throbber
Case 3:21-cv-00806-FLW-LHG Document 20-1 Filed 03/02/21 Page 1 of 21 PageID: 408
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF NEW JERSEY
`
`
`
`
`
`
`Civil Action No. 3:21-cv-00806-FLW-LHG
`
`
`
`
`NOVO NORDISK INC., et.al.,
`
`Plaintiffs,
`
`–v–
`
`NORRIS COCHRAN, et al.,
`
`Defendants.
`
`
`
`
`
`MEMORANDUM OF LAW IN SUPPORT OF THE MOTION TO
`INTERVENE BY AMERICAN HOSPITAL ASSOCIATION,
`340B HEALTH, AMERICA’S ESSENTIAL HOSPITALS,
`ASSOCIATION OF AMERICAN MEDICAL COLLEGES,
`CHILDREN’S HOSPITAL ASSOCIATION, AND AMERICAN SOCIETY
`OF HEALTH-SYSTEM PHARMACISTS
`
`
`Justin P. Walder
`James W. Boyan III
`PASHMAN STEIN WALDER HAYDEN
`A Professional Corporation
`Court Plaza South
`21 Main Street, Suite 200
`Hackensack, NJ 07601
`Telephone (201) 488-8200
`Facsimile (201) 488-5556
`jboyan@pashmanstein.com
`
`
`
`
`
`
`William B. Schultz (pro hac vice forthcoming)
`Margaret M. Dotzel (pro hac vice forthcoming)
`Casey Trombley-Shapiro Jonas
`(pro hac vice forthcoming)
`ZUCKERMAN SPAEDER LLP
`1800 M Street NW, Suite 1000
`Washington, DC 20036
`Tel: (202) 778-1800
`Fax: (202) 822-8106
`wschultz@zuckerman.com
`mdotzel@zuckerman.com
`cjonas@zuckerman.com
`
`
`
`Ariella Muller (pro hac vice forthcoming)
`ZUCKERMAN SPAEDER LLP
`485 Madison Avenue, 10th Floor
`New York, New York 10022
`Tel: (212) 704-9600
`Fax: (917) 261-5864
`amuller@zuckerman.com
` Attorneys for Proposed Intervenors
`
`
`
`
`
`
`
`
`

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`Case 3:21-cv-00806-FLW-LHG Document 20-1 Filed 03/02/21 Page 2 of 21 PageID: 409
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`TABLE OF CONTENTS
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`Page
`
`
`TABLE OF AUTHORITIES .................................................................................... ii
`BACKGROUND ....................................................................................................... 4
`ARGUMENT ............................................................................................................. 8
`I.
`Proposed Intervenors Have a Right to Intervene Under Rule 24(a). .............. 8
`A.
`Timeliness ............................................................................................. 9
`B.
`Interest .................................................................................................10
`C.
`Interest Impaired ..................................................................................12
`D.
`Inadequate Representation ..................................................................13
`Alternatively, Proposed Intervenors Should be Permitted to Intervene
`Under Rule 24(b). ..........................................................................................15
`CONCLUSION ........................................................................................................16
`
`
`II.
`
`
`
`
`
`i
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`

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`TABLE OF AUTHORITIES
`
`Page(s)
`
`
`CASES
`ACR Energy Partners, LLC v. Polo N. Country Club, Inc.,
`309 F.R.D. 191 (D.N.J. 2015) ................................................................................ 9
`Am. Hosp. Ass’n v. Azar,
`No. 4:20-cv-8806 (N.D. Cal. Dec. 11, 2020) .....................................................6–7
`Brody v. Spang,
`957 F.2d 1108 (3d Cir. 1992) ...............................................................................13
`Clean Earth, Inc. v. Endurance Am. Ins.,
`Civ. No. 15-6111, 2016 WL 5422063 (D.N.J. Sept. 28, 2016) ............ 8–9, 10, 12
`Friends of the Earth, Inc. v. Laidlaw Envtl Servs. (TOC), Inc.,
`528 U.S. 167 (2000) ...................................................................................... 10–11
`Glover v. Ferrero USA, Inc.,
`No. 11-1086, 2011 WL 5007805 (D.N.J. Oct. 20, 2011) .................................9–10
`Granillo v. FCA US LLC,
`No. 16-153, 2018 WL 4676057 (D.N.J. Sept. 28, 2018) .....................................13
`Harris v. Pernsley,
`820 F.2d 592 (3d Cir. 1987) ................................................................................... 9
`Hemy v. Perdue Farms, Inc.,
`No. 11-888, 2011 WL 6002463 (D.N.J. Nov. 30, 2011) .....................................15
`King v. Christie,
`981 F. Supp. 2d 296 (D.N.J. 2013).......................................................................15
`Nat’l Ass’n of Cmty. Health Ctrs. v. Azar,
`No. 1:20-cv-3032 (D.D.C.)..................................................................................... 6
`Pa. Prison Soc’y v. Cortes,
`622 F.3d 215 (3d Cir. 2010) ................................................................................... 8
`Pennsylvania v. President of the U.S.,
`888 F.3d 52 (3d Cir. 2018) ...................................................................................13
`
`ii
`
`

