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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF NEW JERSEY
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`NOVO NORDISK INC., et al.,
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`Plaintiffs,
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`v.
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`UNITED STATES DEPARTMENT OF
`HEALTH AND HUMAN SERVICES, et al.,
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`
`
`
`
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`Civil Action No. 3:21-cv-806-FLW-LHG
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`Motion Date: April 5, 2021
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`
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`Defendants.
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`
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`DEFENDANTS’ OPPOSITION TO MOTION TO INTERVENE
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`Proposed intervenors in this case already have tried—and failed—to litigate the legality of
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`Plaintiffs Novo Nordisk Inc. and Novo Nordisk Pharma, Inc. (collectively, “Novo”) and other drug
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`manufacturers’ unilaterally imposed restrictions on 340B drug discounts in another federal district
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`court. Every one of the associations seeking to intervene here (hereinafter, “Covered Entities”)
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`was a plaintiff in a suit, dismissed less than a month ago, that sought unsuccessfully to commandeer
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`Defendants’ (collectively, “HHS”) enforcement of the 340B statute against Novo and other
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`pharmaceutical companies. Ignoring that court’s straightforward holding that the legality of
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`Novo’s and its peers’ recent restrictions must be decided, in the first instance, in HHS’s ADR
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`process (not in federal court), the Covered Entities now seek a second bite at the apple by
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`intervening in this suit to again press their interpretation of the statute. But the Covered Entities
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`are no more entitled to litigate the proper interpretation of the 340B statute in this suit than in the
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`one that was just dismissed, and intervention should be denied for several reasons.
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`First, the Supreme Court unequivocally has held that covered entities, like those seeking to
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`intervene here, cannot litigate purported 340B violations because “Congress vested authority to
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`oversee compliance with the 340B Program in HHS and assigned no auxiliary enforcement role to
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`1
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`covered entities.” Astra USA, Inc. v. Santa Clara Cty. (Astra), 563 U.S. 110, 117 (2011). The
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`Covered Entities’ attempt to intervene as defendant here, in place of the agency charged with
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`enforcing the statute, is simply a creative recasting of precisely the type of suit Astra forbade.
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`Second, this Court should not even reach the motion to intervene, because the Court should first
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`address HHS’s forthcoming motion to dismiss,1 which will include arguments demonstrating why
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`this Court lacks jurisdiction to review the interpretation set forth in the Advisory Opinion.
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`Intervention is improper when a court lacks subject-matter jurisdiction over the original action,
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`and the intervention of a new party cannot cure a lack of jurisdiction. Third, even were the Court
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`to reach the motion to intervene, the Covered Entities still do not have an interest in the outcome
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`that is sufficient to meet the requirements of Federal Rule of Civil Procedure 24(a)(2). The Covered
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`Entities have no independent right to defend the legality of government action, and their interests
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`are adequately represented because the government is defending this suit vigorously and seeks the
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`same outcome as would proposed intervenors—a complete denial of relief for the plaintiffs.
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`Instead, the Covered Entities seeking to intervene should present their views as amici curiae.
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`Fourth, the Covered Entities cannot even meet the requirements under Rule 24(b)(1)(B) for
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`permissive intervention because they do not have any “claim or defense” for which there is an
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`independent basis for jurisdiction. The Covered Entities do not seek to assert any claim or defense
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`of their own in this action; instead, any “defenses” they may wish to assert would merely consist
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`of defenses they believe HHS should raise against the claims presented by Novo. And both Astra
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`and the Covered Entities’ own recent, failed suit demonstrate that the Covered Entities cannot
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`1 The deadline to file a responsive pleading is April 27, 2021. See Aff. of Serv. by Cert. Mail,
`ECF No. 23 (reflecting service on the United States Attorney’s Office for the District of New
`Jersey on February 26, 2021); see also Fed. R. Civ. P. 12(a)(2) (requiring a federal defendant to
`file a responsive pleading within 60 days after service on the United States Attorney).
`2
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`present any claim for 340B violations against either drug manufacturers or HHS.
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`Accordingly, the Court should delay consideration of the Covered Entities’ motion to
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`intervene until it has decided the jurisdictional issues that will be raised in HHS’s forthcoming
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`motion to dismiss. But if the Court reaches the motion to intervene, it should be denied. As HHS
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`already has communicated to the Covered Entities, the Government does not oppose participation
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`by the proposed intervenors as amici curiae.
