24 states support federal government in 340B drugmaker lawsuit

A collection of 24 states is throwing its support to the federal government in a legal fight with several drugmakers over access to drugs discounted under the 340B program. 

The states and the District of Columbia announced in legal filings Monday that the drugmakers’ moves to cut off sales of 340B drugs to contract pharmacies are unlawful.

“As a result of the manufacturers’ refusals and restrictions, numerous federally qualified health centers and other safety-net providers operating in our states are unable to provide vulnerable patients with affordable prescription drugs and expanded healthcare services,” the friend of the court brief said. 

The states blasted the moves of six drugmakers—Sanofi, United Therapeutics, Eli Lilly, Novartis, Novo Nordisk and AstraZeneca—that started in 2020. The drugmakers cut off sales of 340B drugs to contract pharmacies, which are third parties that dispense drugs on behalf of the 340B-covered entities. 

The drugmakers charged that the conditions are needed to alleviate duplicative discounts for both Medicaid and 340B. The federal government warned the drugmakers to reverse the moves, but the drugmakers refused.

The spiraling feud led to several lawsuits that are continuing to make their way through the federal court system. Since the lawsuits, more drug companies have followed suit and cut off contract pharmacies' access to 340B drugs, bringing the total number of manufacturers imposing such restrictions to 16.

The states said in the legal filing that the “new policies are an improper way to remedy any disputes regarding duplicate reimbursements or drug diversion.”

They add that contract pharmacies are vital to helping dispense drugs for outpatient treatment and recovery. The states said that using multiple contract pharmacies is a common practice. 

The states also charge that even though the 340B statute doesn’t specifically reference contract pharmacies, Congress didn’t need to “expressly authorize” their use. Lawmakers wrote the legislation with the “understanding that the contract pharmacy networks were already in place and operating to facilitate prescription dispensing services to patients,” the filing said. 

A group of five hospital associations have also filed "friend of the court" briefs in support of the Biden administration. The advocacy group 340B Health, American Hospital Association, Children's Hospital Association, America's Essential Hospitals and Association of American Medical Colleges called for the court to force the drug companies to pull back their restrictions.

So far, the rulings have been a mixed bag for the federal government, with a federal judge ruling in favor of its ability to warn and fine the drugmakers but other judges ruling for the manufacturers. The federal government has appealed one of the rulings, which continue to make their way through the federal judicial system.