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`Princeton Biochemicals, Inc. v. Beckman Coulter, Inc.,
`223 F.R.D. 326 (D.N.J. 2004) ................................................................................ 9
`Ryan White Clinics for 340B Access v. Azar,
`No. 1:20-cv-2906 (D.D.C.).................................................................................5–6
`Tansey v. Rogers,
`No. 12-1049-RGA, 2016 WL 3519887 (D. Del. June 27, 2016) .........................15
`Trbovich v. United Mine Workers of Am.,
`404 U.S. 528 (1972) .............................................................................................13
`Wallach v. Eaton Corp.,
`837 F.3d 356 (3d Cir. 2016) ................................................................................... 9
`STATUTES
`Public Health Service Act, 42 U.S.C. § 256 .............................................................. 1
`RULES
`Federal Rule of Civil Procedure 24 ................................................................ 1, 8, 15
`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) ............. 7
`
`
`
`iii
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`

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`American Hospital Association, 340B Health, America’s Essential Hospitals,
`
`Association of American Medical Colleges, National Association of Children’s
`
`Hospitals d/b/a Children’s Hospital Association, and American Society of Health-
`
`System Pharmacists (collectively the “Proposed Intervenors”) move this Court,
`
`pursuant to Federal Rule of Civil Procedure 24(a) or in the alternative pursuant to
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`Federal Rule of Civil Procedure 24(b), for an Order granting their Motion to
`
`Intervene in this lawsuit regarding the 340B Drug Discount Program.
`
`The 340B Program, established by section 340B of the Public Health Service
`
`Act, 42 U.S.C. § 256b, requires, as a condition of participating in Medicaid and
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`Medicare Part B, that pharmaceutical manufacturers sell outpatient drugs at a
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`discounted price (no more than the 340B ceiling price) to certain public and not-for-
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`profit hospitals, community health centers, and other federally funded clinics that
`
`serve communities with a large numbers of low income patients (“340B providers”
`
`(described in the statute as “covered entities”)) in order to increase the funding these
`
`entities have available to meet the needs of their patients.
`
`Since the beginning of the program, 340B providers have dispensed covered
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`outpatient drugs to their patients through in-house pharmacies and through
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`community pharmacies that have entered into written contracts with hospitals and
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`other providers (“contract pharmacies”). Under the latter arrangements, the 340B
`
`provider orders and pays for the 340B drugs, which are then shipped to the contract
`
`1
`
`

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`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 Novo Nordisk Inc., (“Novo”), worked
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`cooperatively with 340B providers that dispensed discounted drugs to their patients
`
`through contract pharmacies. Overall, a quarter of the benefit that 340B hospitals
`
`receive from the 340B discount comes from 340B drugs dispensed through contract
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`pharmacy arrangements. This varies by hospital type. For example, Critical Access
`
`Hospitals (small hospitals in rural areas) report that an average of 51% of their 340B
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`benefit from the 340B discount comes from drugs distributed through contract
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`pharmacies, while Disproportionate Share Hospitals (DSH hospitals) (hospitals that
`
`serve a significantly disproportionate number of low-income patients) report that an
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`average of 61% of their 340B benefit from the 340B discount comes from drugs
`
`distributed through contract pharmacies.1
`
`Plaintiff’s complaint requests the Court to adopt an implausible interpretation
`
`of the 340B statute that would deny Proposed Intervenors’ members access to drug
`
`discounts for drugs dispensed to their patients at most contract pharmacies.
`
`Intervention by Proposed Intervenors is necessary to protect their members’ interests
`
`in this lawsuit and to ensure that patients have adequate access to 340B drugs —
`
`
`1 See Declaration of James W. Boyan III in Support of Proposed Intervenors’ Motion
`to Intervene, Mar. 1, 2021 (“Boyan Decl.”), Ex. A (Declaration of Maureen Testoni
`in Support of Proposed Intervenors’ Motion to Intervene, Feb. 24, 2021 (“Testoni
`Decl.”) ¶¶ 4–6.
`
`2
`
`

