Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 1 of 17 PageID #: 1130
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`UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF INDIANA
`INDIANAPOLIS DIVISION
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`Case No. 1:21-cv-81-SEB-MJD
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`ELI LILLY AND COMPANY,
`Lilly Corporate Center
`893 Delaware Street
`Indianapolis IN 46225, et al.,
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`Plaintiffs,
`
`–v–
`
`NORRIS COCHRAN
`200 Independence Avenue, SW
`Washington, DC 20201, et al.,
`
`
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`Defendants.
`
`
`
`
`THE AMERICAN HOSPITAL ASSOCIATION, 340B HEALTH, AMERICA’S
`ESSENTIAL HOSPITALS, THE ASSOCIATION OF AMERICAN MEDICAL
`COLLEGES, THE CHILDREN’S HOSPITAL ASSOCIATION, AND THE AMERICAN
`SOCIETY OF HEALTH-SYSTEM PHARMACIST’S MEMORANDUM IN SUPPORT
`OF THEIR MOTION TO INTERVENE
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`Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 2 of 17 PageID #: 1131
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`TABLE OF CONTENTS
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`TABLE OF AUTHORITIES .......................................................................................................... ii
`BACKGROUND ............................................................................................................................ 3
`ARGUMENT .................................................................................................................................. 6
`I.
`PROPOSED INTERVENORS HAVE A RIGHT TO INTERVENE UNDER
`RULE 24(A)........................................................................................................................ 6
`A.
`Timeliness ............................................................................................................... 7
`B.
`Interest..................................................................................................................... 8
`C.
`Interest Impaired ..................................................................................................... 9
`D.
`Inadequate Representation .................................................................................... 10
`ALTERNATIVELY, PROPOSED INTERVENORS SHOULD BE PERMITTED
`TO INTERVENE UNDER RULE 24(B). ........................................................................ 11
`CONCLUSION ............................................................................................................................. 12
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`
`II.
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`i
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`Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 3 of 17 PageID #: 1132
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`TABLE OF AUTHORITIES
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`CASES
`Am. Hosp. Ass’n v. Cochran,
`No. 4:20-cv-8806 (N.D. Cal.) ............................................................................................. 10–11
`
`Am. Std. Ins. Co. of Wis. v. Rogers,
`123 F. Supp. 2d 461 (S.D. Ind. 2000) ......................................................................................... 6
`
`Bond v. Utreras,
`585 F.3d 1061 (7th Cir. 2009) .................................................................................................. 11
`
`Buquer v. City of Indianapolis,
`No. 1:11-cv-708, 2013 WL 1332137 (S.D. Ind. Mar. 28, 2013) ................................................ 6
`
`Driftless Area Land Conservancy v. Huebsch,
`969 F.3d 742 (7th Cir. 2020) ...................................................................................................... 6
`
`Elouarrak v. Firstsource Advantage, LLC,
`No. 1:19-cv-3666, 2020 WL 291364 (N.D. Ill. Jan. 21, 2020) .............................................. 6, 8
`
`Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc.,
`528 U.S. 167, 181 (2000) ............................................................................................................ 8
`
`Joe Sanfelippo Cabs Inc. v. City of Milwaukee,
`No. 14-cv-1036, 2015 WL 1728123 (E.D. Wis. Apr. 15, 2015) .............................................. 11
`
`Ligas ex rel. Foster v. Maram,
`478 F.3d 771 (7th Cir. 2007) .................................................................................................... 10
`
`Lopez-Aguilar v. Marion Cty. Sheriff’s Dep’t,
`924 F.3d 375 (7th Cir. 2019) .................................................................................................. 6, 7
`
`Michigan v. U.S. Army Corps of Eng’r’s,
`No. 10-cv-4457, 2010 WL 3324698 (N.D. Ill. Aug. 20, 2010) .............................................. 6–7
`
`Nat’l Ass’n of Cmty. Health Centers v. Azar,
`No. 1:20-cv-3032 (D.D.C.) ......................................................................................................... 4
`
`Nat’l Fire Ins. Co. of Hartford v. Tri-State Hose & Fitting, Inc.,
`No. 06 C 5256, 2007 WL 9814578 (N.D. Ill. June 21, 2007) .................................................... 8
`
`Planned Parenthood of Wis., Inc. v. Kaul,
`942 F.3d 793 (7th Cir. 2019) ................................................................................................ 6, 11
`
`Randall v. Rolls-Royce Corp.,
`No. 1:06-cv-860, 2010 WL 1948222 (S.D. Ind. May 13, 2010) .............................................. 11
`
`ii
