Bristol-Myers Squibb Sues HHS To Implement 340B Rebate Model

On November 26, 2024, Bristol-Myers Squibb (BMS) filed a lawsuit against HRSA in the D.C. District Court to defend its proposed 340B rebate model. BMS’s lawsuit follows similar lawsuits by Johnson & Johnson, Eli Lilly, and Kalderos challenging HRSA’s position that their proposed rebate models are impermissible.

BMS’s complaint states that it informed HHS of its intention to implement a rebate model in the spring of 2025. The model would initially apply solely to Eliquis and would apply to all covered entity types. Eliquis is one of ten drugs selected for Medicare’s Drug Price Negotiation Program, which will set a maximum fair price for the drug beginning in January 2026. The complaint also states that HHS informed BMS that the rebate model would violate the 340B statute. HHS’s rejection of BMS’s proposed rebate model is consistent with its response to both Johnson & Johnson’s and Eli Lilly’s proposals.

BMS’s complaint makes arguments similar to those advanced by Johnson & Johnson, Eli Lilly, and Kalderos. It alleges that HHS cannot require pre-approval of a rebate model, and that its disapproval is arbitrary and capricious. 340B covered entities disagree strongly with manufacturers’ positions and contend that rebate models are contrary to the 340B statute.

AbbVie Updates Its Contract Pharmacy Policy

On December 2, 2024, AbbVie extended its contract pharmacy policy to grantees. Beginning January 1, 2025, grantees will be required to register with, and submit 340B claims data to, 340B ESP™ in order to use an unlimited number of contract pharmacies.

For hospital covered entities with an in-house pharmacy, the updated policy continues to prohibit use of contract pharmacies. Hospital covered entities without an in-house pharmacy can use one contract pharmacy within 40 miles of the hospital, provided that the hospital submits claims data for that hospital to 340B ESP™.

The AbbVie policy also states that 340B drugs cannot be transferred, shipped, or redistributed from a designated contract pharmacy to another location or entity. 

The Powers 340B team will continue to monitor developments related to 340B rebate models and manufacturer contract pharmacy policies.