`

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`which it is not apparent the government Defendants will sufficiently do — and to
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`defend the correct interpretation of the 340B statute to include the availability of
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`discounts when distribution is through contract pharmacies. The Proposed
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`Intervenors have standing to intervene because at least one or more of each
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`association’s members has been and continues to be significantly harmed by Novo’s
`
`failure to offer 340B drug discounts to 340B covered entities when drugs are
`
`dispensed through contract pharmacies.
`
`Proposed Intervenors meet the standard for intervention of right. First,
`
`Proposed Intervenors’ members clearly have a direct stake in the outcome. If
`
`Plaintiff were to obtain a ruling adopting their (incorrect) interpretation of the
`
`statute, Proposed Intervenors’ members’ 340B savings will continue to diminish,
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`seriously hampering their ability to serve vulnerable communities as Congress
`
`intended. Moreover, the drug companies that have not already adopted policies
`
`comparable to Novo’s would be incented to adopt one, resulting in even greater
`
`losses of the 340B discounts and the services to the communities those discounts
`
`fund. Likewise, there is no question that an adverse outcome in this case would
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`impair Proposed Intervenors’ members’ interests—not just in the correct
`
`interpretation and application of federal law, but in receiving the discounts to which
`
`they are entitled. Defendants cannot adequately defend Proposed Intervenors’
`
`interests. In fact, to date, the Department of Health and Human Services (HHS) has
`
`3
`
`

`

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`refused to take any action to stop Novo from denying Proposed Intervenors’
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`members the statutory discounts to which they are entitled. Alternatively, because
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`Proposed Intervenors and Plaintiff both seek to have this Court resolve the same
`
`question of law – namely whether the 340B statute requires Plaintiff to provide
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`covered entities covered outpatient drugs at or below the 340B ceiling price when
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`dispensed through a contract pharmacy – Proposed Intervenors also meet the standard
`
`for permissive intervention. Accordingly, the Court should grant Proposed
`
`Intervenors’ motion to intervene.
`
`BACKGROUND
`Seven months ago, Eli Lilly and Company (“Lilly”) became the first drug
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`company to abandon its 20-year compliance with the statutory requirement to
`
`provide 340B providers with drugs at or below 340B ceiling prices when dispensed
`
`through contract pharmacies. In May 2020, Lilly floated the idea of applying its “no
`
`contract pharmacy” policy to a single drug, Cialis®, with the division of HHS that
`
`administers the 340B program, the Health Resources and Services Administration
`
`(HRSA).2 When HRSA failed even to inform Lilly that this practice would be
`
`
`2 Boyan Decl., Ex. C (First Am. Compl., Ex. E (Attach. 1), Eli Lilly & Co. v.
`Cochran, No. 1:21-cv-81-SEB-MJD (S.D. Ind. Jan. 25, 2021), ECF No. 17-6).
`
`4
`
`

