Dive Brief:
- Drugmakers are fighting back against hospitals’ latest attempt to kill the controversial 340B rebate pilot program, arguing they could lose money if the legal system blocks the pilot from taking effect.
- On Oct. 14, pharmaceutical companies AbbVie, Bristol-Myers Squibb and Boehringer Ingelheim filed a motion to intervene in the American Hospital Association’s lawsuit against the HHS. Hospitals had challenged the Trump administration’s new 340B pilot, which would trade upfront discounts for post-purchase rebates for drugs, earlier this month.
- The drugmakers argue the HHS won’t be able to adequately represent their interests and demonstrate the financial impact that the pilot’s cancellation would have. Instead, they want a chance to represent themselves in court.
Dive Insight:
The legal battle over the 340B rebate pilot might feel familiar — it’s the second time the HHS has tried to kickstart the program, the second time hospitals have sued to block it and the second time drugmakers have fought to intervene.
The initial saga last year concluded with hospitals winning their case and the HHS scrapping the pilot.
But in July, the Trump administration said it would try again to require rebates instead of upfront discounts on drugs in 340B. Hospital groups sued again to stop the pilot this month, arguing once again that the switch would threaten the financial viability of safety-net providers in the program.
Now, drugmakers are hoping to have their day in court, after a judge declined their request to intervene in the last lawsuit. To succeed this time, they must demonstrate that there’s a plausible risk the HHS might fail to adequately represent their interests.
In a court filing last week, Boehringer Ingelheim — a Germany-based manufacturer that makes drugs including Jardiance, Ofev and Tradjenta — said it’s losing an average of $3 million per week due to providers’ use of duplicate discounts in 340B and other federal programs.
Boehringer Ingelheim expects to lose more when the CMS’ maximum fair price, which places a cap on what Medicare and plans pay for select drugs, kicks in for Ofev and Tradjenta next year.
The other two drugmakers included in the motion made similar claims, with Bristol-Myers Squibb saying it has already lost $40 million in duplicate discounts, and AbbVie expecting to lose tens of millions, according to the filing.
Drug lobbies are also asking to have a say. PhRMA, the largest pharmaceutical trade association in the U.S., claimed in a separate motion to intervene that it would bring an industry-wide perspective to the case that HHS alone cannot provide.
“While Plaintiffs will likely argue that granting intervention will unduly complicate the suit, that argument should not bear weight,” PhRMA’s filing states. The group says it’s unfair for the plaintiffs to argue that the drugmakers should not have a role in defending themselves.
Last time PhRMA and manufacturers tried to get involved the court denied their motions to intervene, saying they had no “tangible basis” for questioning the government’s ability to represent their interests. PhRMA says that case demonstrated its point, given that the HHS consented to the vacature and allegedly downplayed the drugmakers’ financial harms.
Created by Congress in 1992, 340B allows providers that serve a large number of low-income and uninsured patients to purchase popular drugs at a significant discount, between 25% to 50% off a drug’s list price. Providers argue the program is a lifeline that allows safety-net providers to stretch scarce resources.
But drugmakers believe that providers are abusing the program, including by using prohibited duplicative discounts to reap higher markdowns on drugs. They point to recent reports of ballooning spending — providers purchased $100 billion worth of 340B drugs last year, a 23% increase from the prior year and more than double the amount compared to 2021. Rebates would help curb the problem, according to manufacturers.
