Drug manufacturer Eli Lilly on Nov. 14 filed a lawsuit (PDF) against the U.S. Department of Health and Human Services and the Health Resources and Services Administration (HRSA) in the U.S. District Court for the District of Columbia, challenging the legality of HRSA’s position that Eli Lilly is prohibited from using a rebate model to provide 340B pricing to covered entities participating in the 340B Drug Pricing Program. Eli Lilly filed the lawsuit two days after manufacturer Johnson & Johnson filed suit in the same federal court on the same grounds [refer to Washington Highlights, Nov. 14]. While Johnson & Johnson’s proposed rebate model applied to two of its drugs and only to disproportionate share hospitals, Eli Lilly intends for its “cash replenishment model” to apply to all 340B-covered entities and to all the manufacturer’s drugs. The rebate model would be administered by third-party vendor Kalderos.
In the legal complaint, Eli Lilly argues that HRSA’s prohibition of a rebate model for 340B drugs violates both the 340B statute and the Administrative Procedure Act. Further, the drug manufacturer maintains that using retrospective rebates is necessary to ensure covered entities do not violate the statutory prohibition on duplicate discounts and achieve compliance with provisions of the Inflation Reduction Act (P.L. 117-169, PDF) requiring manufacturers to provide the lower of the negotiated maximum fair price for a drug or the 340B price. Eli Lilly requested that the court vacate HRSA’s Sept. 18 enforcement letter, declare that its rebate model is lawful, and prevent HRSA from taking enforcement action if Eli Lilly implements its rebate model.