340B Entities Sue HHS Over Lack of Dispute Resolution Process

Three organizations serving primarily HIV and AIDS patients and who each are also considered “Covered Entities” under the 340B Drug Pricing Program (the Plaintiffs) filed a lawsuit against Department of Health and Human Services (HHS) Secretary Alex Azar and the Administrator of the Health Resources and Services Administration (HRSA) Administrator Thomas Engels (the Defendants) on October 9, 2020, seeking to compel action by their respective agencies.

The case is captioned Ryan White Clinics for 340B Access vs. Azar, D.D.C., No. 1:20-cv-02906.

The complaint alleges that the Defendants’ failure to promulgate final regulations related to a formal dispute resolution process for the 340B Drug Pricing Program has damaged Plaintiffs and has encouraged pharmaceutical manufacturers to engage in practices contrary to agency guidance. Specifically, the Plaintiffs allege that some manufacturers are refusing to sell heavily discounted 340B drugs to Covered Entities that utilize contract pharmacies, despite HRSA guidance affirming the right and ability of Covered Entities to use contract pharmacies to dispense 340B drugs to qualifying patients.

Interestingly, the complaint is not focused on declaratory relief instructing HRSA to finalize regulations governing the dispute resolution process, but seeks a declaratory judgment that the Plaintiffs are entitled to purchase and dispense 340B drugs through contract pharmacies. The practice of purchasing and dispensing 340B drugs through contract pharmacies is not specifically authorized under the 340B statute or final agency regulations, but rather is a practice only discussed in HRSA guidance. In addition, it is not entirely clear how the relief sought by the Plaintiffs is related to HRSA’s failure to finalize regulations governing the dispute resolution process. The Plaintiffs also claim damages for violation of due process rights by the Defendants’ failure to promulgate final dispute resolution regulations and seek other relief related to violations of the Administrative Procedures Act.

This lawsuit is yet another action calling into focus the issues that have beleaguered the 340B Drug Pricing Program for many years. Arent Fox will continue to monitor the case.