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`BACKGROUND
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`I.
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`STATUTORY AND REGULATORY BACKGROUND
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`In 1992, Congress created a program, administered by the Secretary of Health and Human
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`Services (“HHS”), through which certain safety-net healthcare providers, including hospitals,
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`community health centers, and other federally funded entities (collectively known as “covered
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`entities”) serving low-income patients could receive drug discounts. See Veterans Health Care Act
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`of 1992, Pub. L. No. 102-585, § 602, 106 Stat. 4943, 4967–71 (1992), codified at § 340B, Public
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`Health Service Act, 42 U.S.C. § 256b (1992). The program has dual benefits: Drug discounts
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`“enable these entities to stretch scarce Federal resources as far as possible, reaching more eligible
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`patients and providing more comprehensive services,” H.R. Rep. No. 102-384, pt. 2, at 12 (1992)
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`(conf. report), and also may benefit uninsured and underinsured patients, when covered entities
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`opt to pass along the discounts by helping patients afford costly medications. Congress expressly
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`conditioned drug makers’ access to an incredibly valuable federal benefit—coverage of their
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`products under Medicaid and Medicare Part B—on manufacturers’ choice to participate in this
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`drug-discount scheme, known as the “340B Program.” 42 U.S.C. § 1396r-8(a)(1); 42 U.S.C.
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`§ 256b(a).
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`During the early years of the 340B Program, it became clear that fewer than five percent
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`3
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`of the covered entities statutorily eligible to participate in the 340B Program operated in-house
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`pharmacies; instead, the vast majority of safety-net providers relied on arrangements with outside
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`pharmacies, called “contract pharmacies,” to dispense prescriptions to patients. See Notice
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`Regarding Section 602 of the Veterans Health Care Act of 1992; Contract Pharmacy Services, 61
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`Fed. Reg. 43,549-01, 43,550 (Aug. 23, 1996). And because “covered entities provide medical care
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`for many individuals and families with incomes well below 200% of the Federal poverty level and
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`subsidize prescription drugs for many of their patients, it was essential for them to access 340B
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`pricing.” Id. at 43,549. Covered entities participating in the 340B Program thus began relying on
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`these contract pharmacies to take delivery from manufacturers of drugs purchased by the covered
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`entity and then to dispense those drugs to low-income patients. Id.
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`In 1996, HHS issued non-binding guidance to aid pharmaceutical companies and covered
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`entities in the use of contract pharmacies, explaining that “[i]t would defeat the purpose of the
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`340B program if these covered entities could not use their affiliated pharmacies in order to
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`participate,” because “[o]therwise, they would be faced with the untenable dilemma of having
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`either to expend precious resources to develop their own in-house pharmacies (which for many
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`would be impossible) or forego participation in the program altogether.” Id. at 43,550. Rather than
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`imposing any new requirements, that guidance confirmed the Department’s pre-existing position
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`“that if a covered entity using contract pharmacy services requests to purchase a covered drug from
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`a participating manufacturer, the statute directs the manufacturer to sell the drug at the discounted
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`price,” regardless whether the covered entity directs that the drugs be shipped for handling and
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`dispensing to a contract pharmacy. Id. at 43,549. And, the agency continued, restricting covered
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`entities’ access to 340B discounts to those operating an in-house pharmacy would not be “within
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`the interest of the covered entities, [or] the patients they serve, [or] consistent with the intent of
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`4
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`the law.” Id. at 43,550.
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`Consistent with HHS’s interpretation of the 340B statute and its early guidance
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`implementing the statute’s terms, covered entities have for decades relied on contracts with outside
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`pharmacies to serve their patients and access the discounts Congress provided. Indeed, these
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`arrangements proved so pivotal to covered entities’ and their patients’ access to drug discounts
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`that, in 2010, HHS issued additional guidance specifying that covered entities need not be limited
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`to a single contract pharmacy. See Notice Regarding 340B Drug Pricing Program-Contract
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`Pharmacy Services, 75 Fed. Reg. 10,272-01 (Mar. 5, 2010) (“2010 Guidance”). The agency agreed
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`with commenters that “[i]t would be a significant benefit to patients to allow the use of more easily
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`accessible, multiple contract pharmacy arrangements by covered entities” and that, because “some
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`patients currently face transportation barriers or other obstacles that limit their ability to fill their
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`prescriptions,” more-flexible use of contract pharmacies “would permit covered entities to more
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`effectively utilize the 340B program and create wider patient access.” Id. at 10,273.
