Five Massachusetts hospitals sued Eli Lilly on Oct. 27, alleging the drugmaker unlawfully cut off their 340B discounts after they refused to provide patient claims data, according to a complaint filed in the U.S. District Court for the District of Massachusetts.
The plaintiffs — Massachusetts General Hospital, Brigham and Women’s Hospital, North Shore Medical Center (Salem Hospital), UMass Memorial Medical Center and UMass Memorial Health-Harrington Hospital — allege Lilly violated Massachusetts’ consumer protection law and was unjustly enriched. The hospitals characterize the dispute as “corporate extortion.” They say they are not asking the court to administer the 340B program or replace HRSA, but to address what they allege are independent violations of state law.
The lawsuit challenges a policy Lilly adopted in January requiring 340B hospitals to submit claims data on drugs dispensed to their patients, including in-house pharmacy and medical claims, through the third-party 340B ESP platform as a condition of receiving the 340B ceiling price. Lilly later gave hospitals five business days to comply or lose pricing and began denying discounts to noncompliant hospitals June 18.
The complaint says 340B ESP is owned through Second Sight Solutions by private-equity-backed Berkeley Research Group. The hospitals contend the requested data is protected health information under HIPAA and argue that the platform’s expert opinion does not establish that the data will remain de-identified, instead suggesting it could be re-identified in Lilly’s hands. They also object to terms that grant Lilly and the platform a license to use the data and cap the platform owner’s liability at $100. The hospitals allege Lilly’s stated goal of preventing duplicate discounts is pretextual because HRSA already has audit and dispute resolution processes.
After the hospitals declined to comply, Lilly stopped allowing them to purchase drugs at the ceiling price, according to the complaint. Brigham and Women’s and UMass Memorial were cut off around June 18, Mass General around July 2, and Salem Hospital and Harrington around Oct. 21. UMass Memorial says the policy will result in annualized overpayments of at least $20 million, while the Mass General Brigham hospitals estimate they will lose tens of millions of dollars in savings annually. Mass General says it overpaid about $2,478 for a single package of the cancer drug Cyramza, while Brigham says it overpaid about $200 for a package of the Alzheimer’s drug Kisunla.
The hospitals say they use 340B savings to support charity care and community services. UMass Memorial provided $413 million in uncompensated care in fiscal 2025, while Mass General, Brigham and Salem together provided more than $800 million in charity care and health-related services, according to the complaint. They are seeking preliminary and permanent injunctions against the policy and loss of 340B pricing, compensatory damages, two to three times damages under state law, restitution and attorneys’ fees. They have also demanded a jury trial.
Becker’s has reached out to Eli Lilly for comment and will update this story if a response is received.
Tampa General Hospital and Mary Hitchcock Memorial Hospital have already challenged the policy in federal court, though neither judge has ruled. Missouri’s attorney general also sent Lilly a cease-and-desist letter over the policy.
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