Court Rules in Favor of Manufacturers in 340B Contract Pharmacy Case

Earlier today, the US Court of Appeals for the Third Circuit issued a much-anticipated decision in one of the 340B contract pharmacy cases. The decision is a win for drug manufacturers who have sought to restrict access to 340B prices on drugs dispensed through contract pharmacy arrangements.

The Court found that the 340B statute does not require delivery of 340B drugs to an unlimited number of contract pharmacies because (1) the text of the statute is silent about delivery, (2) structural clues confirm that the statute does not require unlimited delivery, and (3) neither drafting history nor legislative purpose compels a different result.

Additionally, the Court found that the 340B Administrative Dispute Resolution Rule that was published in December 2020 is lawful. The US Department of Health and Human Services has since published a new proposed rule that would replace the December 2020 one.

This is the first of three decisions in 340B contract pharmacy appeals cases. The remaining two are expected at any time. We are continuing to track more than 40 cases in courts across the country related to a wide range of 340B program issues. Our summaries are compiled in the 340B Litigation Tracker, a subscription product from McDermott+Consulting.