Eli Lilly Shares Tumble 10% Amid 340B Legal Showdown with US Health Agency
1min read Eli Lilly (LLY) recently faced a significant challenge as its stock fell by 5.09% on November 15, marking the fourth consecutive day of decline with a total loss of 10.36%. The shares reached their lowest point since May 2024 during intraday trading. The company is currently embroiled in a legal battle, having filed a lawsuit against the U.S. Health Resources and Services Administration (HRSA). Lilly argues that HRSA unjustly interfered with its discount model for drugs supplied under the government's 340B program.
The 340B program mandates pharmaceutical companies to provide discounts on expensive outpatient medications to healthcare providers that serve uninsured and low-income patients. Lilly's complaint revolves around a cash replenishment model which involves direct weekly payments to these healthcare providers. This method intends to curb abuse within the current system and ensure adherence to existing laws as well as new requirements from the Inflation Reduction Act.
Lilly asserts that HRSA lacks the authority to reject this model, which the company believes aligns with the 340B program's original intent to enhance transparency, efficiency, and program integrity. The lawsuit was filed in the federal court of Washington D.C., where Lilly alleges that HRSA's actions are both baseless and procedurally flawed.
Earlier in the week, another pharmaceutical giant, Johnson & Johnson, took similar legal action against the U.S. Department of Health and Human Services, challenging its refusal to allow J&J to adjust its discount approach for drugs like Xarelto and Stelara under the 340B program.
As Eli Lilly navigates the legal landscape, the company underscores its commitment to maintaining fair practices within the 340B program, emphasizing the importance of ensuring that healthcare providers can continue to serve low-income patients effectively. This legal dispute highlights the ongoing tension between drug manufacturers and regulatory bodies over pricing strategies and cost-containment measures.