Dive Brief:
- Eli Lilly is giving hospitals and medical groups in the 340B drug discount program less than a week to comply with the drugmaker’s data sharing requirements or be cut off from valuable savings on Lilly’s medications.
- In January, Lilly said it would begin requiring providers to submit claims data for all of its drugs dispensed in 340B. The company hasn’t been enforcing the policy. But now, providers that don’t comply with Lilly’s ultimatum by this coming Monday will lose access to 340B discounts on the drugmaker’s medications, Lilly warned this week.
- Lilly argued it needs to collect more data from providers to ensure they aren’t double-dipping discounts in 340B with savings in other programs like Medicaid. However, hospitals argue the move is illegal and, if not stopped by regulators, will empower other pharmaceutical companies to take similar actions.
Dive Insight:
Lilly is one of a cadre of major drugmakers looking to crack down on 340B. Pharmaceutical companies argue that the drug discount program is being gamed by savvy hospitals looking to profit from the lucrative discounts that 340B allows — a concern shared by researchers and lawmakers, especially as 340B has snowballed in recent years.
Hospitals counter that drugmakers are just trying to avoid paying discounts that they’re owed in the program, which was set up decades ago to help cash-strapped providers serving vulnerable patients afford pricey prescription drugs.
Along with attempting to reform how 340B discounts are paid, drugmakers are also pushing providers to share more data they can audit to ensure a provider isn’t bringing in duplicate discounts.
Lilly announced it would require providers to share claims data for in-house pharmacy dispenses in January, quickly followed by a similar plan from Novo Nordisk.
And now, Lilly, which offers top-selling drugs like Mounjaro for type 2 diabetes and Zepbound for obesity, is putting teeth behind the requirement.
It’s a “crucial step” to root out 340B fraud and abuse that Lilly takes “reluctantly,” the company said in a letter sent Monday to Tom Engels, the administrator of the HHS agency that oversees 340B.
The majority of eligible providers are already complying with the requirements, Lilly said. But a small group of well-resourced hospitals — led by influential trade associations — are resisting, according to the drugmaker.
“For months, Lilly worked tirelessly to avoid this outcome and resolve any legitimate concerns. But Lilly cannot allow a coordinated holdout — orchestrated by powerful hospital trade groups that oppose 340B transparency in any form — to defeat a lawful, modest integrity measure,” Josh O’Harra, Lilly’s deputy general counsel and head of global public policy, wrote in the letter.
A spokesperson for Lilly declined to comment on which hospitals were not complying.
Hospital associations have decried the data sharing mandate as another thinly veiled attempt from a drugmaker to restrict 340B payments. The labor and expenses needed to comply would burden already strapped facilities, the American Hospital Association argued earlier this year.
But hospitals already collect and send this data to insurers every day, so sharing it with Lilly shouldn’t be difficult, O’Harra wrote in the letter to Engels.
Moreover, the move is consistent with decades of guidance from regulators allowing manufacturers to request information to prevent drug diversion and duplicate discounts, O’Harra said.
Still, hospitals urged the Health Resources and Services Administration to stop Lilly’s policy before it starts a trend.
“We believe Lilly’s actions violate the law and urge HRSA to immediately warn the drugmaker that it will face costly enforcement actions if it goes forward,” Maureen Testoni, the CEO of 340B Health, said in a statement.
“If the federal government does not act, hundreds of other drugmakers could do the same, massively increasing costs for those hospitals that devote the most resources to caring for low-income patients. The consequences of Lilly’s actions for hospitals and their patients will be severe,” Testoni said.