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`illegal,3 Lilly was emboldened to expand its discount denials to all of its drugs.4 On
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`December 1, 2020, Novo announced that as of January 1, 2021, it would join the
`
`other drug manufacturers in imposing restrictions related to 340B contract
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`pharmacies, effectively denying 340B hospitals the discounts for 340B drugs
`
`dispensed through contract pharmacies. Novo has stated that its restrictions will
`
`apply only to hospitals and will include an exception for hospitals that do not have
`
`their own on-site pharmacy.5 To date, four other drug companies have implemented
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`similar policies.6
`
`HRSA’s inaction precipitated three lawsuits. Two lawsuits challenged
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`HRSA’s failure to issue an Administrative Dispute Resolution (ADR) regulation,
`
`which they alleged was needed to resolve the disagreement over contract pharmacy
`
`arrangements. See Ryan White Clinics for 340B Access v. Azar, No. 1:20-cv-2906
`
`
`3 Boyan Decl., Ex. D (First Am. Compl., Ex. C, Eli Lilly & Co. v. Cochran, No.
`1:21-cv-81-SEB-MJD (S.D. Ind. Jan. 25, 2021), ECF No. 17-4).
`4 Boyan Decl., Ex. E (First Am. Compl., Ex. G, Eli Lilly & Co. v. Cochran, No. 1:21-
`cv-81-SEB-MJD (S.D. Ind. Jan. 25, 2021), ECF No. 17-8).
`5See Boyan Decl., Ex. J (Notice Regarding Limitation on Hosp. Contract Pharm.
`Distribution, Novo Nordisk (Dec. 1, 2020)).
`6See Boyan Decl., Ex. F (Am. Compl., Ex. A at 2, AstraZeneca Pharms. LP v.
`Cochran, No. 1:21-cv-00027-LPS (D. Del. Feb. 12, 2021), ECF 13-1); Boyan Decl.,
`Ex. K (Sanofi Notice (July 2020)); Boylan Decl., Ex. L (New policy related to the
`340B program, Novartis Statement (Oct. 30, 2020)); Boylan Decl., Ex. M (Mem.
`from Kevin Gray, SVP, United Therapeutics Corp. to 340B Covered Entities (Nov.
`18, 2020)).
`
`5
`
`

`

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`(D.D.C.); Nat’l Ass’n of Cmty. Health Ctrs. v. Azar, No. 1:20-cv-3032 (D.D.C.). In
`
`addition, Proposed Intervenors and three hospitals filed suit to obtain a ruling that
`
`the refusal by Novo and the other drug companies to provide 340B providers 340B
`
`discounts for drugs dispensed through contract-pharmacies was illegal and to require
`
`HHS to develop an enforcement plan aimed at stopping the drug companies from
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`continuing to implement these illegal policies. See Compl., Am. Hosp. Ass’n v. Azar,
`
`No. 4:20-cv-8806 (N.D. Cal. Dec. 11, 2020), ECF No. 1.7 Novo and three of the
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`other drug companies with similar contract pharmacy policies filed motions to
`
`intervene in those cases. Proposed Intervenor-Defendant Novo Nordisk Inc.’s Not.
`
`of Mot., Mot., & Mem. in Supp. of Mot. to Intervene, Am. Hosp. Ass’n, No. 4:20-
`
`cv-8806 (N.D. Cal. Jan. 10, 2021), ECF No. 62; Mot. of Sanofi-Aventis U.S. LLC
`
`to Intervene as a Def., Ryan White Clinics, No. 1:20-cv-2906 (D.D.C. Nov. 20,
`
`2020), ECF No. 13; AstraZeneca LP’s Mot. to Intervene as Def., Ryan White Clinics,
`
`No. 1:20-cv-2906 (D.D.C. Nov. 24, 2020), ECF No. 29; Eli Lilly & Co.’s Mot. to
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`Intervene as Def., Ryan White Clinics, No. 1:20-cv-2906 (D.D.C. Nov. 20, 2020),
`
`ECF No. 12; Proposed Intervenor-Def. Sanofi-Aventis U.S. LLC’s Not. of Mot.,
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`Mot. to Intervene, & Mem. of P. & A. in Supp., Am. Hosp. Ass’n, No. 4:20-cv-8806
`
`(N.D. Cal. Dec. 28, 2020), ECF No. 38; AstraZeneca LP’s Not. of Mot., Mot., &
`
`
`7 On February 17, 2021, the court dismissed this action without prejudice, ruling
`“plaintiffs may be able to maintain a narrower action seeking general enforcement
`of the statute in the future . . . .” ECF No. 91 at 13.
`
`6
`
`