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`Ryan White Clinics for 340B Access v. Azar,
`No. 1:20-cv-2906 (D.D.C.) ......................................................................................................... 4
`
`Sokaogon Chippewa Cmty. v. Babbitt,
`214 F.3d 941 (7th Cir. 2000) ...................................................................................................... 7
`
`State v. City of Chicago,
`912 F.3d 979 (7th Cir. 2019) ...................................................................................................... 7
`
`Trbovich v. United Mine Workers of Am.,
`404 U.S. 528 (1972) .................................................................................................................. 10
`
`Walker v. Floyd Cty., Ind.,
`No. 4:07-cv-14, 2009 WL 2222886 (S.D. Ind. July 22, 2009) ................................................. 11
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`STATUTES
`42 U.S.C. § 256b ............................................................................................................................. 1
`
`OTHER AUTHORITIES
`2019 340B Health Annual Survey,
`https://www.340bhealth.org/files/340B-Health-Survey-Report-2019-FINAL.pdf. ................... 2
`
`Advisory Opinion 20-06 on Contract Pharmacies Under the 340B Program
`(Dec. 30, 2020) ........................................................................................................................... 5
`
`Cathy Kelly, 340B Dispute Resolution Process On Ice As Feuds Between Pharma,
`Providers, HHS Heat Up, Pink Sheet,
`https://pink.pharmaintelligence.informa.com/PS143652/340B-Dispute-Resolution-
`Process-On-Ice-As-Feuds-Between-Pharma-Providers-HHS-Heat-Up (last visited
`February 16, 2021) .................................................................................................................... 10
`
`Letter from Krista M. Pedley to Maureen Testoni (Dec. 9, 2020) ................................................ 10
`
`Letter from Robert Charrow to Anat Hakim (Sept. 21, 2020) ...................................................... 10
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`Letter Re: Availability of 340B-Priced Cialis® (tadalafil) Erectile Dysfunction
`Presentations to Contract Pharmacies, Lilly (May 18, 2020),
`https://www.dropbox.com/s/ttjou3z9zo7q33w/Lilly%201etter%20to%2OHRSA%2005
`.18.2020.pdall=0 ......................................................................................................................... 3
`
`Letter Re: Pharmaceutical Company Actions Undermining 340B Drug Pricing Program,
`AEH (Aug. 28, 2020) ................................................................................................................ 10
`
`Letter Re: Recent Actions by Pharmaceutical Manufacturers Eli Lilly and Merck
`Impacting 340B Covered Entities, 340B Coalition (July 16, 2020) ......................................... 10
`
`Letter Re: United Therapeutics Corporation 340B Contract Pharmacy Policy Effective
`November 20, 2020, United Therapeutics Corp. (Nov. 18, 2020),
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`iii
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`https://www.dropbox.com/s/swyrookjcwqxe58/United%20Therapeutics%20Letter%20
`11.20.2020%20%281%29.pdf?dl=0 ........................................................................................... 4
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`Letter, AHA (July 30, 2020) ......................................................................................................... 10
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`Letter, AHA (Oct. 16, 2020) ......................................................................................................... 10
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`Limited Distribution Plan Notice for Eli Lilly and Company Products,
`https://www.340bhealth.org/files/200901_Eli_Lilly_and_Company_Limited_Distributi
`on_Plan_Public_Notice.pdf ........................................................................................................ 4
`
`New policy related to the 340B program, Novartis (Oct. 30, 2020),
`https://www.novartis.us/news/statements/new-policy-related-340b-program ........................... 4
`
`Notice Regarding Limitation on Hospital Contract Pharmacy Distribution, Novo Nordisk
`(Dec. 1, 2020), https://www.340bhealth.org/files/Novo_Nordisk_12-1-2020.pdf ..................... 4
`
`Sanofi Notice (July 2020), https://www.340bhealth.org/files/Sanofi_Notice_10_1_20.pdf;
`Letter Re: 340B Contract Pharmacy Pricing, AstraZeneca (Aug. 17, 2020),
`https://www.dropbox.com/s/gethwns6m7zzkoh/AstraZeneca%20Retail%20Communic
`ation%20-%20340B%20-%20Final.pdfld1=0 ............................................................................ 4
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`RULES
`Fed. R. Civ. P. 24(a)(2) ............................................................................................................ 6, 11
`
`REGULATIONS
`340B Drug Pricing Program; Administrative Dispute Resolution Regulation,
`85 Fed. Reg. 80,632 (Dec. 14, 2020) (to be codified at 42 C.F.R. pt. 10) .................................. 5
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`iv
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`Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 6 of 17 PageID #: 1135
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`The American Hospital Association, 340B Health, America’s Essential Hospitals, the
