Eli Lilly wants court to halt HRSA from issuing penalties over 340B contract pharmacy moves

Eli Lilly is asking a federal court to stop the federal government from imposing any penalties over its decision to restrict sales of 340B-discounted products to contract pharmacies.

The request for a preliminary injunction and temporary restraining order filed late Thursday comes less than a week after the Health Resources and Services Administration (HRSA) wrote to Lilly and five other drug companies over the contract pharmacy restrictions.

The injunction and order show that drug companies appear likely to fight HRSA’s order to immediately offer 340B-discounted drugs to contract pharmacies, which are third-party entities that dispense drugs on behalf of the 340B covered entities.

Lilly and five other drug companies started to restrict sales of certain drug products to contract pharmacies last summer. The move elicited fierce pushback from providers who claim the moves were an effort to avoid having to offer discounts.

The 340B program requires drug companies to offer discounts to safety-net providers in exchange for participation in Medicare and Medicaid. But drug companies have argued that the use of contract pharmacies, which are employed by a majority of covered entities, has ensured that the benefits of the discounts don’t reach patients.

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Providers argue that the 340B program is vital to combat rising drug prices.

The Department of Health and Human Services’ (HHS') general counsel issued an advisory opinion back in December 2020 that the drugmakers’ moves violated the 340B federal statute. However, HRSA did not call for drug companies to halt the moves until it sent letters to the six drugmakers released Monday. The drug companies have until June 1 to release a plan on how to resume selling to contract pharmacies.

In addition to Lilly, HRSA sent letters to Sanofi, AstraZeneca, United Therapeutics, Novo Nordisk and Novartis.

Lilly had sued over the validity of a December 2020 advisory opinion from HHS’ legal counsel that the drugmakers violated the 340B statute when it restricted access.

Lilly had asked the federal government to extend the June 1 deadline or at least hold off on any penalties until the resolution of that case, but the government declined.

Now Lilly is hoping for a federal judge to impose a restraining order and preliminary injunction in order to hold off on any penalties until the court case is resolved.