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`Also in 2010, Congress opted “to strengthen and formalize [HHS’s] enforcement
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`authority” over the 340B Program. See Astra, 563 U.S. at 121–22. Specifically, Congress included
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`provisions in the Patient Protection and Affordable Care Act (“ACA”), Pub. L. No. 111-148, 124
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`Stat. 119 (2010), to amend the 340B Program to improve “program integrity” related to
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`manufacturer and covered-entity compliance. For example, the Secretary was granted authority to
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`issue new regulations imposing civil monetary penalties on manufacturers that knowingly and
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`intentionally overcharge covered entities. See 42 U.S.C. § 256b(d)(1). Relying on that authority,
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`the Secretary issued a regulation allowing the imposition of monetary penalties, including up to
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`$5,000 for each knowing and intentional instance of overcharging by a drug manufacturer. 42
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`C.F.R. § 10.11(a).
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`5
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`A neighboring provision also instructed the Secretary to establish a 340B Program
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`administrative dispute-resolution (“ADR”) process for covered entities and manufacturers:
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`[T]he Secretary shall promulgate regulations to establish and implement an
`administrative process for the resolution of claims by covered entities that they have
`been overcharged for drugs purchased under this section, and claims by
`manufacturers … of violations [of provisions prohibiting diversion of drugs and
`duplicate discounts], including appropriate procedures for the provision of
`remedies and enforcement of determinations made pursuant to such process
`through mechanisms and sanctions described [herein].
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`42 U.S.C. § 256b(d)(3)(A). Congress included several directives regarding the new dispute-
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`resolution mechanism, but largely granted the Secretary discretion to devise a workable system.
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`The final ADR rule was published in the Federal Register on December 14, 2020, and became
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`effective on January 13, 2021. See 85 Fed. Reg. 80,632. Both covered entities and drug
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`manufacturers now have a mechanism to resolve before the agency disputes arising under the 340B
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`Program. See 85 Fed. Reg. at 80,644.
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`II.
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`
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`PHARMACEUTICAL COMPANIES UNILATERALLY RESTRICT ACCESS TO
`340B DISCOUNTS FOR SAFETY-NET PROVIDERS.
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`Late in 2020, several pharmaceutical manufacturers, including Novo, unilaterally imposed
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`onerous and non-statutory restrictions on providers’ access to 340B discounted drugs.
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`Specifically, Novo announced (more than ten years after HHS’s explicit guidance on the subject)
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`that, effective January 1, 2021, it would no longer ship 340B discounted drugs to more than one
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`designated contract pharmacy per covered entity, and it would only ship to a contract pharmacy
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`where the covered entity is without an in-house pharmacy. See Novo Nordisk, Notice Regarding
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`Limitation on Hospital Contract Pharmacy Distribution (Dec. 1, 2020), Mot., Ex. J, ECF No. 20-
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`2 at 81. Novo claimed that its “new policy” would only apply to “‘hospital’ covered entit[ies],”
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`and that no “‘grantee’ covered entit[ies]” would be “impacted by this change in policy.” Id.
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`Naturally, the public outcry to the drug companies’ actions was swift. In response, HHS’s
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`6
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`General Counsel issued an Advisory Opinion on December 30, 2020, confirming his view—in
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`accord with the agency’s longstanding guidance—“that to the extent contract pharmacies are
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`acting as agents of a covered entity, a drug manufacturer in the 340B Program is obligated to
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`deliver its covered outpatient drugs to those contract pharmacies and to charge the covered entity
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`no more than the 340B ceiling price for those drugs.” HHS Gen. Counsel, Advisory Opinion 20-
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`06 on Contract Pharmacies Under
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`the 340B Program (“AO”) at 1, available at
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`https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/340B-AO-FINAL-12-
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`30-2020_0.pdf. The AO did not represent a change in the agency’s position from the 2010
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`Guidance.