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`Association of American Medical Colleges, National Association of Children’s Hospitals d/b/a the
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`Children’s Hospital Association, and American Society of Health-System Pharmacists
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`(collectively the Proposed Intervenors) move this Court, pursuant to Federal Rule of Civil
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`Procedure 24(a), or in the alternative pursuant to Federal Rule of Civil Procedure 24(b), for an
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`Order granting their Motion to Intervene in this lawsuit regarding the 340B Drug Discount
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`Program.
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`The 340B Program, established by section 340B of the Public Health Service Act, 42
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`U.S.C. § 256b, requires, as a condition of participating in Medicaid and Medicare Part B, that
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`pharmaceutical manufacturers sell outpatient drugs at a discounted price (no more than the 340B
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`ceiling price) to certain public and not-for-profit hospitals, community health centers, and other
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`federally funded clinics that serve communities with a large numbers of low income patients
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`(“340B providers” (described in the statute as “covered entities”)) in order to increase the funding
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`these entities have available to meet the needs of their patients.
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`Since the beginning of the program, 340B providers have dispensed covered outpatient
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`drugs to their patients through in-house pharmacies and through community pharmacies that have
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`entered into written contracts with hospitals and other providers (“contract pharmacies”). Under
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`such arrangements, the 340B provider orders and pays for the 340B drugs, which are then shipped
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`to the contract pharmacy where the drugs are dispensed to the 340B provider’s patients. For more
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`than 20 years, all drug companies, including Eli Lilly and Company (“Lilly”), worked
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`cooperatively with 340B providers that dispensed discounted drugs to their patients through
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`contract pharmacies. Overall, a quarter of the benefit that 340B hospitals receive from the 340B
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`discount comes from 340B drugs dispensed through contract pharmacy arrangements. This varies
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`1
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`Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 7 of 17 PageID #: 1136
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`by hospital type, with Critical Access Hospitals (small hospitals in rural areas) reporting that an
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`average of 51% of their 340B benefit from the 340B discount comes from drugs distributed
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`through contract pharmacies, while Disproportionate Share Hospitals (DSH hospitals) (hospitals
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`that serve a significantly disproportionate number of low-income patients) report that an average
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`of 61% of their 340B benefit from the 340B discount comes from drugs distributed through
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`contract pharmacies.1
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`Plaintiffs’ complaint requests the Court to adopt an implausible interpretation of the 340B
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`statute that would deny Proposed Intervenors’ members access to drug discounts for drugs
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`dispensed to their patients at most contract pharmacies. Intervention by Proposed Intervenors is
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`necessary to protect their members’ interests in this lawsuit and to ensure that patients have adequate
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`access to 340B drugs — which it is not apparent the government defendant will sufficiently do —
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`and to defend the correct interpretation of the 340B statute to include the availability of discounts
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`when distribution is through contract pharmacies. The Proposed Intervenors have standing to
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`intervene because at least one or more of each association’s members has been and continues to
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`be significantly harmed by Eli Lilly’s failure to offer 340B drug discounts to 340B covered entities
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`when drugs are dispensed through contract pharmacies.