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`Mem. in Supp. of Mot. to Intervene, Am. Hosp. Ass’n, No. 4:20-cv-8806 (N.D. Cal.
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`Dec. 28, 2020), ECF No. 35; Proposed Intervenor-Def. Eli Lilly & Co.’s Not. of
`
`Mot., Mot., & Mem. in Supp. of its Mot. to Intervene, Am. Hosp. Ass’n, No. 4:20-
`
`cv-8806 (N.D. Cal. Dec. 28, 2020), ECF No. 28.
`
`In response to these lawsuits, HHS did two things. First, it finalized the
`
`proposed ADR 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 340B statute
`
`requires drug companies to offer 340B discounts to covered entities for drugs
`
`dispensed through contract pharmacies. See Boyan Decl., Ex. G (Advisory Opinion
`
`20-06 on Contract Pharmacies Under the 340B Program (Dec. 30, 2020)).
`
`Nevertheless, even though it stated that the drug company policies with respect to
`
`contract pharmacies are illegal, HHS has taken no action to enforce the statute. Id.
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`In its complaint, Novo challenges the December 30, 2020 Advisory Opinion.
`
`ECF No. 1. At this point no additional motions have been filed and the Court has not
`
`yet entered a Scheduling Order. As such, intervention at this preliminary stage of the
`
`case would not affect or delay any matters currently before the Court, or otherwise
`
`prejudice the parties.
`
`7
`
`

`

`Case 3:21-cv-00806-FLW-LHG Document 20-1 Filed 03/02/21 Page 12 of 21 PageID: 419
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`ARGUMENT
`“Rule 24(a) of the Federal Rules of Civil Procedure provides that, ‘on timely
`
`motion, the court must permit anyone to intervene who: (1) is given an unconditional
`
`right to intervene by a federal statute; or (2) claims an interest relating to the property
`
`or transaction that is the subject of the action, and is so situated that disposing of the
`
`action may as a practical matter impair or impede the movant’s ability to protect its
`
`interest, unless existing parties adequately represent that interest.’” Pa. Prison Soc’y
`
`v. Cortes, 622 F.3d 215, 232 (3d Cir. 2010) (alteration omitted) (quoting Fed. R. Civ.
`
`P. 24(a)). “Rule 24(b) provides in relevant part that ‘on timely motion, the court may
`
`permit anyone to intervene who: (A) is given a conditional right to intervene by a
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`federal statute; or (B) has a claim or defense that shares with the main action a
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`common question of law or fact.” Id. (alteration omitted) (quoting Fed. R. Civ. P.
`
`24(b)). 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).
`The Third Circuit requires that the following four elements be met from an
`
`applicant seeking intervention as of right: “(1) a timely application for leave to
`
`intervene; (2) a sufficient interest in the litigation; (3) a threat that the interest will
`
`be impaired or affected, as a practical matter, by the disposition of the action; and
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`8
`
`

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`(4) inadequate representation of the prospective intervenor’s interest by existing
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`parties to the litigation.” Clean Earth, Inc. v. Endurance Am. Ins., Civ. No. 15-6111,
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`2016 WL 5422063, at *3 (D.N.J. Sept. 28, 2016).
`
`As in most other circuits, the Third Circuit courts “liberally construe Rule
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`24(a) in favor of intervention.” ACR Energy Partners, LLC v. Polo N. Country Club,
`
`Inc., 309 F.R.D. 191, 192 (D.N.J. 2015) (alteration and citation omitted). In
`
`considering motions to intervene, “courts should adhere to the elasticity
`
`that Rule 24 contemplates and may examine pragmatic considerations.” Clean
`
`Earth, 2016 WL 5422063, at *3 (citations omitted); see also Harris v. Pernsley, 820
`
`F.2d 592, 597 (3d Cir. 1987) (noting that courts must “consider the pragmatic
`
`consequences of a decision to permit or deny intervention”).
`
`A. Timeliness
`The Third Circuit considers three factors to determine whether a motion to
`
`intervene is timely: “(1) the stage of the proceeding; (2) the prejudice that delay may
`
`cause the parties; and (3) the reason for the delay.” Wallach v. Eaton Corp., 837 F.3d
`
`356, 371 (3d Cir. 2016) (citation omitted). In addition, timeliness is ascertained from
`
`the complete set of circumstances, and the inquiry “is essentially a test of
`
`reasonableness,” Princeton Biochemicals, Inc. v. Beckman Coulter, Inc., 223 F.R.D.
`
`326, 328 (D.N.J. 2004) (citation omitted). Where intervention “will cause no delay
`
`9
`
`