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`III. THE COVERED ENTITIES ATTEMPT TO RESOLVE THIS DISPUTE OUTSIDE
`OF THE STATUTORY SCHEME.
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`On December 11, 2020, each of the Covered Entities seeking to intervene here sued HHS
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`in the Northern District of California. Compl., Am. Hosp. Ass’n v. Dep’t of Health & Hum. Servs.,
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`No. 4:20-cv-8806-YGR (N.D. Cal. Dec. 11, 2020), ECF No. 1. That same day the Covered Entities
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`moved for emergency injunctive relief, seeking to compel HHS to enforce the 340B statute against
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`Novo and other manufacturers, including orders “to require the Drug Companies to provide
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`covered outpatient drugs at or below 340B ceiling prices to covered entities when they dispense
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`those drugs through contract pharmacies,” along with orders for drug companies to issue refunds,
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`and referral of Novo and other companies’ restrictions for the assessment of significant civil
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`monetary penalties. Mot. for Prelim. Inj., Am. Hosp. Ass’n, No. 4:20-cv-8806-YGR (N.D. Cal.
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`Dec. 11, 2020), ECF No. 7.
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`In addition to opposing the Covered Entities’ emergency motion, HHS moved to dismiss
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`the suit in its entirety, arguing that claims for 340B violations must be decided, in the first instance,
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`through HHS’s newly available ADR process. Defs.’ Notice of Mot. & Motion to Dismiss; Mem.
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`7
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`of Points & Auths. in Supp. Thereof & Opp. to Pls.’ Mot. for Prelim. Inj., Am. Hosp. Ass’n, No.
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`4:20-cv-8806-YGR (N.D. Cal. Jan. 11, 2021), ECF No. 64. HHS’s motion demonstrated (1) that,
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`under Astra, Covered Entities may not sue to enforce 340B requirements (regardless whether the
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`agency or a drug manufacturer is named as the nominal defendant); (2) the Covered Entities could
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`not establish jurisdiction under the Administrative Procedure Act (“APA”) because they did not
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`challenge any final agency action; and (3) no jurisdiction exists for a court to review HHS’s
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`enforcement of the statute because such decisions are committed to agency discretion under
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`Heckler v. Chaney, 470 U.S. 821 (1985). Id. at 16–24. Only two days after HHS filed its motion,
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`the court ordered the Covered Entities “to show cause in writing why this case should not be
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`dismissed for lack of subject-matter jurisdiction.” Order to Show Cause re: Dismissal for Lack of
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`Subject-Matter Jurisdiction, Am. Hosp. Ass’n, No. 4:20-cv-8806-YGR (N.D. Cal. Jan. 13, 2021),
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`ECF No. 70 (font altered). The court also suspended hearing the Covered Entities’ preliminary-
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`injunction motion until HHS’s motion to dismiss had been decided.
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`Facing near-certain dismissal, the Covered Entities disavowed their previous request for
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`sweeping injunctive relief requiring HHS to take specified enforcement actions, and instead recast
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`their suit as one seeking to compel HHS to develop a new “enforcement policy.” Pls.’ Resp. to
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`Order to Show Cause, Opp. to Mot. to Dismiss, & Reply in Supp. of Pls.’ Mot. for Prelim. Inj.,
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`Am. Hosp. Ass’n, No. 4:20-cv-8806-YGR (N.D. Cal. Jan. 25, 2021), ECF No. 81.
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`The Covered Entities’ attempt to transform their suit was unavailing: one month ago, the
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`Northern District of California dismissed the case, specifically agreeing with each of HHS’s
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`jurisdictional arguments. See Am. Hosp. Ass’n v. Dep’t of Health & Human Servs., No. 4:20-cv-
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`08806-YGR, 2021 WL 616323, at *1–8 (N.D. Cal. Feb. 17, 2021). Importantly for the present
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`action, the court found the Covered Entities’ claims barred by Astra’s holding that litigation to
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`enforce 340B requirements is “incompatible with the statutory regime” and that Congress had
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`mandated resolution of disputes under the 340B Program in the agency’s ADR process. Id. at *5–
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`6 (quoting Astra, 563 U.S. at 113). Even though the Covered Entities had “creatively recast their
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`claims,” the court found, they “seek precisely that which Astra forbids: the private enforcement of
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`340B program requirements.” Id. at *5. The court then explained:
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`Congress made explicit that alleged 340B Program violations are to be first
`adjudicated by HHS through an established ADR process. This process provides
`the agency an initial opportunity to develop rules and regulations applicable to the
`enforcement of the 340B Program requirements. Moreover, the panel consists of
`decisionmakers with intimate familiarity, technical knowledge, and understanding
`of the nuances inherent in the 340B Program. The judiciary has a prescribed role in
`this process, but its role comes only after the parties have participated in this ADR
`process. This Court will not otherwise short-circuit the foundational regime that
`Congress has enacted in the 340B Program.