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`Proposed Intervenors meet the standard for intervention of right. First, Proposed
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`Intervenors’ members clearly have a direct stake in the outcome. If Plaintiffs were to obtain a
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`ruling adopting their (incorrect) interpretation of the statute, Proposed Intervenors’ members’
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`340B savings will continue to diminish, seriously hampering their ability to serve vulnerable
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`communities as Congress intended. Moreover, the drug companies that have not already adopted
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`policies comparable to Lilly’s would be incented to adopt one, resulting in even greater losses of
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`1 See Ex. A Testoni Decl., ECF No. 39-1, ¶¶ 4–6.
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`2
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`Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 8 of 17 PageID #: 1137
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`the 340B discounts and the services to the communities those discounts fund. Likewise, there is
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`no question that an adverse outcome in this case would impair Proposed Intervenors’ members’
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`interests—not just in the correct interpretation and application of federal law, but in receiving the
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`discounts to which they are entitled. Defendants cannot adequately defend Proposed Intervenors’
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`interests. In fact, to date, the Department of Health and Human Services (HHS) has refused to take
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`any action to stop Lilly from denying Proposed Intervenors’ members the statutory discounts to
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`which they are entitled. Alternatively, because Proposed Intervenors and Plaintiffs both seek to
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`have this Court resolve the same question of law – namely whether the 340B statute requires
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`Plaintiffs to provide covered entities covered outpatient drugs at or below the 340B ceiling price
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`when dispensed through a contract pharmacy – Proposed Intervenors also meet the standard for
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`permissive intervention. Accordingly, the Court should grant Proposed Intervenors' motion to
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`intervene.
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`BACKGROUND
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`Seven months ago, Lilly became the first drug company to abandon its 20-year compliance
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`with the statutory requirement to provide 340B providers with drugs at or below 340B ceiling
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`prices when dispensed through contract pharmacies. In May 2020, Lilly floated the idea of
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`applying its “no contract pharmacy” policy to a single drug, Cialis® with the division of HHS that
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`administers the 340B program, the Health Resources and Services Administration (HRSA).2 When
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`HRSA failed even to inform Lilly that this practice would be illegal,3 Lilly was emboldened to
`
`
`2 Letter Re: Availability of 340B-Priced Cialis® (tadalafil) Erectile Dysfunction Presentations to Contract Pharmacies,
`Lilly
`(May
`18,
`2020),
`https://www.dropbox.com/s/ttjou3z9zo7q33w/Lilly%201etter%20to%2OHRSA%2005.18.2020.pdall=0.
`3 Ex. C to Pls.’ Am. Compl., ECF No. 17-4.
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`3
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`expand its discount denials to all of its drugs.4 Not surprisingly, to date, five other drug companies
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`followed suit with similar policies.5
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`HRSA’s inaction precipitated three lawsuits. Two lawsuits challenged HRSA’s failure to
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`issue an Administrative Dispute Resolution (ADR) regulation, which they alleged was needed to
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`resolve the disagreement over contract pharmacy arrangements. See Ryan White Clinics for 340B
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`Access v. Azar, No. 1:20-cv-2906 (D.D.C.); Nat’l Ass’n of Cmty. Health Ctrs. v. Azar, No. 1:20-
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`cv-3032 (D.D.C.). In addition, Proposed Intervenors and three hospitals filed suit to obtain a ruling
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`that the refusal by Lilly and the other drug companies to provide 340B providers 340B discounts
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`for drugs dispensed through contract-pharmacies was illegal and to require HHS to develop an
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`enforcement plan aimed at stopping the drug companies from continuing to implement these illegal
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`policies. See Compl., ECF No. 1, Am. Hosp. Ass’n v. Azar, No. 4:20-cv-8806 (N.D. Cal. Dec. 11,
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`2020). Lilly and three of the other drug companies with similar contract pharmacy policies filed
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`motions to intervene in those cases. Eli Lilly & Co.’s Mot. to Intervene as Def., ECF No. 12, Ryan
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`White Clinics, No. 1:20-cv-2906 (D.D.C. Nov. 20, 2020); Mot. of Sanofi-Aventis U.S. LLC to
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`Intervene as a Def., ECF No. 13, Ryan White Clinics, No. 1:20-cv-2906 (D.D.C. Nov. 20, 2020);
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`AstraZeneca LP’s Mot. to Intervene as Def., ECF No. 29, Ryan White Clinics, No. 1:20-cv-2906
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`(D.D.C. Nov. 24, 2020); Proposed Intervenor-Def. Eli Lilly & Co.’s Not. of Mot., Mot., & Mem.
