AbbVie is spearheading a new battle in pharma’s long-running fight to reform the federal government’s 340B drug discount program with a lawsuit that challenges the definition of what it means to be a “patient” under the program's framework.
AbbVie, a three-decade participant in the 340B system, leveled the suit to “restore integrity” to the drug discount program, the company explained in its 72-page complaint against the Department of Health and Human Services (HHS) and its secretary Robert F. Kennedy Jr., plus the Department of Health Resources and Services Administration (HRSA) and administrator Thomas Engels.
The 340B program is meant to help eligible hospitals and clinics that serve a high volume of low-income or uninsured patients by mandating drugmakers provide sharp discounts on their products. The HRSA still relies on 1996 guidelines to define a “patient,” a broad definition that AbbVie says has “created loopholes” that can allow covered entities to claim drug discounts based on minimal patient contact from thousands of miles away, or for the same prescription multiple times.
This can lead to savings being diverted and wrongly being used as a “discretionary revenue stream” by these entities, the company explained in a release.
In its lawsuit, the Illinois-based drugmaker says it encountered the issue firsthand when it looked to audit certain hospitals and prescribers that it believed were abusing the program, but it was denied the ability to investigate based on HRSA’s reliance on its “outdated, overly expansive, and erroneous definition of the term ‘patient.’”
Now, AbbVie asks the court to authorize and enforce such audits based instead on the “proper statutory definition” of the term “patient.”
As AbbVie puts it, the 1996 definition that the HRSA uses is weak in the face of newer technologies that have allowed telehealth and virtual medicine to blossom and doesn’t account for factors such as a “timely care relationship” between a “patient” and their prescriber. The company maintains that the correct interpretation of the term “patient” should mean that a person received recent and substantial medical care from a 340B eligible provider who is actively managing their care.
“As a longtime, proud participant in the 340B program, AbbVie has seen firsthand how a nebulous interpretation of ‘patient’ can undermine—and ultimately destroy—the altruistic goals of the program,” the company explained in a statement. “Our filing seeks to establish a clear, sensible patient definition to realign 340B with its original intent—serving vulnerable individuals and true safety net providers, not padding revenue streams that increase overall healthcare costs.”
Although AbbVie’s complaint represents a unique angle in a long-running fight, purported flaws within the 340B program have been brought to light by several industry players over the years. Earlier this year, Eli Lilly and, later, Novo Nordisk implemented new policies for 340B providers, requiring all covered entities to provide claims-level data for all pharmacy and medical dispensations of their products in order to better help the companies spot duplicate discounts and prepare audits if necessary.
This move was slammed by the American Hospital Association (AHA) last month in a letter to HRSA, warning that the drugmakers’ requirements will “prevent hospitals from obtaining the 340B discounts they are owed by statute.”
Still, the Trump administration has shown interest in reforming the system, rolling out a pilot program that would have had nine drugmakers swap out discounts for after-the-fact rebates on a limited set of products. Although that move was blocked in a district court in February, HRSA has requested public and stakeholder input on a potential rebate model.