{"id":57808,"date":"2025-06-10T16:14:00","date_gmt":"2025-06-10T16:14:00","guid":{"rendered":"https:\/\/www.dinsmore.com\/?post_type=publications&#038;p=57808"},"modified":"2025-12-31T15:48:42","modified_gmt":"2025-12-31T15:48:42","slug":"d-c-district-court-declines-manufacturers-unilateral-efforts-to-move-forward-with-proposed-340b-rebate-models","status":"publish","type":"publications","link":"https:\/\/www.dinsmore.com\/publications\/d-c-district-court-declines-manufacturers-unilateral-efforts-to-move-forward-with-proposed-340b-rebate-models\/","title":{"rendered":"D.C. District Court Declines Manufacturers\u2019 Unilateral Efforts to Move Forward with Proposed 340B Rebate Models"},"content":{"rendered":"\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/www.dinsmore.com\/wp-content\/uploads\/2025\/06\/rebate-Header.jpg\" alt=\"D.C. District Court Declines Manufacturers\u2019 Unilateral Efforts to Move Forward with Proposed 340B Rebate Models\"\/><\/figure>\n\n\n\n<p>Last month, the United States District Court for the District of Columbia (the \u201cDistrict Court\u201d) evaluated Motions for Summary Judgment concerning drug manufacturers\u2019 efforts to unilaterally pay 340B Program discounts in the form of a rebate. The drug manufacturer plaintiffs, including a technology company that hopes to implement manufacturer-developed rebate processes, brought actions against the U.S. Department of Health and Human Services (\u201cHHS\u201d) and the Health Resources and Services Administration (\u201cHRSA\u201d) requesting injunctive and declaratory relief. The American Hospital Association and other hospitals filed amicus briefs in opposition. <a href=\"https:\/\/www.aha.org\/system\/files\/media\/file\/2025\/03\/aha-others-amicus-brief-opposing-eli-lilly-bristol-meyers-squibb-and-novartis-340b-rebate-models-3-4-2025.pdf\">[1]<\/a><\/p>\n\n\n\n<p>Overall, the District Court\u2019s holding appears to be a step in the right direction for 340B covered entities, as the District Court recognized both the preapproval power of HRSA and the potential pitfalls of implementing rebate methodologies for the delivery of 340B Program discounts.&nbsp;<\/p>\n\n\n\n<p>At the core of these cases, the plaintiffs claimed that HRSA acted beyond the scope of its authority under the 340B statute by requiring them to obtain preapproval for any 340B rebate model, and that HRSA violated the Administrative Procedures Act by \u201carbitrarily and capriciously . . . imposing this requirement and failing to approve [plaintiff\u2019s] rebate models.\u201d <a href=\"#_ftn2\" id=\"_ftnref2\">[2]<\/a><\/p>\n\n\n\n<p>As to the first claim, the District Court held that HRSA\u2019s preapproval requirement was within the scope of its statutory authority under the 340B Program statute. The District Court cited the 340B Program statute\u2019s clear language providing HRSA authority to determine how a 340B Program discount must be paid, and the agency\u2019s issuance of prior guidance in \u201cinterpreting and implementing pricing\u201d as evidence of the agency\u2019s authority.<a href=\"#_ftn3\" id=\"_ftnref3\">[3]<\/a><\/p>\n\n\n\n<p>Regarding the second claim, the District Court declined to assess HRSA\u2019s initial evaluation of four rebate models proposed by three drug manufacturers and the technology company. The District Court reasoned that such an assessment would be \u201cpremature,\u201d given that HRSA has not yet rejected these models and is still in the process of evaluating the rebate programs in accordance with its preapproval process.<a href=\"#_ftn4\" id=\"_ftnref4\">[4]<\/a> As such, the District Court\u2019s decision does not opine on the merits of the plaintiffs\u2019 claims related to HRSA\u2019s substantive review of their proposals. This means that following HRSA\u2019s approval or rejection of these programs, drug manufacturers could in theory challenge the sufficiency of HRSA\u2019s evaluation and reasoning.<\/p>\n\n\n\n<p>The District Court\u2019s denial of summary judgment in these matters is important for many reasons.&nbsp; Chief among them, is that the plaintiffs\u2019 proposed rebate models (if implemented) could swiftly shift drug costs to covered entities, forcing them to pay a higher up-front price and creating substantial cash flow concerns. The District Court seemingly recognized these potential financial issues in coming to its decision. However, Judge Dabney Friedrich made it clear that if HRSA does reject rebate model proposals, it must give adequate reasoning and address manufacturers\u2019 \u201cvalid concerns\u201d surrounding duplicate discounts and diversion.<a href=\"#_ftn5\" id=\"_ftnref5\">[5]<\/a> In this vein, the District Court also partially granted one other plaintiff\u2019s Motion for Summary Judgment on the basis that HRSA\u2019s rejection of its credit rebate proposal lacked sufficient reasoning. We anticipate the District Court\u2019s decision will not only invite further litigation concerning this plaintiff\u2019s proposed rebate model, but potentially litigation concerning other models considered by HRSA and any guidance it may issue on this topic from time to time.<\/p>\n\n\n\n<p>If you are interested in learning more about 340B Program-related rebate proposals or the 340B Program in general, please contact your Dinsmore attorney.&nbsp;<\/p>\n\n\n\n<p>*Emily Veltri is a summer associate and not yet licensed to practice law.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><a href=\"#_ftn1\">[1]<\/a><a href=\"https:\/\/www.aha.org\/system\/files\/media\/file\/2025\/03\/aha-others-amicus-brief-opposing-eli-lilly-bristol-meyers-squibb-and-novartis-340b-rebate-models-3-4-2025.pdf\">&nbsp;United States District Court for the District of Columbia AHA Amicus Brief in Opposition<\/a><\/p>\n\n\n\n<p><a href=\"#_ftnref2\" id=\"_ftn2\">[2]<\/a> <em>Eli Lilly &amp; Co. v. Kennedy<\/em>, No. 24-cv-03220 (DLF), 2025 U.S. Dist. LEXIS 93066, at *12 (D.D.C. May 15, 2025).<\/p>\n\n\n\n<p><a><\/a><a href=\"#_ftnref3\" id=\"_ftn3\">[3]<\/a> <em>Id.<\/em><\/p>\n\n\n\n<p><a href=\"#_ftnref4\" id=\"_ftn4\">[4]<\/a> <em>Id.<\/em><\/p>\n\n\n\n<p><a href=\"#_ftnref5\" id=\"_ftn5\">[5]<\/a> <em>Id.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last month, the United States District Court for the District of Columbia (the \u201cDistrict Court\u201d) evaluated Motions for Summary Judgment concerning drug manufacturers\u2019 efforts to unilaterally pay 340B Program discounts in the form of a rebate. The drug manufacturer plaintiffs, including a technology company that hopes to implement manufacturer-developed rebate processes, brought actions against the\u2026<\/p>\n","protected":false},"author":8,"featured_media":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"tags":[],"publication-type":[12],"class_list":["post-57808","publications","type-publications","status-publish","format-standard","hentry","publication-type-legal-alerts"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.5 (Yoast SEO v26.9) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>D.C. District Court Declines Manufacturers\u2019 Unilateral Efforts to Move Forward with Proposed 340B Rebate Models - Dinsmore &amp; Shohl<\/title>\n<meta name=\"description\" content=\"D.C. 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