterally restrict sales of products discounted under the 340B program to contract pharmacies while another found that manufacturers don’t have to provide discounts.
Sanofi and Novo Nordisk Lawsuit
In the lawsuit filed by Sanofi and Novo Nordisk, United States District Court Judge Freda Wolfson ruled that the Health Resources and Services Administration (HRSA) did have the authority to issue the warning letter in May 2021. The ruling also found that HRSA did not need to give the drugmakers time to comment prior to the issuance of the letters. Wolfson also agreed with HHS that the companies “cannot impose restrictions on offers to covered entities and that their policies must cease.” However, she did not find that the companies must give credits or refunds to the covered entities and face monetary penalties for their actions.
Wolfson ordered that the penalty letters sent in May 2021 be partially vacated and remanded so that HHS can get a better idea of the role of contract pharmacies and to allow for Congress to step in on the issue.
This ruling is in line with the one Judge Sarah Evans Barker made in the Eli Lilly lawsuit over the HRSA warnings. In that case, Judge Barker also found that the letters should be vacated because HHS changed its views over whether to clamp down on the pharmaceutical restrictions.
United Therapeutics and Novartis Lawsuit
United States District Judge Dabney Friedrich, however, reached a different conclusion in a lawsuit brought by United Therapeutics and Novartis. Friedrich found that the “plain language, purpose, and structure” of the 340B statute does not prohibit pharmaceutical manufacturers from attaching conditions to the sales of covered drugs through a contract pharmacy.
Friedrich noted in her opinion that pharmaceutical manufacturers have “credible evidence” that HRSA’s recent guidelines that permit covered entities to use multiple contract pharmacies to distribute discounted drugs “increased the potential for fraud in the 340B program.” Friedrich went on to rule that any enforcement action taken against pharmaceutical manufacturers must “rest on a new statutory provision, new legislative rule, or a well-developed legal theory.”
As one might expect, 340B Health was disappointed with the ruling from Judge Friedrich, releasing a statement that read, “We disagree with the opinion issued by the U.S. District Court for The District of Columbia regarding the 340B drug pricing program. Two federal courts have firmly stated that drug companies participating in 340B do not have the right to unilaterally impose restrictions on the provision of price discounts. Those courts have also upheld the government’s ability to enforce the law. The facts remain the same. This group of drug companies are in violation of the law and their denial of 340B discounts for drugs dispensed in community pharmacies are harming safety-net hospitals and the patients with low incomes that they serve. Ultimately, these discounts must be restored, and the safety net made whole.”