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`Id. at *6 (first emphasis added). The court further agreed with HHS that the Covered Entities had
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`not challenged any final agency action, as required to maintain an APA suit, and that the relief
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`sought would invade the unreviewable realm of prosecutorial discretion—even after the Covered
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`Entities had “backtrack[ed] from their own requests for emergency relief.” Id. at *6–8.
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`HHS would have no objection to the Covered Entities’ participation in this action as amici
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`curiae, a role which would permit them to provide this Court with potentially useful information
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`regarding the real-world consequences and purported harms inflicted by Novo’s unilateral
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`restrictions on access to discounted drugs. But, despite undersigned counsel having communicated
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`to counsel for the proposed intervenors that the government would not oppose their request to
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`participate as amici, the Covered Entities instead have moved to intervene as a defendant—a
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`posture which would allow them to sidestep Astra and litigate claims under the 340B statute
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`directly against Novo.
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`ARGUMENT
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`1.
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`Intervention by the Covered Entities is barred by Astra.
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`Even after explicitly being told by the Northern District of California that their challenge
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`to the legality of Novo’s new restrictions must be adjudicated, in the first instance, in HHS’s ADR
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`process—not in federal court—the Covered Entities doggedly (and inexplicably) continue to
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`instead pursue the same verboten result: private enforcement of 340B requirements, in direct
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`contravention of Supreme Court authority. The procedural posture of this case, in which the
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`Covered Entities wish to participate as defendants litigating 340B requirements against drug
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`makers, is even more on-point with Astra than the recent suit against HHS that was dismissed on
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`these same grounds last month. Intervention must be denied because covered entities, like the
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`proposed intervenors here, cannot litigate 340B requirements outside the ADR process.
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`The Supreme Court expressly confirmed in Astra that covered entities may not litigate
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`340B Program requirements. See generally 563 U.S. 110. In that case, a collection of covered
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`entities had sued drug manufacturers for purported overcharges on 340B-covered drugs. The Court
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`rejected as “incompatible with the statutory regime” the covered entities’ efforts to sue to enforce
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`340B requirements, regardless of the legal theory on which they based their claim. Id. at 113. This
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`is because “Congress vested authority to oversee compliance with the 340B Program in HHS and
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`assigned no auxiliary enforcement role to covered entities.” Id. at 117. The Court further made
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`clear that the legal theory relied on by covered entities mattered not, in light of the evident
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`“incompatibility of private suits with the statute Congress enacted.” Id. at 121; see also id. at 120
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`(“Far from assisting HHS, suits by 340B entities would undermine the agency’s efforts to
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`administer both Medicaid and § 340B harmoniously and on a uniform, nationwide basis,” and
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`create a “substantial” “risk of conflicting adjudications”).
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`10
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`Finally, the Court noted that Congress had responded to reports of inadequate 340B
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`oversight and enforcement, not by authorizing private suits by covered entities, but instead by
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`providing for the establishment of an ADR process within the agency. Id. at 121–22 (citing 42
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`U.S.C. § 256b(d)). “Congress thus opted to strengthen and formalize” the agency’s enforcement
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`“to make the new adjudicative framework the proper remedy for covered entities complaining of
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`‘overcharges and other violations of the discounted pricing requirements,’” with the agency’s
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`resolution of ADR complaints subject to review under the APA. Id.
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`The Covered Entities’ request to intervene here is barred by this unmistakable Supreme
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`Court precedent. The calculus is not altered by the fact that the Covered Entities purport to ask this
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`Court to allow them to defend the agency’s statutory interpretation; intervention will still permit
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`covered entities and manufacturers to litigate between them claims for 340B program violations
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`(here, the legality of Novo’s restrictions), which is precisely what the Supreme Court forbade.
