Mounjaro-Maker Eli Lilly Files Lawsuit Against US Agency Over Drug Rebate Program

Eli Lilly And Co. LLY has filed a lawsuit against the Health Resources and Services Administration (HRSA). The pharmaceutical giant claims that HRSA obstructed its attempt to alter drug discount offerings to hospitals.

What Happened: As per Eli Lilly’s official statement on Thursday, the conflict centers on the federal 340B program, which requires drug manufacturers to offer discounts to healthcare providers serving low-income communities. Participation in this program is crucial for drug companies to secure funding from government health insurance programs like Medicare and Medicaid.

Eli Lilly proposed a plan to ensure 340B entities pay no more than the ceiling price by providing them with cash directly on a weekly basis. However, HRSA, a division of the U.S. Health and Human Services Department, rejected this approach, stating it was inconsistent with the 340B law.

“HRSA does not have the authority to arbitrarily reject this model, which serves the original goals of the 340B program and improves transparency, efficiency, and program integrity,” the statement read.

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Why It Matters: The lawsuit comes amid ongoing scrutiny of drug pricing practices. Recently, Doctors Without Borders criticized Eli Lilly and other insulin manufacturers for maintaining high prices, urging them to provide affordable insulin to low- and middle-income countries.

This legal action also follows a similar lawsuit by Johnson & Johnson, which alleged the Health and Human Services Department of blocking its drug rebate plans. The 340B program has been subject to extensive legal challenges, with a U.S. appeals court previously allowing drugmakers to limit the use of outside pharmacies for dispensing under the program.

Meanwhile, Eli Lilly has been in the spotlight for its Phase 3 trial data of tirzepatide, marketed as Mounjaro and Zepbound. The study showed promising results in reducing the risk of type 2 diabetes in patients with pre-diabetes and obesity, highlighting the company’s focus on innovative treatments.

Price Action: Eli Lilly was down by 0.28% during pre-market hours on Friday at the time of writing, as per Benzinga Pro.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.