Eli Lilly (LLY.N) announced on Thursday that it has sued the federal Health Resources and Services Administration (HRSA). The company claims that HRSA is blocking its plan to modify how it provides drug discounts to hospitals.
The lawsuit involves the federal 340B program. Under this program, drug manufacturers must offer discounts to eligible healthcare providers that serve low-income populations. To receive funding from government health insurance programs such as Medicare and Medicaid, drugmakers must participate in this program.
Eli Lilly announced that its program aims to provide cash directly to 340B covered entities on a weekly basis. This approach ensures that these entities will not pay more than the 340B ceiling price.
However, the Health Resources and Services Administration (HRSA), a part of the U.S. Department of Health and Human Services, rejected Lilly’s model. The agency stated that the model did not comply with 340B law. Lilly expressed this in a lawsuit it filed in federal court in Washington, D.C.
HRSA has not yet responded to a request for comment from Reuters.
Lilly is following in the footsteps of fellow drugmaker Johnson & Johnson, which recently filed a lawsuit against the Health and Human Services Department (HHS). Johnson & Johnson claims that the agency is hindering its plan to sell its psoriasis treatment Stelara and the blood thinner Xarelto to certain hospitals at full price before applying drug rebates.
The 340B program has faced extensive legal scrutiny over the years.
Last year, a U.S. appeals court ruled that drug manufacturers can restrict health providers from using outside pharmacies to dispense drugs under this program. In response, HHS had ordered drugmakers to stop limiting sales to contract pharmacies.
Click here for more Business news.