HHS Argues Covered Entities Cannot Intervene in 340B Drug Pricing Case

The Department of Health and Human Services (HHS) on Monday filed an opposition to a motion to intervene by entities not party to a District of New Jersey case alleging that the HHS overstepped its statutory authority by purportedly imposing binding guidance on drug manufacturers saying that they must provide discounts to certain health service providers.

Novo Nordisk Inc. and Novo Nordisk Pharma Inc.’s Jan. 15 complaint stemmed from an advisory opinion concerning Section 340B of the Public Health Service Act issued by HHS on Dec. 30, 2020, which urged drug manufacturers to offer outpatient products at lower prices to “covered entities,” such as hospitals and health care providers that serve low-income and disadvantaged individuals, Law Street Media reported. Novo argued that it should not have to follow this guidance when contract pharmacies, which are not considered covered entities under 340B, end up benefiting from the discount; because of this, Novo decided to cease offering the discount to covered entities that work with contract pharmacies. Although HHS emphasized its advisory opinion was not legally binding, Novo claimed otherwise.

Various covered entities filed motions to intervene, arguing that the plaintiffs requested that the court “adopt an implausible interpretation of the 340B statute.” Novo’s decision not to provide the lower prices that 340B promises when medications are dispensed through contract pharmacies has harmed and will continue to harm the patients of the proposed intervenors, according to the motion

In its opposition, HHS challenged the fundamental ability of covered entities to intervene.

“(T)he Supreme Court unequivocally has held that covered entities, like those seeking to intervene here, cannot litigate purported 340B violations because ‘Congress vested authority to oversee compliance with the 340B Program in HHS and assigned no auxiliary enforcement role to covered entities,’” HHS contended, citing Astra USA Inc. v. Santa Clara County.

HHS also argued that the court should address its forthcoming motion to dismiss, the deadline to file of which is April 27, HHS noted. In order to intervene in a case, subject-matter jurisdiction must exist, and HHS said it will argue in its motion that this court lacks jurisdiction over the interpretation of 340B in HHS’s advisory opinion.

Further, HHS said that the entities need not intervene because their interests in this litigation align with those of HHS.

“The Covered Entities have no independent right to defend the legality of government action, and their interests are adequately represented because the government is defending this suit vigorously and seeks the same outcome as would proposed intervenors—a complete denial of relief for the plaintiffs.”

If the covered entities would like to opine, the opposition said, they ought to file an amicus brief instead.

Pashman Stein Walder Hayden P.C. and Zuckerman Spaeder LLP are representing the proposed intervenors. King & Spalding is representing Novo Nordisk.