BMS files legal challenge to HHS' 340B rebate decision

Bristol-Myers Squibb has become the latest drugmaker in the US to file a legal challenge to a block on a drug rebate model opposed by a Health and Human Services (HHS) department.

Specifically, BMS is taking issue with a decision to deny its rebate plan for big-selling blood thinner Eliquis (apixaban) under the 340B federal drug discount programme – which requires companies to discount outpatient drug sales to healthcare systems that serve uninsured and low-income patients – on the grounds that it is inconsistent with the statute.

The 340B requirement has long been a bone of contention for the pharma industry, which claims that the programme has long since strayed away from its primary purpose of ensuring access to medicines for vulnerable people.

Last year, for example, a federal appeals court sided with Sanofi, AstraZeneca, and Novo Nordisk in a dispute claiming that recipients of the discounted medicines charge both uninsured patients and insurance companies higher prices, pocketing the difference.

In its complaint, BMS alleges that HHS' Health Resources and Services Administration (HRSA), which has responsibility for overseeing 340B, has unlawfully denied its plan to pay rebates to qualifying organisations who source Eliquis only after they have bought the drug at normal commercial prices.

In court documents, BMS' counsel asserts that the 340B allows both upfront discounted sales and the rebate model proposed for Eliquis. And that means HRSA's decision last month to block the latter is unlawful because it "walls off" part of the statute governing the programme, is "arbitrary and capricious," and illogical because it "runs afoul of substantive due process principles that guard against irrational governmental action."

The suit levels familiar criticism of the 340B framework in its complaint, claiming that it has become "rife with abuse" by commercial pharmacies, third-party administrators, and other middlemen that buy drugs at the discounted rate and then sell them on at a profit.

"Manufacturers' use of a discount model has unintentionally enabled these excesses, making it impossible to ensure programme integrity," according to the drugmaker, which names HRSA administrator Carole Johnson and HHS Secretary Xavier Becerra as defendants in the lawsuit.

The case is being heard in the US District Court for the District of Columbia and follows similar actions against HRSA's decision to block the rebate model from Johnson & Johnson and Eli Lilly.

In calendar 2023, around $66.3 billion in covered outpatient drugs was purchased under the 340B programme, out of total prescription drug spending in the US of $405.9 billion, according to an update from the HRSA published in October.

Eliquis is among the drugs subject to the first round of Medicare negotiations under the Inflation Reduction Act, which resulted in a 56% cut on its list price.