BREAKING: HIV/AIDS Clinics Sue HHS Over Drug Manufacturers’ Denials of 340B Pricing

Your 340B Report for Saturday Oct. 10, 2020

HIV/AIDS Clinics Sue HHS Over Drug Manufacturers’ Denials of 340B Pricing

(UPDATE Saturday Oct. 10, 2020, 9:20 a.m. EDT—The U.S. Health and Human Services Department (HHS) said it will not comment on pending litigation.)

The national association of HIV/AIDS clinics and two of its members late last night sued U.S. Health and Human Services (HHS) Secretary Alex Azar in federal court to compel him to protect their rights to buy covered outpatient drugs from four manufacturers that refuse to sell them when the drugs are ordered through 340B contract pharmacy arrangements.

The complaint cites 340B Report articles about the manufacturers’ actions, responses to their actions, and related 340B program developments.

The Oct. 9 suit was brought by Ryan White Clinics for 340B Access (RWC-340B), its Kentucky member Matthew 25 AIDS Services, and its Tennessee member Cempa Community Care. It is a major turning point in the months-long struggle over 340B contract pharmacy involving the drug industry, 340B covered entities and their trade associations, HHS, the U.S. Health Resources and Services Administration (HRSA), Congress, and Connecticut’s top legal official and possibly other state attorneys general. It brings the federal judiciary into the equation.

A second similar lawsuit by 340B covered entities against HHS and HRSA is expected soon.

In a news release, RWC-340B said it and its members sued “to protect 340B entities’ longstanding right to dispense their drugs through contract pharmacies under the federal 340B drug pricing program as mandated by statute and regulation.”

It said drug manufacturers Eli Lilly and Co., AstraZeneca, Sanofi, and Novartis “have flouted the 340B statute and regulation by openly refusing to sell 340B discounted drugs to covered entities when ordered via contract pharmacy arrangements.” HHS and HRSA’s inaction, RWC-340B says, “has deprived the nation’s most vulnerable individuals of crucial health services in a manner that causes irreparable harm contrary to the public interest at a time when our country is in the middle of a national public health emergency.”

“Unless the Secretary acts to protect the 340B safety net…these manufacturer actions could force safety net providers to scale back or eliminate services when these front-line health care providers are fighting both the HIV/AIDS epidemic and COVID-19,” the group said.

“We are filing this lawsuit because these drug manufacturers’ unilateral policies will decimate the ability of HIV clinics and other safety net providers to care for vulnerable patients,” said Shannon Stevenson, CEO of plaintiff Cempa Community Care and President of RWC-340B.

“We need HHS to take immediate action against these companies because, if it does not, our organization will be forced to cut services vital to the health of our patients and community,” said Cyndee Burton, CEO of plaintiff Matthew 25.

We have reached out to HHS and HRSA for comment.

Drug manufacturer Merck, which is not named in the suit, asked—but has not required—340B covered entities, beginning Aug. 14, to submit 340B contract pharmacy claims data to a vendor so it could be checked for 340B drug discounts and Medicaid, Medicare Part D, and commercial rebates on the same drugs. Merck said it might take unspecified adverse action against non-compliant entities, but it has not yet done so.

RWC-340B and its members accuse Azar, HHS, HRSA, and HRSA Administrator Thomas Engels in the lawsuit of violating Ryan White clinics’ right to due process under the Fifth Amendment, and of neglecting the government’s duties under the federal Administrative Procedure Act (APA). They want a jury trial, and they seek

  • A declaration that they “are entitled to purchase and dispense covered outpatient drugs through contract pharmacies at 340B discounts”;

  • An order giving Azar 60 days to promulgate long-delayed 340B program regulations setting up a mandatory and binding administrative dispute resolution system for 340B;

  • An order directing Azar to enforce the plaintiffs’ “right to purchase and dispense covered outpatient drugs via contract pharmacies at 340B discounts”;

  • An order directing Azar to use his power to force Lilly, AstraZeneca, Sanofi, and Novartis to refund the plaintiffs for overpayments on drugs they have refused to sell at 340B prices when ordered via contract pharmacy arrangements;

  • An order directing Azar to use his power to impose 340B program civil monetary penalties against the four manufacturers until they come into compliance with the 340B statute and honor contract pharmacy arrangements;

  • An order directing Azar to revoke the manufacturers’ 340B pharmaceutical pricing agreements with the government until they comply with the 340B statute, which would prevent all their drugs from being reimbursable by Medicaid and Medicare Part B;

  • An order awarding the plaintiffs costs and fees incurred in the litigation and other relief as the court deems proper.

RWC-340B filed the suit in the U.S. District Court for the District of Columbia. It is the same court involved in 340B hospitals’ ongoing lawsuit over the U.S. Centers for Medicare & Medicaid Services’ nearly 30 percent reduction in Medicare Part B reimbursement for hospitals’ 340B purchased drugs. The court also in 2017 forced HRSA to implement 340B ceiling price and manufacturer civil monetary penalties; vacated a HRSA legislative regulation regarding 340B pricing on orphan drugs in 2014, and vacated a subsequent HRSA 340B orphan drug interpretative rule in 2015.

RWC-340B’s lawsuit comes a day after two retiring GOP congressional committee leaders invited 340B stakeholders “to submit ideas” by Oct. 30 “on how we can improve the 340B program.” Sen. Lamar Alexander (R-Tenn.) and Rep. Greg Walden (R-Ore.) said “changes are needed and long overdue,” and Congress and program participants “must be open to updating 340B.” Alexander and Walden’s Democratic counterparts, Rep. Frank Pallone (D-N.J.) and Sen. Patty Murray (D-Wash.), have not responded for requests for comment on Alexander and Walden’s call for ideas and inference that legislation is needed.