Key Takeaways
- Eli Lilly has joined Johnson & Johnson in filing a lawsuit against the federal government over a decades-old drug discounting program.
- The companies have said the 340B program, which requires drugmakers to sell discounted medications to certain medical facilities, needs changes.
- The Health Resources and Services Administration, however, has rejected the companies’ proposed changes to the program.
Eli Lilly (LLY) became the second drugmaker in recent days to sue the U.S. government for rejecting their proposed changes to a program that requires selling discounted drugs to certain medical facilities.
Lilly joined Johnson & Johnson (JNJ), which filed a lawsuit earlier this week against the heads of the U.S. Department of Health and Human Services (HHS) and the Health Resources and Services Administration (HRSA), the agency that oversees the 340B discounting program.
What Is the 340B Program?
The program, created in 1992, requires drug manufacturers to sell discounted medications to hospitals and clinics serving lower-income and uninsured patients, to ensure they are accessible to a wide range of medical facilities.
The drug companies, however, argue that the program has become large enough that hospitals can circumvent the rules of the program without being noticed, taking the discounted drugs and charging patients or insurance companies higher prices to make a profit.
Why Eli Lilly, J&J Say It’s Time for Change
Lilly and J&J both proposed a change to the program, in which they would sell the drugs to medical facilities at the full price, then provide rebates later.
HRSA has rejected the drugmakers’ proposed changes, and the companies have now filed lawsuits arguing that their plans serve the original purpose of the program while lowering the chance that rules are broken. The agency has notified J&J that it would face fines if it went through with an unapproved plan, and the drugmaker said in September it would work with HRSA to address any issues.
Lilly said the agency “does not have the authority to arbitrarily reject this model,” while J&J said it is “taking action to bring much needed transparency essential to helping the 340B program achieve its original intent to support prescription drug access for vulnerable patients.”
When reached by Investopedia, HRSA did not have a comment.
UPDATE—This story has been updated with HRSA’s response.
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