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`in Supp. of its Mot. to Intervene, ECF No. 28, Am. Hosp. Ass’n, No. 4:20-cv-8806 (N.D. Cal. Dec.
`
`
`Products,
`Company
`and
`Lilly
`Eli
`for
`Notice
`Plan
`Distribution
`Limited
`4
`https://www.340bhealth.org/files/200901_Eli_Lilly_and_Company_Limited_Distribution_Plan_Public_Notice.pdf.
`5 See Sanofi Notice (July 2020), https://www.340bhealth.org/files/Sanofi_Notice_10_1_20.pdf; Letter Re: 340B
`Contract
`Pharmacy
`Pricing,
`AstraZeneca
`(Aug.
`17,
`2020),
`https://www.dropbox.com/s/gethwns6m7zzkoh/AstraZeneca%20Retail%20Communication%20-%20340B%20-
`%20Final.pdfld1=0; New
`policy
`related
`to
`the
`340B
`program, Novartis
`(Oct.
`30,
`2020),
`https://www.novartis.us/news/statements/new-policy-related-340b-program; Letter Re: United Therapeutics
`Corporation 340B Contract Pharmacy Policy Effective November 20, 2020, United Therapeutics Corp. (Nov. 18,
`2020),
`https://www.dropbox.com/s/swyrookjcwqxe58/United%20Therapeutics%20Letter%2011.20.2020%20%281%29.pd
`f?dl=0; Notice Regarding Limitation on Hospital Contract Pharmacy Distribution, Novo Nordisk (Dec. 1, 2020),
`https://www.340bhealth.org/files/Novo_Nordisk_12-1-2020.pdf.
`
`4
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`Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 10 of 17 PageID #: 1139
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`28, 2020); AstraZeneca LP’s Not. of Mot., Mot., & Mem. in Supp. of Mot. to Intervene, ECF No.
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`35, Am. Hosp. Ass’n, No. 4:20-cv-8806 (N.D. Cal. Dec. 28, 2020); Proposed Intervenor-Def.
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`Sanofi-Aventis U.S. LLC’s Not. of Mot., Mot. to Intervene, & Mem. of P. & A. in Supp., ECF No.
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`38, Am. Hosp. Ass’n, No. 4:20-cv-8806 (N.D. Cal. Dec. 28, 2020); Proposed Intervenor-Defendant
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`Novo Nordisk Inc.’s Not. of Mot., Mot., & Mem. in Supp. of Mot. to Intervene, ECF No. 62, Am.
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`Hosp. Ass’n, No. 4:20-cv-8806 (N.D. Cal. Jan. 10, 2021).
`
`In response to these lawsuits, HHS did two things. First, it finalized the proposed ADR
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`regulation (which had been withdrawn). See 340B Drug Pricing Program; Administrative Dispute
`
`Resolution Regulation, 85 Fed. Reg. 80,632 (Dec. 14, 2020) (to be codified at 42 C.F.R. pt. 10).
`
`And, on December 30, 2020, its General Counsel issued an Advisory Opinion recognizing that the
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`340B statute requires drug companies to offer 340B discounts to covered entities for drugs
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`dispensed through contract pharmacies. See Advisory Opinion 20-06 on Contract Pharmacies
`
`Under the 340B Program (Dec. 30, 2020). Nevertheless, even though it stated that the drug
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`company policies with respect to contract pharmacies are illegal, HHS has taken no action to
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`enforce the statute. Id.
