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Mosaic Health Alleges Drug Companies Conspired to Evade 340B Drug Pricing Program

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On Friday a case was filed in the Western District of New York by Mosaic Health, Inc. against three pharmaceutical companies regarding their alleged limitation of the participation of their diabetes control products in the 340(b) Drug Discount program. The suit claimed that these anti-competitive activities negatively impact the general health of medically underserved areas of the country.

The named defendants are Sanofi Aventis, Eli Lily USA, Novo Nordisk, and AstraZeneca Pharmaceuticals.

The 340(b) program, in part, provides savings that fund safety-net hospitals “which provide healthcare services to low-income and underserved” Americans, the complaint said. “Covered entities, such as federally qualified health centers; federally qualified health center look-alikes; native Hawaiian health centers; (and) tribal or urban Indian health centers,” among others, can participate in the program where drugs are provided at cost or with steep discounts to patients directly.

The plaintiffs noted that the defendant companies made strident efforts to limit the amount of access to diabetes medications that were a part of the 340(b) program to participating facilities in 2020. The plaintiffs characterized these lobbying efforts as a failure, culminating in Executive Order 13937, which reaffirmed the need for these medications and did not limit the access to the extent the defendants were seeking.

All defendants then over the course of time between the Executive Order and the filing of the case, allegedly limited the locations that participating facilities could elect to dispense the medication on their behalf to one, which drastically reduced the geographic area that could be served by the program. The plaintiffs noted that the defendants’ actions were concerted in that they used the same lobbyists, made the same restrictions, and followed the same timeline for restrictions that permitted all of the major manufacturers to make the same restrictions without loosing the market share they currently had due to hospitals making contracts with their competitors.

The plaintiffs are suing for Section 1 of the Sherman Act. state antitrust in 16 states, and unjust enrichment under all 50 states as well as the District of Columbia. Plaintiffs are represented by the firm of Harter Secrest & Emery.

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