Tampa General Hospital has sued Eli Lilly and Company over the drugmaker’s “unconscionable and immoral” rescindment of discounted pricing under the 340B program.
The complaint, filed last week for the U.S. District Court in the Middle District of Florida, is early legal fallout from a policy Lilly implemented earlier this year that requires providers participating in the federal subsidy program to submit claims-level data for all pharmacy and medical dispensations. The company threatened to pull the discounts for those that didn’t comply and made good on its threat for a subset of hospitals last month, sparking outrage among provider groups.
Tampa General, a nearly 1,000-bed disproportionate share hospital, confirmed in the legal complaint that it was among those cut off. It is now spending 25% to 50% more on average for Lilly products, “many of which it must purchase because of Lilly’s status as the market’s only supplier of a given drug product.”
Tampa General’s lawsuit frequently describes Lilly in such terms, framing the drugmaker as holding significant monopoly power and wielding it in violation of the Florida Deceptive and Unfair Trade Practices Act. It also often draws contrast to the 340B program’s intent to support the margins of safety-net hospitals providing care to vulnerable patients, against Lilly’s current status as the largest pharmaceutical company in the world by market cap.
A spokesperson for Lilly, in a statement given to Fierce Healthcare, described the lawsuit as “just another part of the broader hospital campaign to fight transparency and hide the fraud, waste and abuse that plague the 340B program.”
Tampa General asked the court to order an immediate end to Lilly’s policy and to award damages for the higher prices to which the hospital was subjected. It contends Lilly’s alleged failure to comply with 340B pricing requirements and decision to continue marketing its products as 340B-discounted are unfair trade practices under the Florida statute.
“The most valuable pharmaceutical company in the world is engaged in a campaign to transfer dollars earmarked for charitable purposes into its own pocket,” the complaint reads. “The direct and inevitable result of Lilly’s actions is reduced healthcare for poor people. Its actions shock the conscience and are self-evidently unconscionable.”
Tampa General, similar to the hospital associations that have protested Lilly’s policy, contends that the claims data it requires imposes substantial administrative burden on 340B providers. Even “hospitals who have caved to Lilly’s new demands” have effectively had the prices for their covered outpatient drugs increased due to those administrative costs, it wrote in the complaint.
Lilly and other drugmakers who have signaled similar plans have said they need claims data to spot instances in which a drug purchase is improperly granted multiple discounts under overlapping programs. The company has also disputed that the burden of its policy is as substantial as hospitals say.
“The claims data Lilly requires hospitals to share is information they already collect and send to insurers regularly,” the Lilly spokesperson said of the lawsuit’s claims. “Refusing to share that same data with Lilly shows that hospitals are more concerned with hiding rampant abuse in the program than improving its integrity. Lilly will keep working to ensure this program serves vulnerable patients instead of hospitals and their for-profit partners.”
The 340B program has proven to be a magnet for industry and policy conflict, particularly in recent years as its scale has ballooned. The divide is most evident in the ongoing clash over a pilot rebate program that the Trump administration attempted to launch at the top of the year but was forced to restart after the hospital industry’s legal pushback.
340B providers also received a shock this past week when the Centers for Medicare and Medicaid Services floated a significant reduction in its 340B reimbursement to 33.4% below average sales price in its annual proposed rule on hospital outpatient payments.