Lilly loses bid to nix $184m Medicaid fraud penalty

Eli Lilly has lost an appeal in a whistleblower lawsuit that alleged it had defrauded Medicaid by underpaying rebates, keeping it on the hook for almost $184 million in damages.

The 7th US Circuit Court of Appeals in Chicago sided with a lower court ruling in which a jury decided that Lilly had made hidden, retroactive price increases on some of its drugs, and then failed to pay Medicaid the correct rebates on the new, higher prices.

The case dates back to 2014, when Ronald Streck, a former executive at a network of regional drug wholesalers, failed a lawsuit against Lilly under the US False Claims Act. That initially resulted in a jury ordering the pharma company to pay $61 million in damages in 2022, which was tripled the following year by a federal judge.

In the latest ruling, Circuit Judge Joshua Kolar upheld the jury verdict, concluding that the company "was aware of, or disregarded, an unjustifiable risk of skirting the law and chose to obfuscate rather than conduct a reasonable inquiry."

Kolar said in making his decision that the jury verdict "underscores a useful lesson: overcomplicated and hyper technical interpretations cannot defeat common-sense plain readings of text."

Overall, he affirmed the jury's view that Lilly's average manufacturer's price (AMP) calculations were false, that the company had knowingly misled Medicaid, and that the amounts held back from the programme - around $60 million - were material.

In a statement, Lilly said it disagreed with the decision and plans to appeal, whilst adding that the ruling is inconsistent with an earlier verdict in a Philadelphia federal appeals court in another whistleblower case brought by Streck.

Earlier cases brought against Bristol Myers Squibb and Astellas resulted in settlement payments of $75 million and $18 million, respectively, in 2021. Complaints brought against other drugmakers have been withdrawn.

The appeals decision comes less than a month after Lilly was accused of giving illegal inducements to encourage medical providers in Texas to prescribe its medicines in a lawsuit filed by state Attorney General Ken Paxton.

That case asserts that Lilly provided a 'free nurse' programme, delivering patient care services at no charge to providers, in return for prescribing a long list of its medicines, including tirzepatide-based medicines Mounjaro for diabetes and Zepbound for weight loss.