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Lilly updated its restrictions on 340B pricing to disallow covered entities from designating central fill pharmacies as contract pharmacies.

Lilly Says 340B Entities Can’t Designate Central Fill Pharmacies as Contract Pharmacies

Drug manufacturer Eli Lilly late last month again updated its conditions on 340B pricing when covered entities use contract pharmacies.

Lilly was the first company to impose such conditions, starting with one drug in July 2020 then expanding to all of its drugs two months later. Today, 19 companies have such polices. Federal appeals courts are expected to rule in the coming months on the legality of six such policies including Lilly’s.

Lilly initially let entities without an in-house retail pharmacy designate just one contract pharmacy. In December 2021, it began letting entities designate multiple contract pharmacies if they agreed to provide related claims-level data to industry contractor 340B ESP.

Central Fill Pharmacies

340B ESP told entities by email on Lilly’s behalf on Dec. 27 that central fill pharmacies “are not eligible as designated retail pharmacy locations” under Lilly’s policy. “Lilly will only facilitate shipment or replenishment to the contract pharmacy for product dispensed directly by that contract pharmacy at that physical location,” the email said.

The email did not explain why Lilly is making central fill pharmacies ineligible, and a Lilly spokesperson said yesterday that the company had no comment. Many healthcare providers and pharmacies, regardless of size or 340B status, use automated central fill pharmacies to save money and to let their pharmacists devote more time to patient counseling and services.

While the potential impact of Lilly’s decision is still unclear, it might erect a new barrier to entities’ access to 340B pricing on Lilly products. None of the 18 other manufacturers that impose conditions on 340B pricing when entities use contract pharmacies are known to have such a policy.

Replenishment Order Quantities

When Lilly announced in December 2021 that it would honor entities’ multiple contract pharmacy arrangements in exchange for entities’ relevant claims data, it said, “Starting on March 16, 2022, registered covered entities shall have 45 days after product is dispensed to an eligible patient to upload into the 340B ESP system claims data for contract pharmacy orders. Replenishment orders associated with these claims must also be placed within the same 45-day period.”

340B ESP’s Dec. 27 email to entities rephrases that, saying, “Starting on March 16, 2022, registered covered entities have 45 days after product is dispensed to an eligible patient to upload claims data into the 340B ESP system and for associated contract pharmacy replenishment orders.”

340B ESP’s email adds, “Replenishment orders should not exceed the quantities provided as claim level detail into the ESP system.”

Data Submission Timeliness

340B ESP’s email said, “340B ESP and Lilly will continue to monitor data submissions and replenishment purchases. If a covered entity is unable to provide required data in a timely manner, Lilly may no longer facilitate bill to / ship to contract pharmacy replenishment orders of 340B claims for the contract pharmacy locations for which data is not submitted.”

FAQ Document Updated on 340B ESP Website

An updated version of Lilly’s Dec. 16, 2021, FAQ to covered entities has been posted on the 340B ESP website. Two Q&As have been added at the end. The first addresses treatment of central fill pharmacies. The second addresses what happens if an entity misses a data submission date.

There is no new FAQ nor an updated FAQ addressing the statement in 340B ESP’s Dec. 27 email that “replenishment orders should not exceed the quantities provided as claim level detail into the ESP system.”

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