BioPharma, Legal

Eli Lilly to stand trial over Medicaid rebate payments

A judge ruled the lawsuit against Eli Lilly for their Medicaid rebate payments will proceed to trial; Ely Lilly is accused of underpaying for Medicaid rebates between 2005 and 2016.

Lawsuit, sue, gavel, court, money

A whistleblower complaint against Eli Lilly is now headed to a jury trial.

On February 28, Judge Harry D. Leinenweber ruled that the lawsuit against Eli Lilly for allegedly shortchanging the Centers for Medicare and Medicaid Services (CMS) on rebates will proceed to trial, despite Lilly’s request to throw out the case.

Monday’s ruling, filed in the Eastern Illinois U.S. District Court, is the most recent development in a several years of legal back and forth about Indianapolis-based Lilly’s rebate payment amounts between 2005 and 2016.

Whistleblower Ronald J. Streck filed the initial suit against Lilly, claiming the drug manufacturer violated the False Claims Act by submitting false statements and certifications both to the United States as well as to several states in its Medicaid rebate program, ultimately underpaying.

Lilly participates in the Medicaid Rebate Program (MDRP), where participating drug manufactures must give the government and states a rebate in order to have their drugs used by Medicaid patients. The amount of the rebate is determined by the Average Manufacturer’s Price (AMP), which Congress in 1991 defined as “the average unit price paid to the Manufacturer for the drug in the [United] States by wholesalers for drugs distributed to the retail pharmacy class of trade,” according to the filing.

Further, AMP “must be adjusted by the Manufacturer if cumulative discounts or other arrangements subsequently adjust the prices actually realized,” the ruling explained. For example, when prices rise so should the amount of the rebate.

However, the 1991 agreement did give leeway for a drug manufacturer to calculate AMP itself in the absence of specific guidance. Lilly claims this is what it did until CMS published clarifying rules in 2016, according to the filing.

Monday’s ruling found otherwise, directly calling Lilly’s interpretation of AMP prior to 2016 “objectively unreasonable.”

As a result of Monday’s ruling, a jury trial will ultimately determine if Lilly acted intentionally by not calculating the AMP as high as it should have between 2005 and 2016 as well as if it caused a loss to Medicaid agencies in the 26 states and the federal government.

Lilly did not respond to request for comment at the time of publication.

Photo: Eli Lilly