Judge dismisses suit accusing HHS of letting drugmakers skirt 340B rules

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A federal judge in California granted a Feb. 17 HHS motion to dismiss a lawsuit accusing the department of failing to force drugmakers to pay 340B discounts to hospitals that dispense drugs through community pharmacies. 

The lawsuit, filed in December by five national hospital organizations, asked the court to order HHS to require drugmakers to pay 340B discounts to hospitals that use contract pharmacies, issue refunds to hospitals that were denied the discounts, and order HHS to refer the drugmakers to the HHS Office of Inspector General to assess penalties. 

But the judge ruled that the issue could not be challenged in court because HHS has not issued a final agency action regarding 340B discounts for hospitals that use community pharmacies.  HHS released an advisory opinion in December stating that 340B drug discounts apply to contract pharmacies, but advisory opinions don't carry the force of a law. 

The judge also ruled that the hospital organizations must go through the administration dispute resolution, or ADR, process that Health Resources & Services Administration established in December to resolve 340B-related disputes between hospitals and drugmakers. 

Maureen Testoni, president and CEO of 340B Health, a group that represents 340B hospitals, said in a statement shared with Becker's: "The ADR process is not yet operating, requiring hospitals to waste time and resources if they attempt to use this avenue to stop the drug companies' illegal behavior. In the meantime, safety-net providers and the patients they serve will continue to suffer."

"Today's decision in our lawsuit merely relates to procedural matters and not the merits of the legal arguments in this case. There is nothing stopping HHS or its next secretary from acting immediately to initiate enforcement proceedings against drug companies that are violating federal law. We will continue to work toward this solution to stop drug company attacks on 340B and the safety-net hospitals and patients who rely on it," Ms. Testoni added. 

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