Bristol-Myers Squibb Files Lawsuit Against US Agency For Overreach In 340B Drug Pricing Program

Bristol-Myers Squibb Co BMY filed a lawsuit on Tuesday against the U.S. Health Resources and Services Administration (HRSA) and the U.S. Department of Health and Human Services (HHS), alleging that HRSA's rejection of its proposed rebate model for the 340B Drug Pricing Program violates federal law.

Recently, Johnson & Johnson JNJ filed a lawsuit against a U.S. government agency over a contentious disagreement about payment methods.

The pharmaceutical giant contends the statute governing the program allows manufacturers to choose between rebate and discount pricing models and claims HRSA's decision undermines this flexibility.

The 340B Drug Pricing Program requires drug manufacturers to sell medications at reduced prices to eligible healthcare providers, known as "covered entities," under specific conditions.

Bristol-Myers has historically used the discount model, offering upfront price reductions. However, the company argues this approach has led to widespread program abuses, including violations of safeguards meant to prevent duplication with Medicaid Drug Rebate Program rebates and diversion of discounted drugs to ineligible recipients.

Bristol-Myers claims these issues are exacerbated by intermediaries such as commercial pharmacies and third-party administrators, who profit from price disparities.

Citing these abuses and insufficient enforcement by HHS, Bristol-Myers announced its intention in October 2024 to transition to a rebate model.

Under this system, covered entities would initially pay the commercial price and later receive a rebate to achieve the 340B price. Bristol-Myers argues this model, explicitly permitted by the 340B statute, would enhance program integrity by reducing opportunities for abuse.

Despite the statutory basis for both models, HRSA determined that Bristol-Myers' proposed shift to a rebate model was inconsistent with the 340B statute and required pre-approval.

Bristol-Myers asserts this decision unlawfully restricts manufacturers' statutory options, violates the Administrative Procedure Act, and represents arbitrary and capricious regulatory overreach.

The company further claims the decision is illogical and contradicts substantive due process principles by imposing irrational constraints.

Eli Lilly And Co. LLY has also filed a lawsuit against the HRSA. The pharmaceutical giant claims that HRSA obstructed its attempt to alter drug discount offerings to hospitals.

BMY Price Action: Bristol-Myers Squibb stock is up 0.12% at $59.36 at publication Friday.

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