(Reuters) – Eli Lilly (NYSE:) said on Thursday it has sued the federal Health Resources and Services Administration (HRSA) for allegedly blocking the company’s plan to change the way it offers drug discounts to hospitals.
The case centers on the federal 340B program, in which drug manufacturers provide rebates to eligible health care providers who serve low-income populations. Drug manufacturers must participate in the program to receive money from government health insurance programs such as Medicare and Medicaid.
Eli Lilly said its program is designed to make cash payments directly to covered entities under the 340 billion each week so that they pay no more than the 340 billion ceiling price.
The company added that the HRSA, which is part of the U.S. Department of Health and Human Services, rejected Lilly’s model, stating it violated the 340B law, Lilly said in a lawsuit filed with a federal court in Washington DC.
HRSA did not immediately respond to a Reuters request for comment.
Lilly follows fellow drugmaker Johnson & Johnson (NYSE:), which sued the Health and Human Services Department on Tuesday, accusing the agency of blocking its plan to sell its psoriasis treatment Stelara and blood thinner Xarelto to some hospitals at full price before medicine discounts are applied.
The 340B program has been the focus of wide legal scrutiny over the years.
A U.S. appeals court said last year that drugmakers can limit health care providers’ use of third-party pharmacies to dispense drugs under the 340B program. HHS had ordered drugmakers to stop restricting sales to contract pharmacies.
