Eli Lilly to halt sales of 340B drugs to contract pharmacies with exception of insulin

Eli Lilly became the latest drug company to restrict sales of drugs discounted under the 340B program to contract pharmacies, escalating a war with hospitals.

The company announced that starting Sept. 1 hospitals cannot get 340B discounted drugs through a contract pharmacy, a popular method used by most hospitals in the program, according to a notice first published on the site 340B Report.

Lilly noted that 340B hospitals can still get discounted insulin through their contract pharmacies, which are third party entities that dispense 340B drugs.

Lilly became the second drug maker to restrict sales of 340B-discounted products to contract pharmacies, following a move a few weeks ago by AstraZeneca.

The drug maker did not immediately return a request for comment.

Drug companies have become more emboldened in recent weeks to restrict sales to contract pharmacies as legal experts say the Trump administration lacks authority to crack down on the drug companies.

Merck, Sanofi and Novartis have called for contract pharmacies to submit claims in order to avoid duplicative discounts.

Back in July, Lilly restricted sales to contract pharmacies of three formulations of the erectile dysfunction drug Cialis.

340B advocacy groups have implored the Trump administration to step in and put a stop to the changes made by drug companies.

“Lilly and other manufacturers must not be permitted to make an end run around the 340B statute in a brazen attempt to avoid their responsibilities under the program,” said Maureen Testoni, president and CEO of the advocacy group 340B Health, in a statement Wednesday.

HRSA told Fierce Healthcare that the 340B statute doesn't specify how the drugs may be dispensed. 

"Without comprehensive regulatory authority, HRSA has only limited ability to issue enforceable regulations to ensure clarity in program requirements across all the interdependent aspects of the 340B program," the agency said.

Pharmaceutical companies are targeting a popular tool used by hospitals in the 340B program, which requires drug companies to provide discounts to safety-net hospitals in exchange for participation in Medicaid.

Roughly one-third of the more than 12,000 340B hospitals use a contract pharmacy to dispense the discounted drugs, according to a 2018 report from the Government Accountability Office.

The GAO report found that the Health Resources and Services Administration, which oversees the 340B program, does not fully assess compliance with the program’s prohibition on duplicate discounts for drugs prescribed to both Medicaid and 340B.

Pharmaceutical manufacturers have also charged that the discount program has gotten too large and unwieldy.

The Trump administration has also tried to cut payments to 340B facilities by nearly 30%. The hospital industry sued to halt the cuts, but a federal appeals court ruled earlier this year that Health and Human Services had the authority to install the cuts.