AbbVie is at the forefront of a new battle in drug companies’ long-running fight to reform the federal government’s $340 billion drug discount program, with a lawsuit challenging the definition of “patient” within the program’s framework.
AbbVie, which has participated in the 340B system for 30 years, filed the lawsuit to “restore the integrity” of the drug discount program, the company said in a 72-page complaint against the Department of Health and Human Services (HHS) and its Secretary Robert F. Kennedy Jr., as well as the Health Resources and Services Administration (HRSA) and Administrator Thomas Engels.
The 340B program is intended to help eligible hospitals and clinics that see large numbers of low-income and uninsured patients by requiring drug companies to offer deep discounts on their products. HRSA still relies on the 1996 guidelines for defining “patient,” but AbbVie says this broader definition “creates loopholes” that could allow covered entities to claim drug discounts or bill the same prescription multiple times based on minimal contact with patients thousands of miles away.
This could result in savings being diverted and mistakenly used as a “discretionary revenue stream” by these companies, the company explained in a release.
The Illinois-based drug company says in its lawsuit that it encountered this problem firsthand when it sought to audit certain hospitals and prescribers it believed were abusing the program, but was denied the ability to investigate because HRSA relied on “an outdated, overly expansive, and incorrect definition of the term ‘patient.'”
AbbVie is now asking the court to authorize and enforce such audits based on an “appropriate statutory definition” of the term “patient.”
As AbbVie notes, the 1996 definition used by HRSA is weak in the face of new technologies that have enabled the blossoming of telemedicine and virtual care, and does not take into account factors such as a “timely care relationship” between a “patient” and his or her prescriber. The company contends that the correct interpretation of the term “patient” is to mean someone who has recently received substantial medical care from a 340B-eligible health care provider who is actively managing their care.
“As a long-time and proud participant in the 340B program, AbbVie has seen firsthand how ambiguous interpretations of ‘patient’ can undermine and ultimately destroy the altruistic goals of the program,” the company explained in a statement. “Our application seeks to establish a clear and prudent patient definition that realigns 340B to its intended purpose: serving vulnerable individuals and true safety net providers, rather than inflating revenue streams that increase overall health care costs.”
AbbVie’s allegations represent a unique angle in a long-running dispute, but alleged deficiencies within the 340B program have been exposed by multiple industry participants over the years. Earlier this year, Eli Lilly and later Novo Nordisk introduced new policies for 340B providers. It required all covered entities to provide claims-level data on all pharmacy and medical dispensing of their products to help companies discover duplicate discounts and prepare for audits if necessary.
The American Hospital Association (AHA) condemned the move in a letter to HRSA last month, warning that drug companies’ requirements would “deprive hospitals of the 340 billion yen in statutory discounts.”
Still, the Trump administration has expressed interest in reforming the system, rolling out a pilot program that would have nine drug companies exchange discounts on limited products for ex-post rebates. The move was blocked in district court in February, but HRSA sought public and stakeholder input on the potential rebate model.
