Lilly Sues US Agency For Blocking Proposed Drug Rebate Plan

Eli Lilly sued the Health Resources and Services Administration (HRSA) for allegedly blocking the pharma giant's proposal to change the manner by which it offers discounts on medicines under a federal program.

Pharma companies use the 340B Drug Pricing Program to supply drugs at discounted prices to eligible healthcare organizations and covered entities serving low-income populations.

Lilly devised a model where the drugmaker would pay cash directly to entities that are covered by the 340B every week, thus ensuring that those covered do not pay more than the ceiling price of the 340B.

"...This model offers faster payments, improves cash flow for covered entities, and increases transparency. And it aims to prevent abuses seen in the current program, ensuring compliance with existing laws and new requirements under the Inflation Reduction Act [IRA]," Lilly said.

Lilly claims the HRSA rejected its model without any reason or process and said 340B program was created by "for-profit pharmacies, third-party administrators, and large hospitals."

It also claimed that the program allows the entities "to exploit arbitrage opportunities, is deliberately opaque, and allows these entities to freely circumvent the law."

In its complaint, Lilly said it has contracted with a healthcare technology company called Kalderos to implement the process.

"Providers will dispense the medicine and send readily available information to Kalderos; Lilly will put cash into their hands weekly (and without others' hands in the till). And Lilly's program will ensure that manufacturers are not forced to make duplicative price concessions across interlocking provisions of the 340B statute, the Medicaid statute, and the IRA."

Lilly's claims its proposed program will ensure that manufacturers are not forced to make duplicative price concessions across interlocking provisions of the 340B statute, the Medicaid statute, and the IRA.

According to Lilly, the HRSA lacks the authority to arbitrarily reject its model, which it stated, serves the original goals of the program.

Johnson & Johnson sued the Health and Human Services Department on Tuesday accusing the agency of blocking plans to sell Stelara and Xarelto, a psoriasis treatment and blood thinner respectively, for their full price to a number of hospitals before applying rebates, Reuters reported.

Over the years, the 340B program has been the subject of legal scrutiny. A U.S. appeals court ruled last year that drugmakers can restrict healthcare providers from using external pharmacies to dispense 340B drugs. HHS had ordered drugmakers to stop curtailing sales to these pharmacies.

In September, Sen. Bill Cassidy (R-La.), ranking member of the Senate health committee, wrote to the CEO of Lilly regarding the company's restrictions on drug discounts under the 340B program.

In June, Lilly restricted 340B drug distribution to wholly-owned contract pharmacies and thus only allowing 340B drugs to be distributed directly to covered entities and their child sites.

In the letter, Cassidy asked Lilly to submit data of how changes in its 340B policy affected its sales under the program, as well as figures showing that there have been fewer duplicate discounts and diversions of 340B-covered drugs. The senator also sought detailed accountings of the company's participation in 340B program starting from 2018.