340B claims data requirements put hospital discounts under stress

Provider advocates criticized Eli Lilly for ramping up pressure on hospitals to comply with a new policy regarding claims submission in the 340B Drug Pricing Program.

The drug manufacturer said holdout hospitals will lose 340B discounts on all Lilly products unless the hospitals quickly comply with a mandate issued earlier this year to submit claims data for in-house pharmacy drugs. A notice to that effect was sent June 1 to the Health Resources and Services Administration (HRSA), the federal agency that oversees the 340B program.

Lilly said 30% of 340B covered entities have not complied with the new requirement. The risk of immediate exclusion is limited to certain large health systems, per the company’s notice. Those organizations have been notified that they have five business days from the date of the notice to come into compliance.

“A large majority of covered entities accepted Lilly’s offer and submitted data without incident,” the letter to HRSA states. “A minority of entities — led by the country’s largest and best-resourced hospitals and organized through their trade associations — continues to refuse to submit data.”

HRSA has not responded to the notice except to say it is reviewing the policy to determine next steps.

Lilly justified the policy, which began Feb. 1, as necessary to avoid duplicate discounts for drugs included in both 340B and the Medicare price negotiations under the Inflation Reduction Act.

Manufacturers also have expressed concern about overlap in discounts between 340B and the Medicaid Drug Rebate Program. Another issue they hope to mitigate via enhanced claims data submission is diversion, whereby a 340B drug is dispensed to someone who does not meet the program’s definition of an eligible patient.

What Lilly’s 340B claims data policy requires

Compliance with Lilly’s policy entails submitting both pharmacy and medical claims data within 45 calendar days of the original dispense date for most drugs, and 60 days for certain infused, injected or clinically administered specialty medications.

Among more than 10 data elements to be submitted through the 340B ESP platform with each claim are the quantity dispensed, the duration of the supply, the refill code and the medical modifier.

The provider advocacy group 340B Health described the new policy as requiring hospitals to “turn over millions of lines of patient claims data.”

The American Hospital Association (AHA) called on HHS and HRSA to intervene.

“This administration has repeatedly shown that it is willing to be tough on drug companies to protect America’s patients from profiteering and price gouging,” the AHA stated. “On behalf of the hospitals and health systems that serve America’s rural and most underserved communities, we ask HHS to show that same toughness here and prevent Lilly from moving forward with this illegal and harmful policy.”

Current or pending legislation exempts covered entities in 10 states from requirements for 340B claims submission. Lilly thus has not implemented the new mandate for providers in Colorado, Maine, Nebraska, North Dakota, Oregon, Rhode Island, South Dakota, Tennessee, Vermont and West Virginia, along with federally qualified health centers in New Mexico.

Other drug companies follow suit

The new policy expands previous requirements by Lilly and other manufacturers for claims data on drugs dispensed at contract pharmacies.

“Although platform details and product scope differ, the common thread is straightforward. Access to discount pricing is increasingly conditioned on the ability to produce verified claim-level data on schedule and through a specified portal,” the law firm of Frier Levitt, which represents providers in 340B litigation, wrote in a March analysis.

Novo Nordisk implemented a similar policy to Lilly effective April 1 (but does not list North Dakota and West Virginia as exempted states). AstraZeneca ended exemptions for in-house pharmacy drugs with respect to its reporting requirement effective May 1, and Bristol Myers Squibb acted likewise.

“If the federal government does not act, hundreds of other drugmakers could do the same, massively increasing costs,” 340B Health wrote in its statement on Lilly’s expanded requirements.

In a May letter to Lilly, the AHA said providers understand the need for program integrity measures. A better approach than requiring claims submissions to manufacturers, however, would be to install a third-party data clearinghouse that would have federal oversight.

“This ‘clearinghouse’ would identify any instances of duplicate discounts or diversion, while limiting the costs imposed on 340B hospitals and protecting their legitimate interests in maintaining data and patient privacy,” the AHA wrote.

Such an approach would be “less burdensome and expensive than Lilly’s unilateral claims-data policy, but it provides the same transparency that both the AHA and Lilly are committed to ensuring.”

Operational and compliance challenges for hospitals

The Frier Levitt analysis states that if a provider loses access to 340B discounts, it first should look to HRSA’s 340B administrative dispute resolution (ADR) process.

“Because the U.S. Supreme Court has held that there is no private right of action under the 340B statute, the ADR process is the principal federal mechanism for covered entities to enforce their pricing rights,” the analysis states.

The firm says providers should ensure they are operationally ready for the new requirements to become commonplace.

“Pharmacy, revenue cycle and compliance teams should be able to connect each dispense to a qualifying encounter, a prescriber and a clearly identified payer, then furnish those data elements in the format and cadence the manufacturer requires,” according to the analysis. 

What hospitals should monitor next

The various manufacturer policies may be the precursor to a larger change if, as expected, HRSA pushes through a comprehensive 340B rebate model. Providers would need to float the full price for a covered drug, then submit claims data to receive a rebate.

After an initially proposed rebate model was scuttled by litigation in early 2026, HRSA drafted another model in the spring of 2026. Seeking to address one of the issues that led to the legal challenges, the agency subsequently solicited stakeholder comments via a formal request for information.

Despite receiving more than 5,000 public comments, HRSA took only five weeks from the comment deadline to send the model to the Office of Management and Budget for a final review, which is in progress. The model is expected to be formally published over the summer, potentially leading to a 2027 start date.