Bristol Myers Sues HHS Over Rebate Model in Drug Discount Plan

Bristol Myers Squibb Co. is challenging a federal health agency for denying its plan to implement a rebate model for its blood thinner Eliquis to health providers that treat low-income and uninsured patients rather than through an up-front discount.

The lawsuit filed Tuesday in the US District Court for the District of Columbia challenges the US Health Resources and Services Administration for determining Bristol Myers’ rebate model to discount medicines under the 340B Drug Pricing Program would be inconsistent with federal statute.

Drugmakers under the federal 340B program are required to discount drugs for covered entities, the qualifying hospitals, clinics, and providers that treat a disproportionate number of low-income and uninsured patients. The covered entities currently purchase drugs at a steep discount, but under Bristol Myers’ plan, providers would buy the medicine at commercial price and then submit data to receive a rebate for the discounted price.

Bristol Myers said, at least to start, it intended to implement the model exclusively for Eliquis, which is one of the 10 drugs selected for the first round of the Medicare Drug Price Negotiation Program.

The drugmaker said it met on Oct. 22 with the US Department of Health and Human Services, which oversees HRSA’s authority over the 340B program, to discuss the rebate plan. However, HHS on Nov. 4 declined to approve its intended rebate model.

Bringing the suit alleging violations of the Administrative Procedure Act and due process clause of the Fifth Amendment, Bristol Myers argues its rebate model would prevent duplication prohibitions under the Medicaid Drug Rebate Program and the Medicare Drug Price Negotiation Program.

“BMS has seen the 340B Program become rife with abuse,” the drugmaker wrote Tuesday.

“Even though rebate and discount models stand on equal statutory footing, HHS has determined that BMS’s intended rebate model would be inconsistent with the 340B statute and requires HHS’s pre-approval prior to implementation. That determination is unlawful three times over.”

Bristol Myers is one of several drugmakers who have sought to institute drug rebate models this year and is the latest to sue HRSA for blocking such a program.

Johnson & Johnson and Eli Lilly & Co. filed separate lawsuits earlier this month, and Sanofi SA sent a letter on Nov. 22 to the agency outlining its rebate model plans.

Hogan Lovells LLP represents Bristol Myers.

The case is Bristol Myers Squibb Company v. Johnson, D.D.C., No. 1:24-cv-03337, complaint filed 11/26/24.