AstraZeneca's lawsuit over 340B contract pharmacies survives after judge dismisses challenge from HHS

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AstraZeneca's lawsuit over the 340B drug discount program survives as a federal judge nixed the Department of Health and Human Services’ motion to dismiss it. (Pixabay)

A federal judge has dismissed the Department of Health and Human Services’ (HHS') bid to toss a lawsuit from drugmaker AstraZeneca over the 340B drug discount program.

The decision by Judge Leonard Stark, delivered Wednesday, ensures the lawsuit over AstraZeneca’s restriction of sales to 340B contract pharmacies will continue.

AstraZeneca and several other drug companies over the past year have restricted sales of 340B-discounted products to contract pharmacies, which are third-party entities that dispense the discounted drugs on behalf of covered entities.

HHS’ general counsel issued an opinion back in December that found drugmakers’ contract pharmacy restrictions violated federal law. The opinion also found that covered entities can have as many contract pharmacies as they need.

AstraZeneca sued the federal government in early January, saying the opinion violated federal law and HHS exceeded its authority in issuing it.

But HHS filed its own motion to dismiss the lawsuit, saying that the advisory opinion merely restated a position that the federal government has held throughout the entirety of the 340B program.

Stark rejected the argument, saying the opinion is “explicitly an exercise in statutory interpretation.”

The judgment also found that the opinion could have an impact on AstraZeneca financially and therefore is a valid opinion to challenge.

“If the opinion had endorsed AstraZeneca’s view of its obligation under the 340B statute, it is possible that covered entities would have brought their own suit against HHS to challenge that interpretation,” the judgment said.

Stark has not ruled yet on AstraZeneca’s motion for a summary judgment striking down the opinion.

The judgment got fierce pushback from 340B advocates who say that the drugmaker is violating the 340B statute.

"We believe the law is clear: Drug manufacturers must provide 340B discounts on prescription drugs dispensed through any means, including contract pharmacies," said Beth Feldpush, senior vice president of policy and advocacy for America's Essential Hospitals, which represents safety net hospitals, in a statement. "AstraZeneca and other manufacturers have skirted these mandates by unlawfully withholding discounts or erecting onerous administrative barriers to providing discounts."

The ruling comes as HHS has escalated its attempts to overturn restrictions on sales to contract pharmacies for 340B.

The Health Resources and Services Administration (HRSA), which oversees 340B, wrote to six drugmakers including AstraZeneca last month calling for them to end the contract pharmacy restrictions.

Eli Lilly, another of the six drugmakers warned by HRSA, also went to court asking to stop HHS from imposing any penalties over the 340B contract pharmacy moves.