On December 20, 2021, a group of more than 850 hospitals signed a letter to the United States Department of Health and Human Services (HHS) Secretary Xavier Becerra, requesting that he take action to restore “340B pricing as rapidly as possible.” The letter comes in response to a federal court ruling that found drugmakers have the power to restrict sales of 340B-discounted drugs to contract pharmacies.
Background
Readers likely remember in May 2021, the Health Resources and Services Administration (HRSA) sent letters to six drug manufacturers, telling them their policies were in violation of federal law. The letters sent by HRSA clearly stated that a company cannot “place conditions on its fulfillment of its statutory obligation to offer 340B pricing on covered outpatient drugs purchased by covered entities.”
The six companies – Eli Lilly, Novartis, Novo Nordisk, United Therapeutics, Sanofi, and AstraZeneca – responded to the letters by filing three federal lawsuits, saying HRSA did not have the authority to penalize them for the changes and that the changes were legal under the 340B statute.
Two federal courts have ruled that drug companies are in violation of the law and cannot unilaterally impose restrictions on 340B discounts. The D.C. District court, however, found HRSA’s interpretation of the 340B statute was incorrect and invalidated the May 2021 violation letters to two of the six companies, essentially allowing them to “unlawfully” deny the discounts hospitals use to serve patients.
In the letter, the hospitals called on the federal government to appeal the D.C. District Court decision that rejected the HHS enforcement actions against two drug companies. Some of the letter signatories include Tampa General Hospital, Johns Hopkins Hospital, MedStar Georgetown University Hospital, and UVA Medical Center.
HHS Files Notice of Appeal
On December 28, 2021, attorneys at the United States Department of Justice who represent HHS, filed a notice to the D.C. Circuit Court of Appeals in the Novartis and United Therapeutics lawsuit that it is appealing the court’s decision. Additionally, in separate notices filed the same date with district courts in New Jersey and Indiana, the government also indicated it was appealing aspects of decisions in cases involving the drug companies Eli Lilly, Sanofi, and Novo Nordisk.
As one would expect, 340B groups have applauded HRSA’s decision to appeal the Novartis and United Therapeutics decision. Maureen Testoni, President and CEO of 340B Health, said, “We are delighted the government is appealing the decision in the Novartis and United Therapeutics cases to the U.S. Court of Appeals for the D.C. Circuit. We agree with HHS that this lower court decision is wrong and should be reversed. Two other federal courts have found drug companies cannot impose unilateral restrictions or conditions on 340B discounts. The government appeals of other aspects of those rulings to the U.S. Courts of Appeals for the Third Circuit and for the Seventh Circuit demonstrate the government’s strong belief that the drug company actions are not permissible under the 340B statute. Drugmakers that have put these limits in place are weakening the health care safety net and harming the patients who rely on it.”