In May 2022, a bipartisan group of Attorneys General from twenty-three states and the District of Columbia filed amicus curiae briefs in two federal court cases surrounding the 340B program and contract pharmacies – one in the Third Circuit and one in the District of Columbia Circuit – in favor of the federal government’s position.
By way of review, these cases started in 2020 when six pharmaceutical companies – Sanofi, United Therapeutics, Eli Lilly, Novartis, Novo Nordisk, and AstraZeneca – cut off sales of 340B drugs to contract pharmacies. The companies alleged that they had to cut off access to prevent duplicative discounts for Medicaid and 340B. HHS and HRSA told the companies they needed to reverse the cancellation, but the companies refused. Since the initial lawsuits, more pharmaceutical companies have also cut off contract pharmacies’ access to 340B drugs.
The amicus briefs allege that the companies are using the policies to avoid providing discounts on specialty drugs as hospitals must purchase discounted specialty drugs at specialty pharmacies and only 20% of hospitals have their own specialty pharmacies. This underscores the need for contract pharmacies and the 340B program.
“As a result of the manufacturers’ refusals and restrictions, numerous federally qualified health centers and other safety-net providers operating in our states are unable to provide vulnerable patients with affordable prescription drugs and expanded healthcare services,” the AGs brief said. Essentially, the states claim that the companies actions threaten the interests of the involved states because the safety-net providers are unable to provide their vulnerable patients with affordable prescription drugs, as required by the 340B program.
The states further say that the policies implemented by the pharmaceutical companies “are an improper way to remedy any disputes regarding duplicate reimbursements or drug diversion,” noting that contract pharmacies are critical in dispensing drugs for outpatient treatment and recovery.
Not Just AGs…Hospital Groups, Too
In addition to the AG briefs, a group of five hospital associations filed amicus curiae briefs in support of the federal government (also in the Third Circuit and D.C. Circuit), saying that the government should have the ability to enforce the 340B drug pricing program statute and require drug companies to offer discounts for drugs purchased by safety-net hospitals and dispensed by community pharmacies.
The five associations argue that the pharmaceutical companies “must go back to providing 340B discounted drugs to covered entities, regardless of whether these vital medicines are being dispensed in-house or through outside pharmacies” and that the “continued viability of the 340B drug discount program is at stake in these cases.”
What’s Next?
The cases will continue to wind their way through the legal system. So far, each side of the argument has come away with some wins and some losses, even on the same topic. For example, one federal judge found in the government’s favor, noting that they have the ability to warn and fine the manufacturers but other judges found in favor of the companies.