340B Delay: Memorandum in Opposition to Defendants' Motion to Dismiss and Reply in Support of Summary Judgment

Memorandum in Opposition to Defendants' Motion to Dismiss and Reply in Support of Summary Judgment

Proposed Order

Exhibits

THE AMERICAN HOSPITAL ASSOCIATION, et al., Plaintiffs, v. THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants. Case No. 18-2112 (JDB)

In the mid-2000s, the Office of the Inspector General of the Department of Health and Human Services (“HHS”) issued a series of reports identifying various shortcomings of the 340B Drug Pricing Program, including the absence of a clear methodology for calculating ceiling prices, the secretive nature of ceiling prices, and the absence of enforcement by HHS. See Mem. In Supp. of Pls.’ Mot. for Summ. J., ECF No. 2-1 (“Pls.’ S.J. Mem.”) at 3-6. That drumbeat of criticism led Congress to address each of those problems. To improve the accuracy of ceiling prices, Congress required HHS to develop a “system to . . . verify the accuracy of ceiling prices calculated by manufacturers,” including to enact “precisely defined standards and methodology for the calculation of ceiling prices.” 42 U.S.C § 256b (d)(1)(B)(i). To improve transparency, Congress required that 340B providers be given online access to “the applicable ceiling prices for covered outpatient drugs as calculated and verified by the Secretary.” Id. § 256b(d)(1)(B)(iii). And to improve compliance, Congress required HHS to impose “sanctions in the form of civil monetary penalties” against drug companies that “knowingly and intentionally” overcharge 340B
providers. Id. § 256b(d)(1)(A).

Each of those statutory mandates was designed to protect 340B providers from the problems that had plagued them – and that continue to plague them because HHS has repeatedly delayed implementing the Final 340B Rule, 82 Fed. Reg. 1,210 (January 5, 2017). Those harms also give Plaintiffs standing to challenge HHS’s impermissible delays in complying with Congress’s mandate. Meanwhile, on the merits, Defendants HHS and the Secretary of HHS have apparently concluded that their repeated, extended delays were unwarranted, and thus they have declined to defend them.

The Court should deny Defendants’ motion to dismiss, grant judgment for Plaintiffs, and issue an order directing HHS to make the Final 340B rule effective by January 1, 2019, and to post the ceiling prices for 340B drugs by April 1, 2019, at the latest.