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`to the parties,” the timeliness prong has been met. See Glover v. Ferrero USA, Inc.,
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`No. 11-1086, 2011 WL 5007805, at *3 (D.N.J. Oct. 20, 2011).
`
`Novo filed its complaint challenging the December 30, 2020 Advisory
`
`Opinion on January 15, 2021. ECF No. 1. Proposed Intervenors have promptly
`
`moved to intervene. Pursuant to Fed. R. Civ. P. 12(a)(2), Defendants’ Answer is not
`
`due until the third week of March 2021, at the earliest. As noted above, there
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`currently is no schedule in place and Proposed Intervenors are prepared to participate
`
`in the case on whatever schedule the Court sets. Moreover, Proposed Intervenors
`
`have attached their Answer to the Complaint to their Motion to Intervene. Boyan
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`Decl., Ex. B. Novo therefore would not be prejudiced because there would be no
`
`delay. If the motion were denied, however, Proposed Intervenors would be
`
`prejudiced. Thus, the timeliness requirement is met.
`
`Interest
`B.
`The second element under Rule 24(a) is that the proposed intervenor must
`
`“have an interest ‘relating to the property or transaction which is the subject of the
`
`action’ that is ‘significantly protectable.”’ Clean Earth, 2016 WL 5422063, at *3
`
`(citation omitted). Further, at issue must be “a legal interest as distinguished from
`
`interests of a general and indefinite character.” Id. (citation omitted).
`
`Proposed Intervenors and their members have a direct and “significantly
`
`protectable” legal interest in obtaining discounts to which they are entitled under the
`
`10
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`

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`Case 3:21-cv-00806-FLW-LHG Document 20-1 Filed 03/02/21 Page 15 of 21 PageID: 422
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`340B statute.8 Proposed Intervenors’ member hospitals use the benefit from 340B
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`discounts for 340B drugs dispensed through contract pharmacies to support
`
`programs and services offered by 340B hospitals. These discounts, for example,
`
`allow them to (1) provide and maintain more patient care services; (2) provide and
`
`maintain more uncompensated and unreimbursed care; (3) provide and maintain
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`more services in underserved areas; (4) develop and maintain targeted programs to
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`serve vulnerable patients; and (5) keep their doors open. Boyan Decl., Ex. A
`
`(Testoni Decl.) ¶ 8.
`
`These discounts are precisely the subject of the General Counsel’s Advisory
`
`Opinion that Novo challenges. Novo seeks an outcome directly contrary to the
`
`Advisory Opinion (i.e., that it not be required to provide discounts for covered
`
`outpatient drugs when such drugs are dispensed through a contract pharmacy).
`
`Defendants’ interests also diverge, as they disagree with Proposed Intervenors that
`
`HHS has the authority and obligation to enforce this requirement. Accordingly, the
`
`interest factor is met.
`
`
`8 “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 Envtl Servs. (TOC), Inc., 528 U.S. 167, 181
`(2000).
`
`11
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`

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`Interest Impaired
`C.
`In assessing whether a proposed intervenor’s interests will be impaired, courts
`
`in the Third Circuit look to the “practical consequences of denying intervention.”
`
`Clean Earth, 2016 WL 5422063, at *4 (citation omitted). The disposition of Novo’s
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`lawsuit in Novo’s favor would adversely affect Proposed Intervenors’ members, and
`
`the communities they serve. If Novo were to successfully convince this Court to
`
`adopt its (incorrect) interpretation of the statute, Proposed Intervenors’ members
`
`would continue to lose access to 340B discounts when their covered outpatient drugs
`
`are dispensed from a contract pharmacy. This would not only encourage the other
`
`five drug companies with similar policies to continue their policies, but it would
`
`likely encourage other drug companies to adopt the same types of policies. This
`
`would significantly, adversely impact the services all 340B covered entities provide
`
`to vulnerable populations. Boyan Decl., Ex. A (Testoni Decl.) ¶¶ 7, 9. This
`
`hardship, which 340B providers are already facing due to the six drug companies’
`
`current policies, comes amidst a pandemic that is putting an enormous strain on
`
`hospitals’ financial resources and accordant ability to care for their patients. On the
`
`other hand, if Plaintiffs’ claims were rejected, then Proposed Intervenors’ members
`
`would be able to continue receiving the discounts to which they are entitled and have
`
`received since the beginning of the 340B program.
`
`12
`
`