`
`In its complaint, Eli Lilly challenges the December 30, 2020 Advisory Opinion. ECF No. 1.
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`Subsequently, Eli Lilly filed an amended complaint which includes additional claims related to
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`HRSA’s ADR regulations. ECF No. 17. At the same time, Lilly filed a motion seeking to
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`preliminary enjoin HRSA from implementing the ADR regulation. ECF No. 18.
`
`Proposed Intervenors’ interest in this lawsuit relates only to Lilly’s claims regarding the
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`Advisory Opinion. Intervention in this case would thus not affect or delay this Court’s resolution
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`of Lilly’s motion for a preliminary injunction which addresses a different issue, namely the legality
`
`of the recently issued ADR regulation.
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`5
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`ARGUMENT
`
`“Intervention of Right should be permitted upon timely application ‘when the applicant
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`claims an interest relating to the property or transaction which is the subject of the action and the
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`applicant is so situated that the disposition of the action may as a practical matter impair or impede
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`the applicant’s ability to protect that interest, unless the applicant’s interest is adequately
`
`represented by existing parties.’ A party may be permitted to intervene in an action (upon timely
`
`application) when ‘an applicant’s claim or defense and the main action have a question of law or
`
`fact in common.’” Am. Std. Ins. Co. of Wis. v. Rogers, 123 F. Supp. 2d 461, 469 n.5 (S.D. Ind.
`
`2000) (quoting Fed. R. Civ. P. 24(a)(2), (b)(2)). Proposed Intervenors meet both of these standards
`
`because the Advisory Opinion, which Plaintiffs challenge, impacts their members’ right to
`
`statutory discounts under the 340B program.
`
`I.
`
`Proposed Intervenors Have a Right to Intervene Under Rule 24(a).
`
`Pursuant to Federal Rule of Civil Procedure 24(a)(2), “a party seeking intervention of right
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`must show: (1) timeliness; (2) an interest relating to the subject matter of the main action, (3) at
`
`least potential impairment of that interest if the action is resolved without the intervenor, and (4)
`
`lack of adequate representation by existing parties.” Buquer v. City of Indianapolis, No. 1:11-cv-
`
`708, 2013 WL 1332137, at *2 (S.D. Ind. Mar. 28, 2013) (citation omitted); see also Planned
`
`Parenthood of Wis., Inc. v. Kaul, 942 F.3d 793, 797 (7th Cir. 2019). “The rule is straightforward:
`
`the court must permit intervention” if those four factors are met. Driftless Area Land Conservancy
`
`v. Huebsch, 969 F.3d 742, 746 (7th Cir. 2020).
`
`As in most other circuits, the Seventh Circuit courts construe Rule 24(a)(2) motions
`
`liberally. Elouarrak v. Firstsource Advantage, LLC, No. 1:19-cv-3666, 2020 WL 291364, at *1
`
`(N.D. Ill. Jan. 21, 2020) (citing Planned Parenthood of Wis., 942 F.3d at, 799; Lopez-Aguilar v.
`
`Marion Cty. Sheriff’s Dep’t, 924 F.3d 375, 391 (7th Cir. 2019)). Courts should resolve doubts in
`
`6
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`Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 12 of 17 PageID #: 1141
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`favor of allowing intervention. Michigan v. U.S. Army Corps of Eng’r’s, No. 10-cv-4457, 2010
`
`WL 3324698, at *2 (N.D. Ill. Aug. 20, 2010).
`
`A motion to intervene as a matter of right, therefore should not be denied unless “it appears
`
`to a certainty that the intervenor is not entitled to relief under any set of facts which could be
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`proved under the complaint.” State v. City of Chicago, 912 F.3d 979, 984 (7th Cir. 2019) (citations
`
`omitted). Courts “must accept as true the non-conclusory allegations of the motion.” Id. (citations
`
`omitted). A court should not deny a motion to intervene “unless it is certain that the proposed
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`intervenor cannot succeed in its case under any set of facts which could be proved under the
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`complaint.” Michigan, 2010 WL 3324698, at *2 (citations omitted).
