Medical Providers Seek Intervention in Eli Lilly Drug Pricing Suit

Six medical entities are pushing back against pharmaceutical company Eli Lilly’s lawsuit against the U.S. Department of Health and Human Services (HHS) over the agency’s expansion of the 340B Drug Pricing Program.

On Friday in the Southern District of Indiana, the American Hospital Association, 340B Health, America’s Essential Hospitals, the Association of American Medical Colleges, the Children’s Hospital Association, and the American Society of Health-System Pharmacists filed a motion to intervene in the case in support of the 340B expansion.

According to the motion, the 340B program, pursuant to section 340B of the Public Health Service Act, requires that for pharmaceutical companies to participate in Medicaid and Medicare Part B, they must sell outpatient drugs at a discount to “covered entities,” which include hospitals, federally funded health centers, and other clinics that serve low-income populations. 340B providers dispense the covered drugs through agreements with pharmacies, with some being in-house and some being third-party “contract pharmacies.”

The motion recalled that in May 2020, Eli Lilly began denying discounts to covered entities for its drug products when distribution was through contract pharmacies, arguing that contract pharmacies are not considered covered entities and thus should not benefit from the 340B program. Five other pharmaceutical companies eventually followed Eli Lilly’s example in denying discounts when contract pharmacies are involved, according to the motion.

Even after a Dec. 30, 2020, advisory opinion — which Eli Lilly challenged in the suit at hand — affirming that drug companies are required to give the 340B discount to covered entities when the products are dispensed through contract pharmacies, “HHS has taken no action to enforce the statute,” the motion said.

HHS did, however, file an opposition to Eli Lilly’s challenge Feb. 16, arguing that if the court were to permit Eli Lilly and other drug companies to withhold their discounts for drugs dispensed at contract pharmacies, it would “drastically restrict many providers’ access to discounted drugs (and, in so doing, boost Lilly’s profits),” as Law Street Media previously reported.

The proposed intervenors argued that if the pharmaceutical companies’ interpretations of the limits of 340B are applied, covered patients and entities’ “340B savings will continue to diminish, seriously hampering their ability to serve vulnerable communities as Congress intended.”

According to the motion, the entities have a right to intervene in the case under Federal Rule of Civil Procedure 24(a)(2), arguing that they are timely, that they have an interest in the matter, “at least potential impairment” if the action continues without intervention, and that their interests currently are not represented by the existing parties.

The proposed intervenors are represented by Hoover Hull Turner.