HHS Rescinds Advisory Opinion after Court Describes 340B Statute as Ambiguous as to Contract Pharmacies
by Elizabeth “Issie” Karan

Last week saw a new installment in the never-ending saga of legal disputes related to the use of contract pharmacies in the 340B Discount Drug Pricing Program. On June 18, 2021, the Department of Health and Human Services rescinded an HHS Office of General Counsel Advisory Opinion released in December 2020 (“Advisory Opinion”). The Advisory Opinion stated that drug makers have an obligation to provide discounts to covered entities in the 340B Program regardless of the method used to dispense drugs (i.e., contract pharmacies). In the legal filing which rescinded the Advisory Opinion, HHS stated that it was pulling it to “avoid confusion and unnecessary litigation” and claimed that the lawsuit is now moot.

The agency’s actions come after the U.S. District Court for the District of Delaware, on June 16, rejected the Biden administration’s request to dismiss a lawsuit by AstraZeneca challenging the Advisory Opinion. In doing so, the Court stated that the 340B Statute is ambiguous as to the use of contract pharmacies in the program. The Court’s opinion states that “Congress may very well want pharmaceutical manufacturers to deliver 340B drugs to an unlimited number of contract pharmacies as a condition for manufacturers’ participation in the Medicare Part B and Medicaid programs. But that kind of policymaking is for Congress, not this Court. The only issue before the Court is whether Congress has spoken clearly and unambiguously on this arrangement. It has not.”

Neither the Court nor the HHS filing definitively address a series of letters sent to drug makers by the Health Resources and Services Administration (HRSA), including AstraZeneca, in May 2021. These letters stated that the drug companies are in direct violation of the 340B Statute and must immediately being offering outpatient drugs at the 340B ceiling price to covered entities through their contract pharmacy arrangements. HRSA gave the companies until June 1 to respond and indicated that without remedial actions, they could face monetary penalties. These letters do not mention the Advisory Opinion.

However, Eli Lilly, one of the other drug makers warned by HRSA, sued HRSA last month over the letter. Although the Court acknowledged HHS’ interpretation of 340B statute is a reasonable one, the Court’s opinion also caused HHS to rescind its Advisory Opinion. This creates significant uncertainty for the future of contract pharmacy arrangements in the 340B program. We will keep members informed as these legal disputes proceed.