`
`A.
`
`Timeliness
`
`The Seventh Circuit considers four factors to determine whether a motion to intervene is
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`timely: “(1) the length of time the intervenor knew or should have known of his interest in the
`
`case; (2) the prejudice caused to the original parties by the delay; (3) the prejudice to the intervenor
`
`if the motion is denied; and (4) any other unusual circumstances.” Sokaogon Chippewa Cmty. v.
`
`Babbitt, 214 F.3d 941, 949 (7th Cir. 2000) (alteration and citation omitted). In addition, the “test
`
`for timeliness is essentially one of reasonableness: ‘potential intervenors need to be reasonably
`
`diligent in learning of a suit that might affect their rights, and upon so learning they need to act
`
`reasonably promptly.’ We further note that, when intervention of right is sought, because ‘the
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`would-be intervenor may be seriously harmed if intervention is denied, courts should be reluctant
`
`to dismiss such a request for intervention as untimely, even though they might deny the request if
`
`the intervention were merely permissive.” Lopez-Aguilar, 924 F.3d at 388–89 (citations omitted).
`
`Lilly filed its complaint challenging the December 30, 2020 Advisory Opinion on
`
`January 12, 2021 and filed an amended complaint and a motion for preliminary injunction related
`
`to the ADR process on January 25, 2021. Proposed Intervenors have promptly moved to intervene.
`
`7
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`Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 13 of 17 PageID #: 1142
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`According to the Court’s recently issued scheduling order, Defendants’ response to the preliminary
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`injunction motion was due February 16, 2021. ECF No. 27. As noted above, however, Proposed
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`Intervenors will not be responding to that motion which relates only to the ADR regulation. With
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`respect to the remaining claims for relief (regarding the Advisory Opinion), there currently is no
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`schedule and Proposed Intervenors are prepared to participate in that aspect of the case on whatever
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`schedule the Court sets. Moreover, Proposed Intervenors have attached their Answer to the First
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`Amended Complaint to its Motion to Intervene. Ex. B ECF No. 39-2. Lilly therefore would not be
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`prejudiced because there would be no delay. If the motion were denied, however, Proposed
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`Intervenors would be prejudiced. Thus, the timeliness requirement is met.
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`B.
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`Interest
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`The second element under Rule 24(a)(2) is that “the proposed intervenor must have a direct,
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`significant, and legally protectable interest in the question at issue in the lawsuit,” which “must be
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`unique to the proposed intervenor” meaning it is “based on a right that belongs to the proposed
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`intervenor rather than to an existing party in the suit.” Elouarrak, 2020 WL 291364, at *2
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`(alterations and citations omitted). “Interest in ‘the subject of the action’ is a broad formulation.”
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`Nat’l Fire Ins. Co. of Hartford v. Tri-State Hose & Fitting, Inc., No. 06 C 5256, 2007 WL 9814578,
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`at *4 (N.D. Ill. June 21, 2007).
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`Proposed Intervenors and their members have a direct, significant and legally protected
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`interest in obtaining discounts to which they are entitled under the 340B statute.6 Proposed
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`Intervenors’ member hospitals use the benefit from 340B discounts for 340B drugs dispensed
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`through contract pharmacies to support programs and services offered by 340B hospitals. These
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`6 “An association has standing to bring suit on behalf of its members when its members would otherwise have standing
`to sue in their own right, the interests at stake are germane to the organization's purpose, and neither the claim asserted
`nor the relief requested requires the participation of individual members in the lawsuit.” Friends of the Earth, Inc. v.
`Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 181 (2000).
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`8
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`Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 14 of 17 PageID #: 1143
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`discounts, for example, allow them to (1) provide and maintain more patient care services; (2)
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`provide and maintain more uncompensated and unreimbursed care; (3) provide and maintain more
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`services in underserved areas; and (4) develop and maintain targeted programs to serve vulnerable
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`patients; and (5) keep their doors open. Testoni Decl., Ex. A ECF No. 39-1 ¶ 8.
