Darwin's Our Take 6.29.26: Eli Lilly withholds 340B pricing from certain hospitals

Eli Lilly withholds 340B pricing from certain hospitals

Earlier this month, Eli Lilly told hospitals they had five business days to begin complying with a 340B policy the company had announced in January and implemented on Feb. 1. If the hospitals did not start submitting in-house pharmacy claims data as the new policy requires, Lilly said, they risked losing access to 340B drug pricing.

Now, apparently, Lilly has followed through, suspending discounted pricing for noncompliant hospitals.

According to the company, approximately 70% of covered entities under the 340B program, or roughly 2,350 organizations, have complied with the requirement. Lilly said the data is needed to identify instances of duplicate discounts and to comply with obligations set forth in the Inflation Reduction Act.

As expected, hospital groups issued responses to Lilly’s decision to withhold the 340B pricing. Several asked the Health Resources and Services Administration, the federal agency that oversees the 340B program, or lawmakers to intervene.

Rick Pollack, CEO of the American Hospital Association, called on Congress to “immediately use its oversight authority and demand [the Department of Health and Human Services] take a position on drug companies’ attempts to hijack the 340B program through burdensome claims-data demands.

“These manufacturer-imposed requirements would drain scarce resources from 340B hospitals and threaten patients’ access to lifesaving drugs. HRSA and HHS cannot continue to stand by while Eli Lilly and others rewrite the rules for their own benefit and skirt their obligations,” Pollack said in the organization’s statement.

In a letter to HRSA’s administrator, Thomas Engels, America’s Essential Hospitals said Eli Lilly lacks the statutory justification or HRSA approval to unilaterally suspend access to 340B pricing.

The organization said in a press release that Lilly “lacks the authority to demand claims information from in-house pharmacies without HRSA approval” and said Lilly’s demands “could functionally increase the cost of 340B drugs above the statutory ceiling price.”

America’s Essential Hospitals urged HRSA to level civil monetary penalties against Lilly and to use all other available tools to restore access to the 340B drug pricing program to all covered entities.

The hospital lobby group noted that as many as nine other drug manufacturers have proposed “similar schemes” and threaten to withhold access to the program’s discounted pricing unless hospitals comply.

Maureen Testoni, CEO of 340B Health, said in a press statement, “Lilly’s policy is a direct attack on the nation’s health care safety net and a dangerous escalation that will significantly increase costs for 340B providers as well as undermine access to care and the very purpose of 340B.

“We believe Lilly’s actions violate the law and are an unprecedented attempt to rewrite the 340B rules without congressional approval. Congress did not give drug companies the authority to create their own reporting requirements and then deny discounts to hospitals that refuse to comply,” Testoni continued.

“Lilly’s policy shares many aspects of unilateral drug company rebate models that HRSA has opposed, a position two federal courts subsequently upheld. If HRSA allows this unlawful conduct to stand, many other drugmakers are poised follow suit, dramatically increasing costs for safety-net providers and threatening health care access for millions of patients.”

A spokesperson for Lilly told Fierce Healthcare the company had sent multiple reminders to the hospitals that had not complied with its policy and had reached out individually to discuss the matter, “all without success.”

OUR TAKE: When several large drug manufacturers attempted to implement 340B programs that would have made hospitals pay full price for certain drugs up front and then submit documentation in order to receive rebates, HRSA said they could not do so without the agency’s approval and threatened to levy fines against them if they proceeded with the rebate programs.

The drug companies sued and, for the most part, federal judges ruled against them.

But last summer, HRSA announced a voluntary (for drug manufacturers) 340B rebate model pilot program for drugs on the Medicare price negotiation list for 2026. The program, which HRSA said was designed to test the rebate model “in a methodical and thoughtful approach to ensure a fair and transparent 340B rebate model process,” was to go into effect on Jan. 1.

As of November, nine manufacturer plans for specific drugs were approved to participate in the pilot, but the American Hospital Association and others sued to prevent it from being implemented. A district court issued a preliminary injunction in late December and officially vacated the pilot program in February, sending the matter back to HRSA for reassessment.

In May, HRSA said it was reviewing comments received in response to a Request for Information it issued about the rebate model pilot program in February.

Given that HRSA published a notice on June 15 requesting clearance from the Office of Management and Budget to collect information related to running the rebate model program, it appears the agency is planning to pursue the matter.

HCR #210: Making Healthcare Work for Rural America, with Dr. Tim Ferris

Rural hospitals in the U.S. have been closing at a steady pace for over 50 years, and the country now has one of the lowest rates of acute hospital beds per capita among OECD nations. Dr. Tim Ferris, Vice President of the Health Care Practice at InterSystems and former National Director of Transformation for the NHS in England, joins John to unpack the Rural Health Transformation Program, why value-based care models built for large health systems don't translate to rural America, and what lessons the U.S. can borrow from his time inside the NHS. Available on Spotify, Apple, YouTube, or anywhere you listen to podcasts.

What else you need to know

AbbVie and Biogen both made deals to bolster their immunology pipelines this past week. AbbVie entered into a definitive agreement to acquire Waltham, Mass.-based Apogee Therapeutics in a transaction with a total equity value of approximately $10.9 billion. Through the acquisition, AbbVie will gain Apogee’s lead candidate, zumilokibart, an anti-IL-13 antibody in midstage development as a subcutaneous treatment for atopic dermatitis, or eczema, that can be dosed every three to six months.

