HHS to judge: Don't revisit the 340B lawsuit we lost

The Obama administration and the pharmaceutical industry are still battling in court over HHS' authority to compel drugmakers to grant 340B discounts on orphan drugs in some instances.

In the latest volley, HHS is asking a federal judge to decline to revisit his May ruling that the administration overstepped its rulemaking authority. HHS argues that the ruling—even though the government technically lost—allows officials to reissue the same policy in a different form. The drug manufacturers are asking the judge to clarify that he really intended to block the policy.

A provision of the Patient Protection and Affordable Care Act excluded orphan drugs from the 340B drug-discount program. HHS, however, has interpreted that exclusion to apply only when the pricey drugs are used to treat the rare conditions that they were developed and approved to target.

The Pharmaceutical Research and Manufacturers of America last year filed a lawsuit arguing that HHS overstepped its rulemaking authority by limiting the exclusion. The court agreed. But the Health Resources and Service Administration, the HHS agency that oversees the 340B program, later said it would stand by its interpretation and continue requiring the discounts.

HHS is now making the argument that it can put out an interpretative rule or guidance that makes the same requirements as the legislative rule that the court struck down, according to court documents filed July 14 in U.S. District Court for the District of Columbia.

“The agency's position on this issue has been correct all along,” said a spokesman for the Safety Net Hospitals for Pharmaceutical Access, a trade group for hospitals participating in the 340B program. “We agree that HHS can legally move forward without additional action by this court.”

A representative for PhRMA declined to comment, citing ongoing litigation.

The lawsuit is one of one aspect of an ongoing and contentious battle over how the 340B program is used. Rapid expansion under the Affordable Care Act has been a concern for drug companies that are required to provide discounts up to 50% on certain outpatient drugs. Some lawmakers, meanwhile, have said that some hospitals are inappropriately using revenue and savings from the program.

Even as both sides wait for future action from the court related to the lawsuit, other questions remain about whether the suit will further delay the release of proposed regulations that were expected in June. The so-called mega-reg will likely clarify other parts of the 340B program. David Ivill, a partner with law firm McDermott Will & Emery, said he expects that the regulations will not be released before the end of the year.

Follow Jaimy Lee on Twitter: @MHjlee