More Court Battles Ahead for 340B in 2022

by Admin | January 12, 2022 3:00 pm

Jan. 12, 2022– The dispute between safety-net hospitals and a growing group of drug companies over community-based pharmacies in the 340B drug pricing program is heading into a new phase of legal wrangling that ensures this fight will remain a dominant issue in the 340B world for months to come.

As 2021 ended, two industry giants – Amgen and AbbVie – joined the group of drugmakers restricting 340B discounted pricing for outpatient drugs purchased by hospitals and dispensed at local pharmacies. AbbVie’s move alone has the potential to be a major one for safety-net hospitals. The company manufactures the immunosuppressive drug Humira, which brought in nearly $20 billion in net revenues in 2020 as the world’s top-selling drug. The development brings the total number of drugmakers imposing 340B community pharmacy restrictions to 11, and safety-net hospitals fear more companies could choose to join the fray and adopt similar policies in 2022. The companies that are restricting 340B pricing (or have announced a plan to do so) are Eli Lilly, Sanofi, AstraZeneca, Novartis, Novo Nordisk, United Therapeutics, Boehringer Ingelheim, UCB, Merck, Amgen, and AbbVie.

In its oversight and enforcement roles, the federal government has sent written warnings to most of these companies telling them their pricing policies violate the 340B statute and ordering them to restore the discounts. In the case of six companies, the Health Resources & Services Administration (HRSA) has referred the matter to the Department of Health and Human Services (HHS) Office of Inspector General (OIG) to investigate whether the government should impose steep civil fines for the noncompliant drugmakers.

The government’s efforts have been held up by lawsuits that many of the drug companies filed challenging whether the 340B statute prohibits them from limiting or conditioning 340B pricing. The litigation also challenges whether HRSA has the authority to take enforcement actions in these matters.

Where the Court Cases Stand

To date, three federal district courts have weighed in on whether the law permits drug companies to impose unilateral restrictions or conditions on 340B discounts when safety-net providers contract with community pharmacies to dispense drugs to their patients. Courts in Indiana and New Jersey largely sided with the federal government, stating the law does not allow such restrictions. However, they found some faults with HRSA’s letters initiating enforcement actions that were challenged in those cases, setting aside all or part of the violation letters. A third court based in Washington, D.C., decided in favor of two drug companies that are challenging the government’s authority to prohibit them from limiting the discounts. A fourth district court in Delaware has yet to issue a final decision in the case it is considering.

The government has made it clear it is not backing down in this fight. Just before the new year, government attorneys representing HHS appealed the decision of the D.C. district court. HHS is asking an appeals court to reverse that ruling and back enforcement actions against companies that have restricted 340B pricing through community pharmacies.

But the drug companies show no signs of backing down, either. Three companies that were told by the Indiana and New Jersey courts that their actions were unlawful filed appeals of their own. The federal government also filed appeals in those cases that will challenge the elements of the decisions that found fault with the HRSA violation letters initiating enforcement actions.

Where the Dispute Is Headed

With all three main stakeholders – hospitals, drug companies, and the federal government – vowing to continue the fight, the dispute now is moving to the next crucial phase. Federal appeals courts in each of these jurisdictions are responding to the notices of appeal. They likely will set schedules soon for submissions of briefs by the parties, followed by hearings for oral argument, to determine who will prevail.

The 340B community is steeling itself for a lengthy court process. Appellate courts typically take months or more than a year to consider cases and issue final rulings. With appeals being heard in at least three separate districts, courts could end up being split on the merits of the cases.  

The fact that at least five drugmakers adopted restrictive pricing policies after the government warned the first six they were breaking the law – and that three drugmakers have done so after the recent court decisions – indicates some in the industry are willing to take the risk of possible big fines to pull back on 340B discounts. Safety-net hospitals are concerned that the D.C. district court decision emboldened some drug companies and could encourage others to follow suit.

What Remains at Stake

As the community pharmacy dispute drags out, 340B providers and government officials continue to point to the mounting harm that they say the drug company restrictions are causing the health care safety net. In various court filings, letters, and other communications, they demonstrate how the financial hit to 340B providers is translating into reduced access to care for patients in need. It is for these patients and their families that safety-net providers say they are arguing for a resolution to the problem.

Drug companies have a significant stake in the outcome of this dispute as well. Some of the companies involved have publicly stated their policies are saving billions of dollars that are going directly to their bottom lines. As a result, there could be little incentive for drugmakers to change course until there are final appeals court decisions supporting HRSA’s position. The companies are telling judges they should not be subject to fines, at least while the court cases are pending, because they are not “knowingly and intentionally” overcharging 340B providers in violation of the law.

With so much riding on the line, all eyes will be on the appeals courts in the coming weeks and months.

Source URL: