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In a stern rebuke, the Department of Health and Human Services has taken Eli Lilly (LLY) to task for its recent decision to curtail the discounts offered to a federal program for safety-net hospitals and clinics.

At issue is the 340B drug discount program, which was created in 1992 and requires drug makers to offer discounts that are typically estimated to be 25% to 50% — but could be much higher — on all outpatient drugs to hospitals and clinics that serve indigent populations. About 12,400 so-called covered entities, including 2,500 hospitals, participate in the program.

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