Hospitals and Eli Lilly and Company are at odds over the federal 340B Drug Pricing Program, a decades-old initiative designed to help safety-net providers stretch scarce resources by purchasing outpatient drugs at steep discounts for vulnerable patient populations.
Created in 1992, the 340B program requires drug manufacturers participating in Medicaid to provide discounted medications to eligible hospitals and clinics, with the goal of expanding access to care for low-income and underserved patients. Hospitals often use the savings to fund uncompensated care, community programs and other services, though the program has long drawn scrutiny from drugmakers over how those funds are used.
The conflict escalated after Lilly warned 340B-covered entities it may cut off access to discounted pricing unless hospitals comply with new requirements to submit detailed claims-level data (transactional pharmacy billing data, not clinical records) through a third-party platform. The policy, which took effect Feb. 1 and runs through the 340B ESP system operated by Second Sight Solutions, makes data submission a condition for receiving 340B ceiling prices. Lilly says more than 1,000 entities have already registered.
The American Hospital Association is pushing back, calling the requirements unlawful and urging the Health Resources and Services Administration to intervene. In an April 27 letter, the group warned that drugmakers are increasingly layering on policies that make it harder and more expensive for hospitals to access discounts they are entitled to under the law.
"Our members tell us that these drug company policies are forcing them to operate under serious cost, chaos and confusion," AHA General Counsel Chad Golder wrote. He said hospitals face a difficult choice to either comply and absorb significant administrative costs or refuse and risk losing access to discounted drugs.
The AHA also said HRSA's lack of action stands in contrast to its swift response to drugmaker rebate models in 2024, raising questions about whether regulators are implicitly allowing the data requirements. The group is urging the agency to either prohibit the policies or clearly state its position to reduce uncertainty.
Lilly said the policy is intended to strengthen oversight, arguing that expanded data collection helps prevent fraud, waste and abuse and ensures 340B discounts benefit patients. The company also maintains the requirements are consistent with existing guidance and do not impose new burdens because hospitals already collect much of this data in the normal course of business.
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