The Gloves Are Officially Off!

Eli Lilly takes on its regulator--and it isn't pulling any punches.

In a recently filed amicus brief, Eli Lilly, the drug manufacturer, takes the Health Resources and Services Administration, and part of the Department of Health and Human Services, to the proverbial woodshed. HRSA, which administers a huge federal pharmaceutical discount program that has been widely criticized for years, is accused of not acting in “good faith” in its oversight of the program. It’s a watershed moment in the troubled history of the agency.

Background: The brief is filed in support of a lawsuit another manufacturer, Sanofi, has filed under the Freedom of Information Act (FOIA). That suit seeks the contracts between the covered entities (CEs) that, by statute, are the only entities entitled to the billions in subsidies provided under the program, and their contract pharmacies (CPs), typically large, national, for profit chains like CVS and Walgreens, that critics charge siphon off billions from the program each year.

HRSA has defended these CP relationships contending that CPs are the “agents” of the covered entities and that the contract pharmacies never take title to the discounted drugs. HRSA’s position, in essence, is that there is no daylight between the CEs and their 33,000 CPs; the contract pharmacies are, in HRSA’s view, just an extension of the covered entities.  

That position is critically important because the statute explicitly prohibits the diversion of any discounted product by a CE to any person other than a patient of the covered entity. In other words, if the contract pharmacies are not merely the alter ego of the covered entities, the CPs’ receipt of discounted drugs is prohibited diversion.

In its dispute with Sanofi, HRSA has refused to provide any of the contracts between CEs and their CPs, despite the agency’s obligations under FOIA.

Both Barrels: Lilly’s brief is brutal, pulling nary a punch.

Here’s a sample:

• HRSA’s refusal to comply with its FOIA obligations “shows the lengths to which HRSA will go to hide widespread illegal conduct” by CEs and their CPs.

• Lilly suggests that “declarations sworn under penalty of perjury” by HRSA and presentations made by government counsel in “open court” describing how CPs operate were false and would be shown to be false if the contract pharmacy contracts were disclosed.

• Lilly has “grave concerns” that for profit CPs are not operating consistent with the statute and that the “agent” and “title” positions taken by the agency are mere “fictions”.

• Lilly says that it has, itself, sought CP contracts in audits of CEs, but HRSA has refused to compel disclosure in an “apparent effort to conceal their contents and … hide the truth”.

• HRSA “does not want the public to see … [that] diversion is rampant” in the program.

• HRSA is turning a “blind eye” to “massive diversion”.

• HRSA is engaged in the “continued concealment” of the true nature of the program’s failures by asserting “disingenuous claims”.

• Sanofi’s FOIA lawsuit is “critical” to “exposing” HRSA’s “falsities”.

• The agency has “left” the “public” in “the dark” about what actually is occurring under HRSA’s watch.

• HRSA’s “perpetuat[ion]” of the agency and title “myths” demonstrate that the agency is not acting “in good faith”.

Ouch!

It’s a sad day in the history of an utterly broken program.