A pharmaceutical company is appealing a federal judge’s recent ruling that upheld a Louisiana law requiring drug makers to provide discounts on certain outpatient drugs dispensed at community pharmacies under the terms of a 1992 federal statute.
AstraZeneca Pharmaceuticals filed the notice of appeal to the U.S. Fifth Circuit in the wake of Judge Robert Summerhays’ Sept. 30 opinion rejecting challenges to Louisiana’s Act 358. The new law bars drug makers from interfering when qualifying pharmacies dispense so-called 340B drugs.
Section 340B of the federal Public Health Service Act mandates that pharmaceutical companies offer discounts on outpatient drugs to Louisiana hospitals and other “covered entities” when they are dispensed by “contract pharmacies,” according to the Sept. 30 opinion in the Western District of Louisiana. By voluntarily taking part in the Medicaid and Medicare Part B programs, the drug companies are required to offer discounts on certain outpatient drugs to health-care providers for underserved or low-income populations, the opinion says.
The legal dispute was sparked after the federal Department of Health and Human Services (HHS) ruled that pharmaceutical companies cannot limit contracts between covered entities and retail pharmacies under contract with them in the provision of 340B drugs. Three separate lawsuits were filed by plaintiffs AstraZeneca, AbbVie Inc. and the Pharmaceutical Research Manufacturers of America (PhRMA) against Louisiana Attorney General Liz Murrill, challenging the HHS decision on constitutional and other grounds.
In his decision covering the three cases, Summerhays rejected the plaintiffs’ arguments that Louisiana’s Act 358 was a violation of the U.S. Constitution’s takings clause or contracts clause – or was unconstitutional due to preemption of federal law over state law or due to vagueness.
“Act 358 only prevents pharmaceutical companies from restricting the ability of covered entities to contract with multiple pharmacies to dispense Section 340B drugs to their patients,” the opinion states. “Because Act 358 does not compel plaintiffs to directly sell 340B drugs to pharmacies, it is not a taking for purposes of the takings clause.”
While AstraZeneca is moving forward on its appeal, it remains unclear how the other plaintiffs will proceed in the litigation.
“We disagree with the court’s ruling and are weighing our next steps,” the deputy vice president of public affairs at PhRMA, Nicole Longo, said in a statement emailed to the Louisiana Record.
AstraZeneca’s notice of appeal was filed in the Western District of Louisiana on Monday.
In a “Statement of Material Facts” filed with the district court last year, AstraZeneca stressed that although the point of Section 340B was to allow covered health care providers the ability to obtain lower drug prices for their patients, Congress did not include contract pharmacies in the list of “covered entities.”
“In drafting what would become Section 340B, Congress considered proposed language that would have permitted covered entities to dispense 340B-discounted drugs through on-site contractors providing pharmacy services,” the AstraZeneca filing states. “But that provision was not enacted.”
Critics have also said that the use of contract pharmacies as laid out in the HHS opinion would lead to abuse and profiteering.
Under Act 358, the state’s attorney general has the enforcement authority to prosecute violations of the act through the provisions of the Louisiana Unfair Trade Practices and Consumer Protection Law.