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`Stated plainly, Astra confirmed that covered entities simply may not sue, on any legal theory, to
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`enforce their statutory entitlement to 340B discounted drugs (and instead must bring claims for
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`violations in the ADR process). Permitting associations of covered entities here to litigate the
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`correctness of the HHS General Counsel’s statutory interpretation against a drug manufacturer
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`would flout this precedent. Intervention must be denied because it is HHS, not the Covered
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`Entities, to which Congress has assigned oversight and enforcement of 340B. See id. at 118 (“A
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`third-party suit to enforce” 340B requirements “is in essence a suit to enforce the statute itself,”
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`and “[t]he absence of a private right to enforce the statutory ceiling-price obligations would be
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`rendered meaningless if 340B entities could overcome that obstacle by suing” under creative legal
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`theories). Indeed, the Covered Entities’ recent attempt to force HHS to take specified actions
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`against Novo failed on this same ground. See Am. Hosp. Ass’n, 2021 WL 616323, at *5 (“Although
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`11
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`plaintiffs here have similarly and creatively recast their claims as an APA action against HHS and
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`the Secretary of HHS, this action is nothing more than an indirect action against the drug
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`manufacturers themselves.”).2
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`2.
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`The Court should consider the jurisdictional issues raised in HHS’s
`forthcoming motion to dismiss before ruling on the Covered Entities’ motion,
`because there is no basis for intervention in a suit over which the Court lacks
`subject-matter jurisdiction.
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`The Court should not even reach the motion to intervene because intervention is not proper
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`
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`in a case where a court lacks subject-matter jurisdiction. The Court should first address HHS’s
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`forthcoming motion to dismiss, which will raise jurisdictional and other threshold defenses; HHS
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`respectfully contends that this motion will be meritorious and will demonstrate why the Court
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`lacks jurisdiction to decide, in the first instance, the correctness of the HHS General Counsel’s
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`statutory interpretation.
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`A court generally should resolve issues of subject-matter jurisdiction before it considers
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`other issues. Moreover, intervention does not affect the jurisdictional analysis. “Intervention
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`cannot cure any jurisdictional defect that would have barred the federal court from hearing the
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`original action. Intervention presupposes the pendency of an action in a court of competent
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`jurisdiction and cannot create jurisdiction if none existed before.” 7C Charles Alan Wright, Arthur
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`R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1917 (3d ed. 2007) (footnote
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`omitted); accord Fuller v. Volk, 351 F.2d 323, 328 (3d Cir. 1965) (“[S]ince intervention
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`contemplates an existing suit in a court of competent jurisdiction and because intervention is
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`ancillary to the main cause of action, intervention will not be permitted to breathe life into a
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`2 The Covered Entities may respond that nothing in Astra abrogated the ability to bring APA claims
`related to the 340B Program. That is true, but irrelevant. The Covered Entities are not suing HHS
`under the APA (that attempt already has failed), but instead seek to participate as defendants
`against drug maker Novo—which is precisely what the Supreme Court forbade.
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`‘nonexistent’ law suit.”); see also McClune v. Shamah, 593 F.2d 482, 486 (3d Cir. 1979) (“A
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`motion for intervention under Rule 24 is not an appropriate device to cure a situation in which
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`plaintiffs may have stated causes of action that they have no standing to litigate.”).
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`In response to Novo’s complaint, HHS expects to present the Court with strong grounds
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`for dismissal. With respect to the Advisory Opinion the Covered Entities seek to “defend,” HHS
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`will show that no jurisdiction exists under the APA because the Advisory Opinion is not final
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`agency action and because an adequate alternate remedy has been provided by Congress; and that
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`the Advisory Opinion does not exceed statutory authority because the only obligations imposed
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`on Novo flow directly from the 340B statute. The Court therefore should delay resolution of the
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`Covered Entities’ motion until it rules on HHS’s forthcoming motion to dismiss, which should be
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`granted.
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`3.
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`The Covered Entities’ interests are adequately represented by HHS.
