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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA Florida hospital is suing Eli Lilly and Co. after the Indianapolis-based drugmaker moved to restrict some health systems’ access to a federal drug discount program intended for safety-net hospitals that serve uninsured and low-income patients.
The lawsuit filed this month by Tampa General Hospital in the U.S. District Court in the Middle District of Florida marks an escalation of tensions between Lilly and hospitals that rely on the 340B Drug Pricing Program to provide medications to patients.
Last month, Lilly stopped supplying discounted medications to some hospitals in a move the company says is needed to identify waste, fraud and abuse. The drugmaker now requires hospitals to submit insurance claims data for in-house pharmacy dispensing to qualify for discount pricing through the 340B program.
In the complaint, Tampa General Hospital calls Lilly’s move “unconscionable and immoral.” It said the hospital now pays 25% to 50% for most medications from Lilly with “outliers” high above that range.
“Lilly is lining its pockets with illegal profits on drug sales allocated to the needy,” the complaint says.
The hospital provided examples in the complaint of how it is now paying higher rates for medications after the change. The price of a single unit of the breast cancer medication Verzenio increased from $2,426 to $4,327, according to Tampa General. The hospital also said the cost of a single unit of Lilly’s Humalog 3ML Kwik Pen, used for glycemic control in patients with diabetes, increased from $2.22 to $159.12.
The hospital said it and other health systems affected by the change “have no choice but to be Lilly customers in order to serve their patient populations” because Lilly “is a single source or monopoly supplier of numerous medicines for which there is significant demand.”
“Savings TGH would otherwise have used to improve health outcomes and expand health care services throughout the region will instead be used to bolster the bottom line of a company slated to take in around $85 billion in revenue, and over $20 billion in profit, in the current fiscal year,” the complaint says.
The lawsuit also says hospitals “who have caved” to Lilly’s new policy are experiencing substantial administrative costs of providing claims level data for all 340B claims.
“Lilly’s conditions, accordingly, have hurt all of its 340B Drug Pricing Program customers, in Florida and throughout the nation,” the complaint says.
Tampa General asked the court to order Lilly to immediately end its policy and award damages to the hospital.
In January, Lilly said it would begin requiring hospitals and other entities it supplied through the 340B program to submit claims data or be prevented from purchasing medications at a discount through the program.
In a June 1 letter to the U.S. Health Resources and Services Administration, Josh O’Harra, senior vice president and deputy general counsel for Lilly, said 70% of the 2,350 entities purchasing Lilly medications at 340B prices had complied by submitting in-house claims data.
A Lilly spokesperson told IBJ in an email that “this lawsuit is just another part of the broader hospital campaign to fight transparency and hide the fraud, waste, and abuse that plague the 340B program.”
“The claims data Lilly requires hospitals to share is information they already collect and send to insurers regularly,” the spokesperson said. “Refusing to share that same data with Lilly shows that hospitals are more concerned with hiding rampant abuse in the program than improving its integrity. Lilly will keep working to ensure this program serves vulnerable patients instead of hospitals and their for-profit partners.”
The spokesperson declined to comment when asked if any Indiana hospitals are impacted by the policy change.
Attorneys representing Tampa General did not respond to a request for comment from IBJ.
Last month, American Hospital Association CEO Rich Pollack condemned Lilly’s decision in a statement posted to the organization’s website and called on Congress to use its oversight authority and demand the U.S. Department of Health and Human Services to “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,” Pollack said.
The federal 340B Drug Pricing Program is worth tens of billions of dollars a year to health care providers. The 340B shorthand stands for the section of the Public Health Service Act set up in 1992 to help hospitals buy drugs at a deep discount for low-income or uninsured patients in outpatient clinic settings.
Congress passed the 340B program to give more assistance to “covered entities” — often small county hospitals or inner-city clinics that helped patients left behind by bigger hospitals. The program was open to a specific set of hospitals that take care of a large number of low-income patients.
Under the program, pharmaceutical companies are required to provide drugs at a discount to so-called “safety-net hospitals” and community care.
The 340B program’s total drug purchases grew from $2.4 billion in 2005 to $66.3 billion in 2023, according to a report published last year by Kaiser Family Foundation. Hospitals account for a large majority of these drug purchases with more than 2,600 hospitals participating three years ago.
Last year, Indiana legislators passed SEA 118, which established reporting requirements on qualified 340B entities, with a special focus on the dozens of hospitals accessing low-priced medications. And earlier this year, Indiana officials announced plans to eliminate Medicaid coverage of prescription drugs for hospitals through the 340B program.
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