`

`Case 3:21-cv-00806-FLW-LHG Document 20-1 Filed 03/02/21 Page 17 of 21 PageID: 424
`
`Inadequate Representation
`D.
`The government Defendants in this lawsuit do not adequately represent
`
`Proposed Intervenors’ interests. The Third Circuit has held that the burden of making
`
`this showing should be treated as “minimal,” and that a party seeking intervention as
`
`of right must only make a showing that the representation “may be” inadequate.
`
`Pennsylvania v. President of the U.S., 888 F.3d 52, 60 (3d Cir. 2018) (citations
`
`omitted); see also Trbovich v. United Mine Workers of Am., 404 U.S. 528, 538 n.10
`
`(1972). Representation is considered inadequate where, “although the applicant’s
`
`interests are similar to those of a party, they diverge sufficiently that the existing
`
`party cannot devote proper attention to the applicant’s interests.” Granillo v. FCA
`
`US LLC, No. 16-153, 2018 WL 4676057, at *9 (D.N.J. Sept. 28, 2018) (quoting
`
`Brody v. Spang, 957 F.2d 1108, 1123 (3d Cir. 1992)).
`
`There is no doubt that HHS interests diverge sufficiently from the interests of
`
`Proposed Intervenors in this case. Since Novo and other drug companies first
`
`instituted the contract pharmacy policy at issue, Proposed Intervenors, 340B covered
`
`entities and other 340B covered entity trade associations have been trying to get the
`
`13
`
`

`

`Case 3:21-cv-00806-FLW-LHG Document 20-1 Filed 03/02/21 Page 18 of 21 PageID: 425
`
`government to take action.9 Despite periodically stating that it was looking into the
`
`issue,10 and after its General Counsel issued an Advisory Opinion agreeing with
`
`Proposed Intervenors’ statutory interpretation, HHS has never taken the position that
`
`it can or will enforce the statutes as interpreted. The only thing HHS has done is to
`
`issue the ADR regulation that is being challenged in several lawsuits and even that
`
`process has been unilaterally placed on hold.11 It is therefore not only possible but
`
`quite conceivable that the government’s defense of its right to implement and/or
`
`enforce the December 30 decision, as the Plaintiffs seek to bar it from doing, may be
`
`inadequate. That alone is sufficient to demonstrate that the government cannot and
`
`will not adequately represent the interests of Proposed Intervenors.
`
`In sum, Proposed Intervenors have met the requirements for intervention of
`
`right.
`
`
`9 See, e.g., Boylan Decl., Ex. N (Letter from 340B Coalition to Alex M. Azar,
`Secretary, HHS (July 16, 2020)); Boylan Decl., Ex. O (Letter from Thomas P.
`Nickels, EVP, AHA to Alex M. Azar, Secretary, HHS (July 30, 2020)); Boylan
`Decl., Ex. P, Letter from Bruce Siegel, President & CEO, AEH to Alex Azar,
`Secretary, HHS (Aug. 28, 2020); Boylan Decl., Ex. Q (Letter from Richard J.
`Pollack, President & CEO, AHA to Alex M. Azar, Secretary, HHS (Sept. 8, 2020));
`Boylan Decl., Ex. R (Letter from Richard J. Pollack, President & CEO, AHA to Alex
`M. Azar, Secretary, HHS (Oct. 16, 2020)).
`10 See, e.g., Boyan Decl., Exs. H and I (First Am. Compl., Exs. K and L, Eli Lilly &
`Co. v. Cochran, No. 1:21-cv-81-SEB-MJD (S.D. Ind. Jan. 25, 2021), ECF Nos. 17-
`12, 17-13).
`11 Boylan Decl., Ex. S (Cathy Kelly, 340B Dispute Resolution Process On Ice As
`Feuds Between Pharma, Providers, HHS Heat Up, Pink Sheet (Jan. 22, 2021)).
`
`14
`
`

