How Courts Are Shaping the Future of 340B

With scores of pending lawsuits involving drugmaker and covered entity challenges of how federal and state governments regulate 340B, the courts have become an important arena in the national 340B debate. 340B Health’s Vice President of Legal and Policy Amanda Nagrotsky unpacks some of the cases and what they might mean for 340B’s future.Courts Wrestle With Issues of Federal and State AuthorityDrug companies have filed about 80 lawsuits challenging state contract pharmacy protection laws. Nagrotsky says drugmakers are arguing these state laws conflict with federal oversight, but most courts so far have ruled that contract pharmacy protection laws fall within a state’s ability to regulate drug distribution and delivery. A recent decision from a federal judge in Mississippi was a major win for covered entities because it completely dismissed a drugmaker’s challenge to the state’s law rather than just ruling on whether to pause enforcement of the law. AbbVie Challenges 340B Patient DefinitionDrugmaker AbbVie is suing the Health Resources & Services Administration (HRSA) directly, arguing that the definition of whom the agency considers a 340B-eligible patient is too broad. AbbVie’s own, narrower patient definition would require drug companies to discount far fewer drugs and thus would limit hospital access to 340B savings significantly. The government is asking the court to dismiss the lawsuit on procedural grounds, and 340B Health along with two member hospitals are asking the court to allow them to intervene as defendants and provide additional arguments for why it should throw out the case.Uncertainty Remains Despite GPO, Child Site RulingsFederal district court decisions found that HRSA failed to explain why it adopted a 2013 policy barring certain 340B hospitals’ use of group purchasing organizations (GPOs) to make initial purchases for their virtual inventory systems and a 1994 policy establishing registration prerequisites for new 340B hospital outpatient facilities. Although the government opted against appealing the ruling striking down the GPO policy, the underlying prohibition remains in effect, leaving hospitals in limbo as to how HRSA will interpret the law. The government has appealed the child site ruling, and a final decision on that case will have a major impact on how quickly hospitals can use 340B drugs at new child sites.