A federal jury in Illinois last week ordered drug manufacturer Lilly to pay more than $61 million in damages for misstating its average manufacturer prices (AMP) and underpaying Medicaid drug rebates.
AMP is a key component used to determine 340B prices and the rebates that drug manufacturers must provide to state Medicaid programs under the Medicaid rebate program. Over the past two decades, dozens of drug manufacturers have been required by the U.S. Department of Justice to refund Medicaid programs, and in some instances 340B providers, for overcharges.
340B covered entities however will not share in this award, which ultimately will total more than $183 million after damages are trebled under the federal False Claims Act. The whistleblower who sued Lilly on behalf of the U.S. government and 26 states did not claim in his complaint that Lilly’s actions caused 340B entities to pay more for covered outpatient drugs than they should have under federal law. The federal government declined to intervene in the case on the whistleblower’s behalf in 2018.
News organization Bloomberg reported on Aug. 4 that Lilly will seek to vacate the jury’s verdict.
A federal district judge in Illinois held in February in the whistleblower’s favor that Lilly’s AMP calculations since 2017 were false, as were its certifications to the government that its price calculations complied with the law. Lilly argued that the laws governing how AMP should be calculated are ambiguous and its prices are legal.
The case centers on how Lilly’s AMP calculations treated service and distribution fees that Lilly paid to drug wholesalers, and extra payments for price appreciation that wholesalers make to Lilly after they take possession of drugs but before customers buy those drugs.
