Five Massachusetts hospitals have filed a lawsuit against pharmaceutical giant Eli Lilly, accusing the company of violating a federal law that requires discounted outpatient drug pricing for healthcare providers serving uninsured and low-income patients. The legal action, initiated Tuesday in U.S. District Court in Boston, centers on the company’s refusal to extend tens of millions of dollars in discounts under the 340B program due to the hospitals’ refusal to share patient data in the manner Lilly demands.
The hospitals involved include Massachusetts General, Brigham and Women’s, Salem Hospital, UMass Memorial Medical Center, and UMass Memorial Health — Harrington. The lawsuit alleges that Lilly is leveraging its dominant market position to withhold critical 340B savings, which are intended to support vulnerable patient populations.
According to the complaint, Lilly insists on obtaining patient information protected by privacy laws through a third-party platform owned by a private equity firm. The hospitals argue this requirement is an improper attempt to collect commercially valuable data without compensation. They also warn that complying could expose them to federal privacy violations if the information is misused.
“This case is about corporate extortion,” the suit states, highlighting Lilly’s status as the largest pharmaceutical company globally and the first to reach a trillion-dollar market valuation. The hospitals emphasize that 340B savings fund essential community services such as mobile health screenings, addiction treatment, free dental care programs in public schools, and food access initiatives.
Lilly, headquartered in Indianapolis with a significant research presence in Boston, condemned the lawsuit. A company spokesperson asserted that Congress created the 340B program to aid vulnerable patients but accused the hospital systems of seeking to profit from it without adequate transparency. Lilly contends the hospitals routinely collect and share patient data with insurers yet refuse to provide similar information to the drugmaker.
The pharmaceutical firm maintains that the data collection is necessary to prevent “double-dipping,” where hospitals might obtain overlapping discounts under 340B and other programs like Medicaid for the same patients. Lilly warns that without this information, it cannot ensure appropriate use of the discounts.
Hospitals dispute Lilly’s claim, asserting that the demand for patient data is unlawful and sets a dangerous precedent that could encourage other drug manufacturers to impose similar requirements. “Our patients trust us with their most personal information and protecting that trust is part of caring for them,” said Dr. Patrick Gordan, associate chief medical officer at Salem Hospital. He underscored the importance of 340B savings for maintaining community health centers and outreach programs that Congress intended to support.
Similar lawsuits against Lilly have been filed recently by other hospitals across the country, including Dartmouth-Hitchcock Medical Center in New Hampshire and Tampa General Hospital in Florida. The ongoing disputes highlight growing tensions between pharmaceutical companies and healthcare providers over the administration and oversight of the 340B program.