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`These discounts are precisely the subject of the General Counsel’s Advisory Opinion that
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`Lilly challenges. Lilly seeks an outcome directly contrary to the Advisory Opinion (i.e., that it not
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`be required to provide discounts for covered outpatient drugs when such drugs are dispensed
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`through a contract pharmacy). Defendants’ interests also diverge, as they disagree with Proposed
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`Intervenors that HHS has the authority and obligation to enforce this requirement. Accordingly,
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`the interest factor is met.
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`C.
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`Interest Impaired
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`The disposition of Lilly's lawsuit in Lilly’s favor would adversely affect Proposed
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`Intervenors’ members, and the communities they serve. If Lilly were to successfully convince this
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`Court to adopt its (incorrect) interpretation of the statute, Proposed Intervenors’ members would
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`continue to lose access to 340B discounts when their covered outpatient drugs are dispensed from
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`a contract pharmacy. This would not only encourage the other five drug companies with similar
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`policies to continue their policies, but it would likely encourage other drug companies to adopt
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`the same types of policies. This would significantly, adversely impact the services all 340B
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`covered entities provide to vulnerable populations. Testoni Decl., Ex. A ECF No. 39-1 ¶¶ 7, 9.
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`This hardship, which 340B providers are already facing due to the six drug companies’ current
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`policies, comes amidst a pandemic that is putting an enormous strain on hospitals’ financial
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`resources and accordant ability to care for their patients. On the other hand, if Plaintiffs’ claims
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`were rejected, then Proposed Intervenors’ members would be able to continue receiving the
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`discounts to which they are entitled and have received since the beginning of the 340B program.
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`9
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`Case 1:21-cv-00081-SEB-MJD Document 40 Filed 02/19/21 Page 15 of 17 PageID #: 1144
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`D.
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`Inadequate Representation
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`The government Defendants in this lawsuit do not adequately represent Proposed
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`Intervenors' interests. The Seventh Circuit held that the burden of making this showing should be
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`treated as “minimal,” and that a party seeking intervention as of right must only make a showing
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`that the representation “may be” inadequate. Ligas ex rel. Foster v. Maram, 478 F.3d 771, 774
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`(7th Cir. 2007) (quoting Trbovich v. United Mine Workers of Am., 404 U.S. 528, 538 n.10 (1972)).
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`There is no doubt that HHS has different interests than the Proposed Intervenors in this case.
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`Since Lilly first instituted the contract pharmacy policy at issue, Proposed Intervenors, 340B
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`covered entities and other 340B covered entity trade associations have been trying to get the
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`government to take action.7 Despite periodically stating that it was looking into the issue,8 and
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`after its General Counsel issued an Advisory Opinion agreeing with Proposed Intervenors’
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`statutory interpretation, HHS has never taken the position that it can or will enforce the statutes as
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`interpreted. The only thing HHS has done is to issue the ADR regulation that is being challenged
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`in several lawsuits, including this one, and even that process has been unilaterally placed on hold.9
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`Finally, Proposed Intervenors have brought suit against HHS asserting that the Department has
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`7 See, e.g., Letter Re: Recent Actions by Pharmaceutical Manufacturers Eli Lilly and Merck Impacting 340B
`Covered Entities, 340B Coalition (July 16, 2020), https://nysarh.org/wp-content/uploads/2020/08/340B-Coalition-
`Letter-Final-7.16.20.pdf; Letter, AHA (July 30, 2020), https://www.aha.org/system/files/media/file/2020/07/aha-
`urges-hhs-take-action-against-drug-manufacturers-for-limiting-distribution-340b-drugs-letter-7-30-2020.pdf; Letter
`Re: Pharmaceutical Company Actions Undermining 340B Drug Pricing Program, AEH (Aug. 28, 2020),
`https://essentialhospitals.org/wp-content/uploads/2020/08/AEH-Letter-340B-Contract-Pharmacy-8-28-20.pdf;
`Letter, AHA (Sept. 8, 2020), https://www.aha.org/system/files/media/file/2020/09/aha-again-urges-hhs-to-protect-
`340b-program-from-drug-companies-actions