340B drug rebate proposal leads to another lawsuit

Eli Lilly sued the federal government as the pharmaceutical manufacturer tries to limit the discounts it provides to hospitals.

The company on Thursday sued the Health and Human Services Department and its subagency the Health Resources and Services Administration, claiming the government cannot dictate how it distributes 340 drug discounts. Under the 340B program, drugmakers must sell discounted outpatient drugs to hospitals and clinics that treat many low-income patients to stay enrolled in Medicare and Medicaid.

Related: How lawsuits may reshape 340B reimbursement

The complaint, filed in the U.S. District Court for the District of Columbia, has a focus similar to a lawsuit filed Tuesday by Johnson & Johnson in the same court. Eil Lilly alleges it should be allowed to vet data from 340B hospitals before offering rebates, rather than providing upfront discounts. The drugmaker contends the approach will help weed out any duplicate discounts for the same prescriptions.

HHS and HRSA declined to comment.

An Eli Lilly spokesperson said in a news release HRSA does not have the authority to reject this model, which serves the original goals of the 340B program and would improve transparency, efficiency and program integrity.

The lawsuit underpins a perpetual fight between drugmakers and providers. Drug companies claim the program has grown too large and are seeking to rein in 340B discounts to hospitals that are not eligible. Providers, meanwhile, say they rely on 340B savings to offset the cost of offering less-profitable, much-needed services in their communities.

The federal government has threatened to fine Eli Lilly and Johnson & Johnson if the companies implement such a rebate model for 340B discounts.