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`A separate reason the Covered Entities fail to qualify for intervention as of right is that
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`their interests are adequately represented by HHS—which shares the Covered Entities’ goal of
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`repelling this lawsuit. It is the Department of Justice, not private parties like the Covered Entities,
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`that is charged by Congress with the responsibility of defending federal agencies’ interpretation of
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`federal law. See 28 U.S.C. § 516. Any unique views the Covered Entities wish to present to the
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`Court should be provided through an amicus brief, not participation as a party, because the
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`Department of Justice’s representation of HHS’s statutory interpretation is more than adequate.
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`In United States v. Territory of Virgin Islands, 748 F.3d 514 (3d Cir. 2014), an inmate
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`imprisoned by the Territory of Virgin Islands sought to intervene alongside the United States in a
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`suit against the Territory to ensure the respect of inmates’ Eighth Amendment rights. Id. at 516.
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`The Third Circuit reiterated that a “presumption of adequacy” attached given that the aligned party
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`Case 3:21-cv-00806-FLW-LHG Document 27 Filed 03/22/21 Page 14 of 20 PageID: 592
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`was a government entity, and held that proposed intervenor failed to show that he was not
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`adequately represented by the government because his interests “not only overlap[ped] with those
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`of the United States,” but were “essentially identical.” Id. at 520, 522. The court noted that the
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`proposed intervenor has the same primary goal as the federal government—to “achieve
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`constitutionally required conditions at the facility.” Id. at 522.
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`This case is on all fours with Territory of Virgin Islands. The Covered Entities and HHS
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`have the same primary goal in the litigation—to repel Novo’s challenge to the Advisory Opinion.
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`This triggers a presumption of adequate representation. See id. at 520. HHS’s general need to
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`weigh other competing interests and the possibility that the Covered Entities may disagree with
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`HHS about the minutiae of litigation strategy do not come close to rebutting that presumption.
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`The Covered Entities make no serious attempt to address this standard. Instead, they assert
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`in conclusory fashion that “Defendants’ interests . . . diverge, as they disagree with Proposed
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`Intervenors that HHS has the authority and obligation to enforce” the 340B statute, as interpreted
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`by the Advisory Opinion. Mot. 11. Not so. In defending against the Covered Entities’ suit in the
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`Northern District of California, HHS confirmed that covered entities must challenge Novo’s recent
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`restrictions—as Congress mandated—in the agency’s ADR process. But once an ADR panel has
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`determined whether Novo’s policy comports with the 340B statute, either side can seek judicial
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`review of that ruling under the APA and HRSA can pursue various types of enforcement action if
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`a violation is found. The Covered Entities’ suggestion that HHS has abdicated responsibility for
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`enforcing the statute is meritless. Moreover, the Covered Entities purport to seek intervention to
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`defend the legality of the statutory interpretation set forth in the Advisory Opinion—not to
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`relitigate the scope of HHS’s enforcement efforts. HHS has not backed away from the Advisory
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`Opinion’s interpretation. And if the Court reaches the merits of Plaintiff’s claims, HHS will rely
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`Case 3:21-cv-00806-FLW-LHG Document 27 Filed 03/22/21 Page 15 of 20 PageID: 593
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`on the Advisory Opinion’s reasoning in defending its interpretation. So, there is no divergent
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`interest whatsoever between the Covered Entities and HHS regarding the only matter about which
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`the Covered Entities seek to intervene.
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`The Covered Entities’ threadbare speculation that it is “quite conceivable that the
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`government’s defense . . . may be inadequate,” Mot. 14, is wrong as a matter of both law and fact.
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`HHS, the agency charged by Congress with implementing and enforcing the 340B statute, is fully
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`and forcefully defending its interpretation of the statute in this suit and those brought by other
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`manufacturers in other districts. Equally false is the Covered Entities’ assertion that “HHS has
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`never taken the position that it can or will enforce the statutes as interpreted.” Mot. 14. HHS
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`successfully rebutted that same assertion in the Northern District of California litigation, and it is
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`the Covered Entities that inexplicably refuse to bring a claim for relief before the agency where
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`the legality of Novo’s policy and, if necessary, appropriate enforcement must be decided.
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`To the extent that the Covered Entities may be seeking intervention in a misguided attempt
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`to once again litigate against HHS—for example, by moving for relief enjoining HHS to enforce
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`the 340B s