Two hospitals are challenging Eli Lilly’s 340B claims data policy in federal court, and neither judge has ruled. At the center of both cases is whether hospitals can use state-law claims to challenge drugmakers that condition 340B discounts on claims data. Here’s where things stand.
How the dispute started
In a June 1 letter to HRSA, Lilly said it had begun notifying an initial group of covered entities that they had five business days to submit claims data for in-house pharmacy dispensing or face suspension of 340B pricing on its products. At the time, Lilly said 70% of covered entities purchasing its drugs, about 2,350 organizations, had submitted in-house claims data. The company said it is collecting the data to stop fraud, waste and abuse in the program. Novo Nordisk also announced a similar in-house claims data requirement effective April 1.
The Tampa General lawsuit
Tampa (Fla.) General Hospital sued Lilly and Lilly USA July 2, alleging the drugmaker’s decision to cut off its 340B pricing violates Florida’s Deceptive and Unfair Trade Practices Act. According to the complaint, Lilly directed wholesaler McKesson to end the hospital’s discounts June 18, and the price of Mounjaro jumped overnight from $750.52 per unit to $1,019.74, a 35.9% increase. Tampa General estimates it will lose about $24.7 million a year. It dispenses Lilly products only through its in-house pharmacy and does not use contract pharmacies, but the complaint said Lilly applied the same data demand and penalty anyway. The hospital is seeking an order halting Lilly’s conduct, actual damages above $24.7 million and attorneys’ fees.
Lilly’s defense in Tampa
Lilly has moved to dismiss the suit. It argues that every count in the complaint depends on an alleged violation of Section 340B and that the hospital’s state-law claims are preempted because they would disrupt the centralized enforcement scheme Congress created. Lilly also argues it has intergovernmental immunity because it is performing a federal function under its agreement with HHS. Lilly says disputes like this belong in HRSA’s administrative dispute resolution process. On Sept. 22, the Washington Legal Foundation filed an amicus brief backing dismissal, arguing a private party cannot enforce the federal 340B program through a state consumer protection statute.
A 2nd challenge in New Hampshire
Lebanon, N.H.-based Mary Hitchcock Memorial Hospital, part of Lebanon-based Dartmouth Health, also sued Lilly in July. It alleges the data requirement imposes “non-negotiable terms” and “retaliatory pricing penalties in order to extract commercially valuable data.” The hospital said it refused to comply with the demands, which rolled out in February, and Lilly ended its discounts in early July. The hospital has asked the U.S. District Court for the District of New Hampshire for a preliminary injunction. The AHA, the New Hampshire Hospital Association and 340B Health filed an amicus brief supporting the request. The brief argues that Lilly’s policy imposes significant administrative burdens, threatens access to 340B discounts and could reduce resources for patient care. It also argues that federal 340B law does not preempt state laws that protect consumers and prohibit unfair trade practices.
What’s next
Neither court has ruled on the hospitals’ pending requests. The cases could help clarify whether hospitals can use state-law claims to challenge drugmakers’ 340B claims data requirements.
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