Eli Lilly files motion to prevent giving 340B drug discounts to contract pharmacies

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Eli Lilly has fired back at the Department of Health and Human Services, saying the agency has capitulated to political pressure from Congress to "come down on drug manufacturers" that disagreed with the government's interpretation of the 340B law.

Lilly has filed a motion for a preliminary injunction against a May 17 order from Health Resources and Service Administration Acting Administrator Diana Espinosa telling six drugmakers, including Eli Lilly, to immediately begin offering drugs at discounted prices under the 340B program. The drugmakers are under a June 1 deadline. If it is not met, they face civil monetary penalties.

Five days before sending the letter, HHS Secretary Xavier Becerra faced heated criticism from members of Congress to "take swift enforcement action" against Lilly and others, the motion said.

At issue is Eli Lilly's refusal "to provide its products at steep discounts to for-profit pharmacies," it said. 

Lilly continues to offer 100% of 340B discounts to 100% of covered entities, but will not provide discounts to contract pharmacies as a matter of course, it said.

Covered entities are hospitals that serve vulnerable populations.

Lilly took issue with the timing of the May 17 mandate, saying it came when both parties were in the middle of litigation about the meaning of the 20-year old 340B statute.
 
"Defendants' attempt to circumvent this litigation, and the briefing schedule they agreed to, could not be clearer," the motion said. "In its motion for summary judgment filed May 10, Lilly expressly urged the court to decide this case on the very ground that would preclude the agency from carrying out the threats it made in the May 17 letter." 

WHY THIS MATTERS

Hospitals want drugmakers to supply 340B drugs at a discount to pharmacies covered under their contractual arrangements.

In December 2020, the American Hospital Association and other provider groups filed a motion for a preliminary injunction to have HHS require Eli Lilly, Sanofi-Aventis, AstraZeneca, Novartis, United Therapeutics and Novo Nordisk to provide drugs covered by the 340B Program at the discounted prices when they were sold to pharmacies that had contracts with the hospitals.

On December 30, HHS gave an advisory opinion. It said that covered entities under the 340B Program were entitled to purchase covered outpatient drugs at no more than the 340B ceiling price – and manufacturers are required to offer covered outpatient drugs at no more than the 340B ceiling price – even if those covered entities use contract pharmacies to aid in distributing those drugs to their patients.

Lilly said in its motion that the December 30 decision was inconsistent with the 340B law. 

"It is not difficult to guess the driving force behind this letter," the company's motion said. "At the hearing on Lilly's previous motion for a preliminary injunction, the government emphasized how responsive it was to political pressure from members of Congress to come down on drug manufacturers that disagreed with its interpretation of the statute." HHS is "attempting to force Lilly to provide its products at steep discounts to for-profit pharmacies while pretending that this novel obligation is actually not new at all, but rather has been in the 340B statute since it was first enacted in 1992."

THE LARGER TREND

The 340B Program is a discount drug pricing program for large drug manufacturers to sell outpatient drugs at a discount to certain hospitals, community centers and other federally funded clinics serving low-income patients. Manufacturers are required to offer the discount as a condition of participating in Medicaid and Medicare Part B.

In 2017 alone, 340B hospitals provided more than $64.2 billion in total benefits for their communities, according to the American Hospital Association. 
 

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com