President Joe Biden has established a June 1 deadline for biopharmaceutical companies to comply with a government program requiring them to supply discounted drugs to pharmacies that contract with hospitals in low-income areas. But Eli Lilly isn’t having it.
With that deadline quickly approaching, the Indianapolis-based drugmaker has asked an Indiana federal court for a preliminary injunction and temporary restraining order against the Department of Health and Human Services. The injunction seeks to prevent the government from imposing penalties for non-compliance with the 340B discount program.
Lilly contends that the court must first issue a judgment on a claim the company made in a January lawsuit challenging the validity of HHS’s prior advisory opinion. The company and others have said the discounts aren’t mandated under the original 340B statute.
Last year, Eli Lilly and other drug companies started restricting discounts to certain pharmacies that contract with 340B hospitals, arguing that some were seeking a profit and not passing discounts on to patients.
The issue has evolved over the past several months, and last week, the Biden administration sent letters to six drugmakers informing them they were violating federal law by restricting access to discounted drugs.
Lilly must “immediately begin offering its covered outpatient drugs at the 340B ceiling price to the covered entities through their contract pharmacy arrangements,” or be subject to a $5,000 penalty for each violation, the letter said. In addition to Lilly, the government wrote to AstraZeneca, Novo Nordisk, Novartis, Sanofi and United Therapeutics.
The feud began last summer when AstraZeneca and Lilly said they’d no longer provide 340B-discounted products to contract pharmacies. The companies argue that waste and abuse in the form of duplicate discounts has become prevalent. They say that the 340B program has grown beyond its original intent and that contract pharmacies don’t always pass discounts on to patients.
Hospital and provider groups say that the program is vital to help safety net providers, which operate on thin margins and struggle with massive price increases.
After drug companies implemented restrictions, HHS issued its advisory opinion in December stating that discounts must be offered regardless of where the patients actually collect their drugs.
The opinion led Lilly, as well as AstraZeneca and Sanofi, to file lawsuits contending it was unlawful and required them to honor a practice that’s not covered under the 340B statute. Advisory opinions don’t carry the force of a law, but they guide how HHS enforces a program.
Now, with the administration’s deadline only days away, it remains to be seen whether the drugmakers will actually offer the discounts, or whether they’ll face government penalties.