Apogee’s pipeline also includes APG273, a potential best-in-category long-acting therapy that combines zumilokibart with another investigational drug known as APG333. APG273 is in preclinical development as a treatment for asthma. / Under the terms of the agreement, AbbVie will pay $135.11 per share in cash, a price representing a 49% premium to Apogee’s closing price on the day before the deal was announced. The acquisition is subject to customary closing conditions, including approval by regulatory authorities and Apogee shareholders. It is expected to close in the third quarter.

Biogen entered into a definitive agreement to acquire San Diego-based startup RayThera for as much as $1 billion in an undisclosed combination of upfront and milestone payments. RayThera’s pipeline contains multiple candidates in lead optimization or preclinical development for immune-mediated conditions across a range of indications, according to the news release. The deal is subject to regulatory approval and other customary closing conditions and is expected to close in the third quarter.

Neither Biogen nor RayThera have provided details on RayThera’s pipeline assets, but Fierce Biotech reported that analysts at BMO Capital Markets found RayThera patents covering TNF modulators, CCR4 inhibitors, and STAT6 modulators. In a note to investors, the analysts said the patents “may provide some line of sight to potential targets being pursued,” according to Fierce Biotech.

Hackensack Meridian Health and Hunterdon Health signed a letter of intent for a proposed merger of the two nonprofit health systems. The boards of both systems voted to explore a long-term partnership between the two organizations, according to a press release. Based in Flemington, N.J., Hunterdon Health consists of Hunterdon Medical Center and more than 30 medical practices located throughout central New Jersey. Hackensack Meridian, based in Edison, N.J., has 18 hospitals and more than 500 outpatient locations. Among the reasons for pursuing a merger, which Hunterdon Health provided in a list of FAQs, are a strengthened capacity to expand access to care, enhance clinical services, and invest in advanced technologies.  

Cadence announced new affiliations with Durham, N.C.-based Duke Health and Arlington-based Texas Health Resources, alongside securing $100 million in Series C funding. Spark Capital led the funding round, in which Duke Health, Corewell Health Ventures, Memorial Hermann, General Catalyst, and other venture capital and investment firms participated. Cadence, a clinical AI company that specializes in remote patient monitoring and chronic care management, stated in the press release that it now partners with more than 20 leading health systems and supports more than 100,000 patients. The company said it would use the additional capital to expand across new health systems, advance its AI agents, and grow value-based care models.  

The Justice Department has charged 455 defendants in a $6.5 billion healthcare fraud “takedown.” Among those charged are 90 physicians and other medical professionals. As part of the effort, according to the DOJ’s press release, CMS suspended 1,079 providers and revoked billing privileges for 1,403 providers; 48 Civil Monetary Payment settlements were made totaling more than $73 million; and HHS’ Office of Inspector General took 25 actions seeking more than $10 billion in payments to the Medicare Trust Fund from payments CMS caught and suspended before the funds were paid to fraudulent providers. In addition, civil charges were brought against 13 defendants for $14.8 million in healthcare fraud schemes, and 31 defendants agree to civil settlements totaling $23 million.

Executive Moves

William Robertson will retire as CEO of MultiCare Health System at the end of this year. Florence Chang, who is currently president of the Tacoma, Wash.-based health system, will take on the additional responsibilities of CEO at that time. Robertson joined MultiCare in 2014, according to the announcement, and served as both president and CEO until 2022, when Chang became president.  Since joining MultiCare in 2006, Chang has served in multiple senior executive roles, including chief information officer and chief operating officer.

Kevin Leahy will step down as CEO of Franciscan Health effective Dec. 31, though he will serve as a consultant through 2027. By the time he retires, he will have been with the Mishawaka, Ind.-based nonprofit Catholic healthcare ministry 48 years. The press release did not mention plans or a time frame for finding or naming his successor.

Madeline Bell, CEO of Children’s Hospital of Philadelphia, will retire on Oct. 1. She has been with CHOP for nearly 40 years, the news release stated, serving as CEO for 11 years and as chief operating officer for eight years before that. Dr. Joseph Mitchell, who joined CHOP in April 2025 and currently serves as the organization’s president, will take over the role of CEO in addition to that of president when Bell retires. Before joining CHOP, Dr. Mitchell was executive vice president at Boston Children’s Hospital and president of Brighton, Mass.-based Franciscan Children’s.

Dr. Omar Lateef, president and CEO of Rush University System for Health and Rush University Medical Center, will retire in June 2027. Rush’s board of directors announced on Thursday that it will launch a national search for his successor this fall. Dr. Lateef joined the faculty at Chicago’s Rush University Medical Center soon after completing his residency there in 2005. He was named president and CEO of the medical center in 2019, president of the health system in 2021, and the system’s CEO in 2022.

What we’re reading

CJR-X: Improving Outcomes Via Post-Discharge Care Pathways. Forvis Mazars, 6.23.26

Fake Cancer Medicines Have Reached US Clinics And Most Providers Don’t Know It. Health Affairs, 6.24.26

Whole-System Trust in Science, Medicine, and Public Health. JAMA, 6.25.26

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