Novartis Sues HHS Over Cash Rebate Model in Drug Discount Plan

Novartis AG is challenging a federal health agency’s decision to rejects its proposal to discount drugs as a rebate rather than up-front to health providers that treat lower-income and uninsured patients.

The lawsuit, filed Wednesday in the US District Court for the District of Columbia, alleges the US Health Resources and Services Administration acted arbitrarily and capriciously when it denied the company’s proposed “cash-rebate system” that would change how medicines are purchased under the federal 340B Drug Pricing Program.

Drugmakers under 340B are required to discount drugs for covered entities, which are qualifying hospitals, clinics, and providers that treat ...