HHS pulls 340B advisory opinion after it fails to throw out AstraZeneca lawsuit

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The Department of Health and Human Services pulled a controversial advisory opinion that drug makers have to offer 340B discounts to contract pharmacies after a legal fight with AstraZeneca. (Pixabay)

The Department of Health and Human Services has pulled a controversial advisory opinion that stated drug makers must provide products discounted under the 340B program to contract pharmacies after a heated legal fight with AstraZeneca.

The agency said in a legal filing late Friday that it was pulling the advisory opinion issued last year by HHS’ Office of the General Counsel to “avoid confusion and unnecessary litigation.” It is the latest court win for pharma companies in a nearly year-long dispute over contract pharmacies, which dispense drugs on behalf of 340B-covered entities.

AstraZeneca had sued HHS last year over the opinion, which stated that the drugmaker and several others were violating federal law for not providing discounted drugs to contract pharmacies. AstraZeneca argued in the U.S. District Court for the District of Delaware that the advisory opinion violated federal law and HHS didn’t have the statutory authority to issue it.

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Last week, a federal judge struck down HHS’ motion to dismiss the lawsuit.

But now, since the opinion has been withdrawn, the lawsuit is moot, HHS said in the court filing. HHS said that the opinion was withdrawn to avoid confusion “in recognition of the narrow function the opinion was intended to serve.”

But HHS has not withdrawn a series of letters it sent to AstraZeneca and five other drugmakers last month calling for them to end the restrictions to contract pharmacies.

The Health Resources and Services Administration, which oversees 340B, does not mention the advisory opinion in the letters. The agency wrote that drug makers violated the federal 340B statute when they restricted sales to contract pharmacies.

HRSA gave the companies until June 1 to respond and offer a plan to resume sales. If a drug company doesn’t do that then they could face monetary penalties.

340B advocates cheered the move and that HRSA has not pulled the letters sent to drug makers. 

"Withdrawal of the December 2020 advisory opinion eliminates an unnecessary distraction created by drug company efforts to challenge the government's authority to enforce the law," said Maureen Testoni, president and CEO of the advocacy group 340B Health, in a statement. 

HRSA did not return a request for comment as of press time on the decision to withdraw the opinion.

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Eli Lilly, one of the other drug makers warned by HRSA, sued HRSA last month over the letter.

340B requires drug makers to offer discounted products to safety net hospitals, community health centers and other providers in exchange for participation in Medicare and Medicaid.

But drug companies have complained the program has gotten too large and that providers are not using the savings to help patients, a charge that providers say is inaccurate. Providers counter that safety net hospitals and centers often operate at narrow margins and the discounts are vital to help them take care of patients and combat rising drug prices.

Contract pharmacies have proliferated in use among 340B-covered entities which sometimes do not have an in-house pharmacy.