Judges issue conflicting rulings on 340B drug discount policy

Judges in Washington, D.C., and New Jersey made two conflicting rulings Nov. 5 regarding drugmakers' ability to put restrictions on discounts offered through the federal 340B program, Endpoints News reported. 

Washington D.C. District Judge Dabney Friedrich ruled that Novartis can put conditions on the sales of 340B drugs to contract pharmacies, writing: "The statute's plain language, purpose, and structure do not prohibit drug manufacturers from attaching any conditions to the sales of covered drugs through contract pharmacies," according to Endpoints News

The same day, New Jersey District Judge Freda Wolfson ruled that Novo Nordisk and Sanofi cannot impose the same restrictions and ordered them to cease their policies restricting 340B discounts for contract pharmacies. 

In her opinion, Ms. Wolfson wrote that Beverly Hospital in Massachusetts, part of Cambridge, Mass.-based Beth Israel Lahey Health, claims to have lost more than $125,000 in 340B savings since Sanofi enacted its policy restricting discounts through contract pharmacies, Endpoints News reported. 

Strong Memorial Hospital in Rochester, N.Y., also said Novo Nordisk and other drugmakers "refused to offer drugs at the 340B ceiling price, resulting in overcharges of more than $2 million." 

An undisclosed healthcare provider in a high-poverty area said it expects to lose $6 million of its $8 million budget due to 340B restrictions and may lay off 35 staff members, Ms. Wolfson's opinion stated, according to Endpoints News. 

Sarah Evans Barker, a district judge in Indiana, ruled in October that HHS efforts to block drugmakers from making changes to 340B discounts was "arbitrary and capricious."

Ms. Evans Barker stated in her opinion that a letter sent by HHS to six drugmakers ordering them to offer 340B discounts to contract pharmacies "fails to acknowledge or explain the agency’s changed position(s) with regard to its authority to enforce statutory compliance when the alleged violation is entangled with a regulated entity’s failure to comply with the agency’s nonbinding contract pharmacy guidance."

But in her opinion, she also stated that drugmakers can't make "unilateral" restrictions on 340B discounts, Endpoints News reported. 

Regarding the Indiana ruling, Ms. Wolfson said she's "unpersuaded by the court's characterization of HHS' actions," stating she believes HHS was "caught between transitioning administrations with dissimilar priorities."

Read Endpoints News' full article here

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