Drugmakers prevail in dispute over U.S. discount drug program By Reuters – Stock Market News

Drugmakers prevail in dispute over U.S. discount drug program By Reuters

© Reuters. FILE PHOTO: Illustrative photo shows various medicinal pills in their original packaging in Brussels, Belgium August 9, 2019. REUTERS/Yves Herman/Illustration/File Photo

By Brendan Pierson

(Reuters) – Drugmakers can limit healthcare providers’ use of outside pharmacies for dispensing drugs under a federal drug rebate scheme, an appeals court ruled on Monday federal.

The decision of a three-judge panel of the 3rd US Circuit Court of Appeals based in Philadelphia is a victory for Sanofi (NASDAQ:) SA, Novo Nordisk (NYSE:) AS and AstraZeneca (NASDAQ:) PLc. The companies had sued the US Department of Health and Human Services (HHS) after it ordered them to stop restricting sales of discount drugs to so-called contract pharmacies.

Spokespersons for the drugmakers said they were happy with the decision. An HHS spokesperson said the agency is reviewing it.

The case centers on the federal 340B program, in which drugmakers offer rebates to eligible healthcare providers who serve low-income populations. Drug manufacturers are required to participate in the 340B program in order to receive funds from government health insurance programs such as Medicare and Medicaid.

Many providers eligible for the program do not have an in-house pharmacy and therefore contract with outside pharmacies. In 2010, HHS issued new guidelines stating that 340B providers could use an unlimited number of contracted pharmacies, replacing previous guidelines that they could only use one of those pharmacies.

In 2020, drug manufacturers began limiting sales of 340B drugs to contract pharmacies. They said these pharmacies had become overused, leading to illegal diversion of drugs, and in some cases, drug manufacturers were offering double discounts on the same drug.

Sanofi, Novo Nordisk and AstraZeneca all continued to allow 340B providers without in-house pharmacies to use a single contracted pharmacy. Sanofi and Novo Nordisk have also allowed the use of multiple pharmacies in some cases.

HHS ordered them to stop, saying the new policies weren’t allowed under the 340B program. But 3rd Circuit Judge Stephanos Bibas said Monday that the federal law behind the program said nothing about contract pharmacies.

“Legal duties do not arise from silence,” he writes.

The decision reverses an order from a New Jersey federal judge against Sanofi and Novo Nordisk, while affirming an order from a Delaware judge in favor of AstraZeneca.

Drugmakers prevail in dispute over U.S. discount drug program By Reuters

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