A simmering dispute between Eli Lilly and the nation’s hospitals boiled over last week.
The drugmaker had been threatening to pull 340B discounts from hospitals that refused to submit claims data, and it made good on that promise last Thursday.
The 340B Drug Pricing Program was established in 1992 to help safety net providers better serve vulnerable populations by allowing eligible hospitals and clinics to purchase outpatient drugs at steeply discounted prices.
Lilly argues that too many large health systems are gaming the system by collecting discounts on drugs that don’t actually go to low-income patients. To protect itself from this type of exploitation, the company imposed a rule requiring hospitals to submit detailed claims data proving the discounted drugs were dispensed to eligible patients.
Lilly announced the data submission requirement in January and gave hospitals until February 1 to comply. The drugmaker said it then spent months sending follow-up letters to roughly 1,000 holdouts before finally withholding discounts last week. The company has not disclosed which hospitals failed to comply.
Predictably, hospitals have pushed back on Lilly’s policy. The American Hospital Association argued the policy is unlawful and places an unreasonable administrative burden on providers that are already stretched thin.
“Congress should immediately use its oversight authority and demand HHS take a position on drug companies’ attempts to hijack the 340B program through burdensome claims-data demands. These manufacturer-imposed requirements would drain scarce resources from 340B hospitals and threaten patients’ access to lifesaving drugs. HRSA and HHS cannot continue to stand by while Eli Lilly and others rewrite the rules for their own benefit and skirt their obligations,” AHA CEO Rick Pollack said in a statement.
340B Health, an organization representing providers taking part in the 340B program, also urged HHS to take enforcement action against Lilly.
“Congress did not give drug companies the authority to create their own reporting requirements and then deny discounts to hospitals that refuse to comply. Lilly’s policy shares many aspects of unilateral drug company rebate models that HRSA has opposed, a position two federal courts subsequently upheld,” Maureen Testoni, CEO of 340B Health, said in a statement.
If Lilly’s policy goes unchecked, other drugmakers are likely to follow suit — which Testoni said would drive up expenses for safety-net providers. In fact, Novo Nordisk implemented a similar policy in April.
So far, HHS has stayed silent. Hospital groups say that silence could be all the permission other drugmakers need to join the trend.
Photo: Olga Zarytska, Getty Images
