Eli Lilly has given some 340B hospitals five business days to begin submitting claims-level data or risk losing access to discounted drug pricing, escalating a growing dispute over transparency requirements in the federal drug discount program.
In a June 1 letter to HHS’ Health Resources and Services Administration and shared with Becker’s, Lilly said it has begun notifying an initial group of 340B-covered entities that they must submit claims data for in-house pharmacy dispensing or face suspension of 340B pricing on its products. The company said wholesalers will be instructed to stop offering 340B pricing to noncompliant hospitals until the required data is submitted.
“If they do not, Lilly will instruct its wholesalers that those entities are no longer eligible for 340B pricing until they submit the outstanding data,” the company wrote in the letter. “Lilly intends to follow the same course for additional covered entities in the weeks ahead.”
The move is the latest chapter in a monthslong battle between drug manufacturers and hospitals over 340B program oversight.
Lilly said it expanded its claims-data collection requirement in February to include in-house pharmacy dispensing, arguing the information is needed to identify duplicate discounts, support audits, initiate dispute resolution proceedings and comply with obligations under the Inflation Reduction Act. The company said covered entities were given a two-month implementation period, multiple reminder notices and individual outreach efforts before enforcement actions began.
According to Lilly, 70% of covered entities purchasing its drugs — about 2,350 organizations — have already submitted in-house claims data, generating nearly 800,000 claims records since Jan. 1. The company said compliance includes two-thirds of critical access hospitals and substantial majorities of several other covered entity categories.
“Lilly is collecting claims data to stop the rampant fraud, waste, and abuse in the 340B program that is harming employers, state and federal governments and patients,” the company said in a June 2 statement shared with Becker’s. “Covered entities have had more than three months to submit the data, but some large hospitals have coordinated a boycott, fighting transparency at all costs. We announced the requirement before it took effect, sent multiple reminders and have reached out individually to entities to discuss — all without success.
The drugmaker also argued that hospitals are already collecting and transmitting similar de-identified claims data to commercial insurers, Medicare and Medicaid, and that federal courts have upheld manufacturers’ ability to request such information.
Hospital groups strongly dispute that position.
In a June 2 statement, American Hospital Association President and CEO Rick Pollack called Lilly’s policy unlawful and warned it could increase costs and administrative burdens for hospitals serving vulnerable populations.
“Eli Lilly will soon take the extraordinary step of denying 340B discounts under its unlawful claims data policy,” Mr. Pollack said. “This decision will undoubtedly harm America’s most vulnerable patients and communities, forcing hospitals to divert resources away from care and towards onerous and expensive administrative burdens.”
Mr. Pollack also criticized Lilly for failing to respond to a May 13 AHA proposal that would have created a neutral, government-administered clearinghouse for data collection rather than requiring hospitals to submit claims directly to the manufacturer.
“It is time for the Department of Health and Human Services to act,” Mr. Pollack said. “With today’s announcement, HHS can no longer sit on the sidelines.”
340B Health, which represents more than 1,600 hospitals participating in the program, also urged federal regulators to intervene.
“Eli Lilly’s decision to deny 340B price discounts to hospitals unless they turn over millions of lines of patient claims data is a huge kick in the face to the nation’s safety-net hospitals,” 340B Health President and CEO Maureen Testoni said in a June 2 statement. “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 with this plan.”
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.