`

`Case 3:21-cv-00806-FLW-LHG Document 20-1 Filed 03/02/21 Page 19 of 21 PageID: 426
`
`II. Alternatively, Proposed Intervenors Should be Permitted to Intervene
`Under Rule 24(b).
`Proposed Intervenors also satisfy the requirements of Federal Rule of Civil
`
`Procedure 24(b). Under Rule 24(b), on “timely motion” the Court “may permit
`
`anyone to intervene” who “has a claim or defense that shares with the main action a
`
`common question of law or fact.” Fed. R. Civ. P. 24(b)(1)(B). The requirements are
`
`that “(1) the motion to be timely; (2) an applicant’s claim or defense and the main
`
`action have a question of law or fact in common; and (3) the intervention may not
`
`cause undue delay or prejudice to the original parties’ rights.” King v. Christie, 981
`
`F. Supp. 2d 296, 309 (D.N.J. 2013). So long as these threshold requirements are met,
`
`the decision to allow permissive intervention is left to the sound discretion of the
`
`court. Id.
`
` “Rule 24(b), unlike intervention as of right under Rule 24(a), ‘is expressly
`
`concerned with consolidating common legal or factual issues,” Hemy v. Perdue
`
`Farms, Inc., No. 11-888, 2011 WL 6002463, at *8 (D.N.J. Nov. 30, 2011) (alteration
`
`and citation), and “the court has broad discretion to permit intervention by anyone
`
`who ‘has a claim or defense that shares with the main action a common question of
`
`law or fact,’” Tansey v. Rogers, No. 12-1049-RGA, 2016 WL 3519887, at *2 (D.
`
`Del. June 27, 2016) (quoting Fed. R. Civ. P. 24(b)(1)(B)). The common question of
`
`law in this case is whether the 340B statute requires pharmaceutical manufacturers
`
`to offer 340B discounts to covered entities that dispense their 340B drugs through
`
`15
`
`

`

`Case 3:21-cv-00806-FLW-LHG Document 20-1 Filed 03/02/21 Page 20 of 21 PageID: 427
`
`contract pharmacies. For the reasons described above, see Sec. I.A., this motion is
`
`timely and thus will not delay the proceedings or prejudice Novo or the Defendants.
`
`Accordingly, at a minimum Proposed Intervenors should be permitted to intervene
`
`under Rule 24(b).
`
`CONCLUSION
`For the foregoing reasons, Proposed Intervenors request the Court to grant
`
`their motion to intervene of right under Rule 24(a) or, in the alternative, to allow
`
`Proposed Intervenors to intervene under Rule 24(b).
`
`Dated: March 2, 2021
`
`
`
`
`
`
`
`
`
`
`
`
`
`Respectfully submitted,
`
`/s/ James W. Boyan III
`James W. Boyan III
`Justin P. Walder
`PASHMAN STEIN WALDER HAYDEN, P.C.
`Court Plaza South
`21 Main Street, Suite 200
`Hackensack, NJ 07601
`Telephone (201) 488-8200
`Facsimile (201) 488-5556
`jboyan@pashmanstein.com
`jpwalder@pashmanstein.com
`
`William B. Schultz (pro hac vice forthcoming)
`Margaret M. Dotzel (pro hac vice forthcoming)
`Casey Trombley-Shapiro Jonas (pro hac vice
`forthcoming)
`ZUCKERMAN SPAEDER LLP
`1800 M Street NW, Suite 1000
`Washington, DC 20036
`Tel: (202) 778-1800
`Fax: (202) 822-8106
`wschultz@zuckerman.com
`
`16
`
`

`

`Case 3:21-cv-00806-FLW-LHG Document 20-1 Filed 03/02/21 Page 21 of 21 PageID: 428
`
`mdotzel@zuckerman.com
`cjonas@zuckerman.com
`
`Ariella Muller (pro hac vice forthcoming)
`ZUCKERMAN SPAEDER LLP
`485 Madison Avenue, 10th Floor
`New York, NY 10022
`Tel: (212) 704-9600
`Fax: (917) 261-5864
`amuller@zuckerman.com
`
`Attorneys for Proposed Intervenors
`
`17
`
`

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