543 F.Supp.3d 47
D. Del.2021Background
- The 340B Program (established in 1992 and administered by HRSA/HHS) requires manufacturers to make covered outpatient drugs available at or below statutory "ceiling prices" to certain "covered entities."
- HRSA guidance: 1996 Guidance allowed each covered entity to use one contract pharmacy; 2010 Guidance permitted covered entities to use an unlimited number of contract pharmacies.
- In Aug. 2020 AstraZeneca announced it would limit 340B distribution to covered entities with in‑house pharmacies (if they use no contract pharmacy) or to covered entities without in‑house pharmacies using only a single contract pharmacy.
- On Dec. 30, 2020 HHS General Counsel issued an advisory Opinion concluding manufacturers must offer 340B pricing even when covered entities use contract pharmacies (including unlimited contract pharmacies) and treating contract pharmacies as agents for this purpose.
- AstraZeneca sued under the APA challenging the Opinion as procedurally and substantively unlawful; HHS moved to dismiss or for summary judgment. The Court found the Opinion final and timely challenged, and held the Opinion is not the only permissible interpretation of the 340B statute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Reviewability/finality of the Opinion | AstraZeneca: Opinion is a final agency action that imposes obligations and is reviewable | HHS: Opinion merely restates longstanding position and is not final; challenge is untimely | Court: Opinion is final and reviewable; it consummates decisionmaking and has legal consequences; challenge was timely |
| Whether HHS violated APA notice‑and‑comment procedures | AstraZeneca: Opinion functionally changed agency policy and required notice‑and‑comment | HHS: Opinion only restates prior guidance; no new rulemaking required | Court denied dismissal on procedural grounds (Opinion materially differs from prior guidance); further relief to be determined |
| Whether Opinion exceeded statutory authority (interpretation of §256b) | AstraZeneca: Statute is silent/ambiguous about contract pharmacies; manufacturers need not deliver to unlimited contract pharmacies | HHS: Statute's plain meaning requires manufacturers to offer 340B pricing regardless of contract pharmacy arrangements | Court: Statute is ambiguous on pharmacies; HHS's view is permissible but not compelled; Opinion wrongly treated its interpretation as compelled by Congress |
| Claim re: HRSA posting AstraZeneca's notice on website | AstraZeneca sought posting; argued HRSA unlawfully withheld action | HHS: No statutory duty to post, so no reviewable action | Court: AstraZeneca abandoned this claim; it is dismissed |
Key Cases Cited
- Bennett v. Spear, 520 U.S. 154 (1997) (two‑part test for final agency action)
- BedRoc Ltd., LLC v. United States, 541 U.S. 176 (2004) (start‑and‑end the inquiry with statutory text if unambiguous)
- Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077 (D.C. Cir. 2001) (district court acts as appellate tribunal in APA review)
- Marshall Cnty. Health Care Auth. v. Shalala, 988 F.2d 1221 (D.C. Cir. 1993) (APA review is a question of law)
- Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (2016) (agency must acknowledge and justify changed positions)
- Peter Pan Bus Lines, Inc. v. Fed. Motor Carrier Safety Admin., 471 F.3d 1350 (D.C. Cir. 2006) (no deference where agency wrongly believes interpretation is compelled)
- Am. Lung Ass'n v. EPA, 985 F.3d 914 (D.C. Cir. 2021) (vacatur and remand where agency gives unjustified assumptions)
- Univ. of Med. & Dentistry of N.J. v. Corrigan, 347 F.3d 57 (3d Cir. 2003) (agency definitive positions may imply immediate compliance)