STATEMENT ON FEDERAL COURT OPINION IN 340B COMMUNITY PHARMACY LAWSUIT
WASHINGTON, D.C.— Friday, a federal judge in Indiana issued an opinion agreeing with the government that Eli Lilly violated the 340B drug pricing program law by restricting discounts to safety-net providers on drugs dispensed at community-based pharmacies. The court said the law did not allow Lilly to impose unilateral conditions on the discounts based on where the drugs are dispensed.
The opinion states that the 340B statute “does not permit drug manufacturers, such as Lilly, to impose unilateral extra-statutory restrictions on its offer to sell 340B drugs to covered entities utilizing multiple contract pharmacy arrangements.” For this reason, a May enforcement letter that the Health Resources & Services Administration (HRSA) sent Lilly ordering it to restore discounts on drugs dispensed at community pharmacies was within the agency’s authority under the 340B law, the opinion states.
“Construing the 340B statute not to permit drug manufacturers to impose extra-statutory conditions on covered entities' access to discounted medications is not only a permissible construction, but, in the court’s view, the construction that best aligns with congressional intent,” the opinion states.
Citing inconsistent representations the government made on its enforcement authority, the judge vacated HRSA’s order against the company directing it to restore the discounted prices. The opinion states the agency did not “acknowledge or explain” its change in position on HRSA’s authority to enforce the 340B statute regarding community pharmacy rules outlined in federal guidance. However, the opinion notes that such guidance “consistently espoused” the view that drug companies “must comply with their obligations under the 340B statute regardless of the manner in which the covered entity chooses to dispense the drugs and must accommodate all contract pharmacy arrangements that the government permits.”
The following statement is attributed to 340B Health President and CEO Maureen Testoni:
“We are pleased a federal court has agreed that Eli Lilly is breaking federal law and its agreements under the 340B program by unilaterally restricting access to discounts on drugs dispensed at community-based pharmacies. We are encouraged that the court upheld HRSA’s view that Lilly is violating the law as one that ‘best aligns with congressional intent’ of the 340B program. We urge the government to continue its work to enforce the law and restore the statutory drug discounts that enable 340B hospitals to care for patients with low incomes and those living in rural parts of the country.”
Contact: Richard Sorian at richard.sorian@340bhealth.org or 202-536-2285.