On December 20, 2024, drugmakers Amgen Inc. (Amgen), Eli Lilly and Company (Eli Lilly), and UCB, Inc. (UCB), sued HHS, alleging that HHS has not fulfilled its obligations to oversee the 340B program by allowing certain STD clinics, including those that only receive in-kind support, to participate in the 340B program.  The suit directly threatens the continued 340B eligibility of STD subgrantees that only receive in-kind support – a group that includes many county health departments and Ryan White HIV/AIDS Program participants.

The complaint names several subdivisions affiliated with Sagebrush Health Services (a 340B covered entity located in Nevada) and states that those entities are ineligible for the 340B program because:  (1) they use 340B drugs for purposes other than STD prevention and treatment; (2) they engage in diversion; (3) they are “sub-subgrantees” that have received federal grant funds only from subgrantees, rather than from state or local governments; (4) they have received only in-kind contributions such as pamphlets or condoms, not grant “funds” (i.e., cash); or (5) HRSA has failed to comply with a statutory requirement to establish a process for the certification of STD grantees and to make the criteria for certification available to manufacturers, including information about past purchases of covered outpatient drugs.

Though only Sagebrush is named in the suit, the manufacturers are asking for the judge to declare that all 340B registrations of all subgrantees that use 340B drugs for non-STD conditions or which only receive in-kind contributions be declared contrary to law.