The company is challenging the “product replenishment model,” which requires healthcare providers to first purchase drugs at higher market prices before receiving a rebate to bring costs down, according to court documents obtained by Becker’s.
Novartis argues that this model does not align with recent changes in drug pricing rules under the Inflation Reduction Act. The company claims that the current product-replenishment model makes it impossible to properly apply these new rules.
Specifically, the drugmaker alleges it is hard to determine which price, the maximum fair price or the 340B discount price, should be used for drugs given to Medicare patients. In the lawsuit, Novartis asserts that a different pricing model, called a “cash-rebate model,” would be better for ensuring that drug prices are correctly calculated and that manufacturers can meet the new requirements.
Becker’s has reached out to HHS for comment and will update this story if more information becomes available.
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.