The Department of Health and Human Services (HHS) is seeking dismissal of a case brought by Sanofi-Aventis U.S. LLC challenging the requirements of a drug discount program for hospitals serving low-income patients — or, alternatively, the agency asked for summary judgment in its favor.
The Sanofi suit is one of multiple disputes over an HHS advisory opinion that interpreted what is known as the 340B Program, which got its name from Section 340B of the Public Health Service Act. The 340B Program requires drug manufacturers to offer outpatient drug products at lower prices to “covered entities,” defined under the act as providers such as hospitals and clinics that serve low-income individuals.
Sanofi along with other pharmaceutical giants — such as Eli Lilly, Novo Nordisk, and AstraZeneca — cited concerns over an HHS advisory opinion that allegedly clarified that drug manufacturers still must give the 340B discounts when “contract pharmacies,” which technically are not covered entities themselves, are “acting as agents” of covered entities, a Dec. 30, 2020, HHS news release said. After HHS issued the opinion, Sanofi and other dissidents announced that they would cease to provide the discount on drugs that would be dispensed by contract pharmacies.
In its Monday motion, HHS argued that Sanofi’s and the other indignant drug companies’ conduct has “upended the settled operation of the 340B Program” to the detriment of hospitals serving vulnerable patients — emphasizing the “settled” element of the program through maintaining that its December 2020 advisory opinion was simply a reiteration of the requirements imposed on drug manufacturers since the program began. Thus, HHS claimed, any effort to render the agency’s interpretation unlawful is in vain.
Regardless of whether the advisory opinion brought novel information to the table, HHS claimed that Sanofi and the other drug giants have mischaracterized the relationship between covered entities and contract pharmacies. HHS explained that pharmacies are not the ones purchasing the discounted drugs — they simply fill the prescriptions written by providers at covered entities, which do the purchasing themselves.
Sanofi amended its first complaint to include challenges to a recent HHS rulemaking that implemented 340B’s administrative dispute resolution (ADR) process, which went into effect Jan. 13. The ADR rule established a panel within HHS to work out disputes over 340B matters between drug manufacturers and covered entities; the decisions resulting from such disputes are “precedential and binding,” pursuant to the rule. Sanofi argued that the rule violates the Constitution’s Appointments Clause and the Administrative Procedure Act, among other claims, which HHS argued lacked merit.
HHS retains its own counsel. Jones Day represents Sanofi.