Aug 6 (Reuters) - Drugmakers Sanofi, Eli Lilly ( LLY ), Novo

Nordisk and AstraZeneca ( AZN ) must face a lawsuit from two health

centers accusing them of conspiring to restrict drug discounts

offered to community pharmacies that contract with providers

serving low-income patients.

A three-judge panel of the 2nd U.S. Circuit Court of Appeals

in New York ruled that federally funded Mosaic Health and

Central Virginia Health Services can move ahead for now with

their proposed class action.

The appeals court in its unanimous order reversed a decision

by a federal judge dismissing the lawsuit.

The clinics contend the drugmakers schemed in 2020 to limit

discounts on diabetes drugs that were available to safety-net

providers purchasing drugs from some pharmacies through a

federal program known as "340B."

As direct competitors, the four defendants control the

diabetes drug marketplace, which would make imposing

restrictions "easy to coordinate and maintain," Circuit Judge

Myrna Pérez wrote in the ruling, joined by Circuit Judges Alison

Nathan and Maria Araújo Kahn.

A Sanofi spokesperson in a statement said the company was

reviewing the opinion and considering its next steps. Eli Lilly ( LLY ),

Novo Nordisk and AstraZeneca ( AZN ) did not immediately respond to

requests for comment. The companies have denied any wrongdoing.

Brian Feldman, a lead attorney for the health clinics, in a

statement called the 2nd Circuit's order a "watershed moment"

and said "we look forward to seeking justice for safety-net

providers."

Mosaic Health operates 22 clinics in New York, and Central

Virginia Health Services runs 18 clinics in Virginia. The two

clinics sued in 2021 seeking damages for alleged revenue lost

from the discount program's savings.

The plaintiffs told the appeals court that Sanofi and the

other manufacturers made billions of dollars in additional

profits "at the expense of safety-net providers and, ultimately,

the patients they serve."

In a court filing, the drugmakers called the plaintiffs'

claims "far-fetched" and said the clinics were trying to punish

the companies for implementing policies designed to address what

they said were "well-documented" abuses of the 340B program.

Drugmakers must participate in the program to receive funds

from government health insurance programs like Medicare and

Medicaid.

The case is Mosaic Health Inc v. Sanofi-Aventis U.S. LLC et

al, 2nd U.S. Circuit Court of Appeals, No. 24-598.

For plaintiffs: Brian Feldman of Aurelian Law

For defendants: Allon Kedem of Arnold & Porter Kaye Scholer

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