Health Law Highlights

D.C. Circuit Holds 340B Program Does Not Prohibit Drug Manufacturers from Imposing Contract Pharmacy Restrictions

Summary of article from Foley Hoag LLP, by Patrick Brennan, Andrew London, Ross Margulies, Kian Azimpoor:

On May 21, 2024, the U.S. Court of Appeals for the District of Columbia Circuit affirmed a lower court’s decision in United Therapeutics Corporation v. Carole Johnson and Novartis Pharmaceuticals v. Carole Johnson, rejecting the government’s position that the 340B statute prohibits drug manufacturers from imposing contractual conditions on drug distribution. The court upheld that the manufacturers’ conditions imposed on contract pharmacies did not violate the 340B statute, but noted that some restrictions might. This follows a similar decision by the Third Circuit in Sanofi Aventis U.S. LLC v. HHS. There is still an ongoing case in the Seventh Circuit that could influence whether the case goes to the Supreme Court or if the Health Resources and Services Administration (HRSA) reconsiders its contract pharmacy policy. This decision is a significant win for drug manufacturers, but its immediate impact on the Section 340B program remains uncertain pending other appellate court rulings and potential Supreme Court review.