Past is Prologue or Déjà Vu All Over Again? Ten Things to Know About Texas v. Lilly & Product Support

September 30, 2025 | Mary Kohler for American Health Law Association

Attorney Mary Kohler breaks down Texas v. Lilly into ten things health lawyers and biopharma leaders need to know. From the “free work” theory to state AG activism, this article explains why this case matters and what it could mean for manufacturers, providers and patients.

On August 12, Texas Attorney General Ken Paxton joined Health Choice Alliance, LLC (Relator) in suing Eli Lilly.[1] The complaint alleges Lilly violated the state’s Health Care Program Fraud Prevention Act by offering providers nursing support and reimbursement help to boost prescriptions of several products, including GLP-1s, insulins, and oncology therapeutics.[2] Lilly has denied the allegations.[3]

The filing is new, but the underlying dispute is not. This case follows long-running tensions over manufacturer product support. It also shows how shifting enforcement philosophies can disrupt an industry’s settled assumptions and impact stakeholders beyond the litigants.

This article looks beyond the headlines to explore the complaint in context. Here are ten things to know.

1. Product Support Is Essential but Can Raise Fraud and Abuse Concerns

Whether buying kitchen appliances or medicines, consumers expect sellers to support their products. For manufacturers, this can include solving access issues such as coverage, payment, and basic product education for patients who sign up and consent. Without it, even breakthrough therapies can languish in obscurity on the pharmacy shelf.[4]

The Department of Health and Human Services Office of Inspector General (OIG) has long recognized that educational support and limited reimbursement assistance tied to a manufacturer’s own products have no independent value and, standing alone, do not violate the federal Anti-Kickback Statute (AKS).[5] But tying these programs to other valuable items or services can implicate the law.

2. The Texas Complaint Targets Two Common Industry Programs

Nursing Support: Self-administered injectables require patients and caregivers to learn proper storage, injection technique, and needle disposal. Practices can bill when their staff provide this education in-office; in some states pharmacists can also train patients. Many manufacturers further supplement with nurse education online, by phone, or at home.

Reimbursement Support: Patients are technically responsible for obtaining prior authorization (PA) but can struggle with complex insurance processes. Physicians must supply clinical information to confirm medical necessity, which can draw their staff into the follow-on administrative work. Manufacturers with deep product-specific payer expertise often establish hubs to help patients and providers navigate PA requirements, which can be finnicky.

3. Past Enforcement Flagged Execution Issues—This Action Targets the Programs

OIG has opined favorably on certain product support services.[6] But Department of Justice (DOJ) settlements show how misconduct can occur, including sales reps falsifying PA forms, forging signatures, urging practices to upcode, or misrepresenting themselves to insurers.[7]

In 2020, AbbVie reached a $24 million settlement with California’s Insurance Commissioner for allegedly blurring the line between manufacturer support and clinical independence when patients perceived the nurses as part of physicians’ practices.[8] The settlement allowed AbbVie’s nurses to continue providing education and injection training, but prohibited them from influencing care decisions, advocating with insurers, and presenting as practice staff.

Importantly, these settlements didn’t shut down programs, but they did prompt industry-wide compliance efforts to improve oversight, clarify roles, and separate access functions from sales.

The Texas complaint goes farther. It doesn’t allege misconduct or inappropriate prescribing, but instead claims the services themselves—by relieving providers’ PA burden—constitute “free work” that makes Lilly’s drugs more attractive. It seeks damages and an injunction to stop the programs.

4. The Relator Has Been Here Before—and Lost

In 2017, the Relator filed a similar complaint against Lilly in the Eastern District of Texas.[9] The case was one of 11 qui tams filed under the umbrella of National Health Care Analysis Group (NHCA), an investor-backed professional relator.[10] NHCA reportedly built a business from mining claims data and coaxing insiders to share company information under the guise of conducting market research.[11] The suits contained few company-specific facts and contended 38 manufacturers’ programs were per se unlawful under AKS.

DOJ moved to dismiss, arguing the qui tams lacked factual and legal grounding, conflicted with federal policy goals, and would waste scarce resources.[12] It also expressed skepticism about the Relator.[13] Importantly, DOJ underscored OIG’s view that basic product support helps patients and aligns with federal program goals. But it warned a viable case could exist on stronger facts.

5. The Texas Complaint Covers 14 Products with Different Profiles

The complaint groups the products together as therapies for chronic lifelong diseases. But their administration routes and support needs vary.[14] For example, oral therapies and in-office infusions don’t require injection training.

The products also don’t share a common benefit or billing structure. Some are “buy and bill,” which practices purchase and infuse under the patient’s medical benefit. Others are oral or self-injected products, which pharmacists dispense and bill under the pharmacy benefit.

The complaint doesn’t specify which elements of which programs are at issue. But these distinctions matter for evaluating how, and for whom, manufacturer support allegedly reduces administrative burdens.

6. The Complaint Highlights Legitimate Issues with PA

Historically, PA was primarily a buy and bill issue. Providers in this setting own administration start-to-finish, and can incur significant shortfalls if a high-cost therapy’s reimbursement fails. For pharmacy products, however, physicians have traditionally written scripts, leaving reimbursement to pharmacies, who carry the financial risk. OIG’s 2003 Guidance aligns with this framework.[15]

As drug prices have risen, payers have expanded PA to products in both settings. Only prescribers can certify medical necessity—they see the patient, order the tests, make the diagnosis, and determine therapy. Communicating this to payers, however, draws their staff into time-consuming, uncompensated administrative work. Each payer demands slightly different documentation and technicalities can trigger denials, resubmissions, and appeals. Regulators are urging reform.[16]

The complaint highlights this burden, estimating practices must spend up to 20 hours per week on PA or contract it out for steep fees.[17] Critics argue PA often functions more as a denial tool than a utilization screen. Perhaps unwittingly, the Relator plays into this, asserting it does not challenge the legitimacy of the prescriptions but that by easing providers’ burdens, Lilly has undermined Medicaid’s cost-containment goals.

7. Extending Physicians’ Duties Beyond Confirming Medical Necessity Will Be Difficult

The Relator argues two state regulations require physicians to “obtain PAs” on behalf of patients.[18] But whether these rules extend beyond confirming medical necessity to owning all aspects of PA is debatable; especially since the complaint doesn’t allege Lilly relieved physicians of clinical judgment.

More fundamentally, the argument overlooks the starting point—that physicians have never been part of the economic model for pharmacy products. The Relator cites a Medicaid rule banning providers from charging patients or the program for completing claim paperwork, but the rule pertains to providers’ own claims, and not claims by pharmacists who own the financial risk and profit from dispensing.[19] A court may struggle to apply this rule as the Relator envisions, particularly when the complaint itself frames the physicians’ burden as onerous and uncompensated.

8. Nursing Support Raises Different Issues

A manufacturer sending a nurse into a patient’s home presents a closer question. But is it meaningfully different than the Genius Bar helping someone troubleshoot a new phone?[20]

The complaint argues physicians have a duty to attend to patients’ health throughout treatment, and Lilly’s nurses relieve them of “less profitable” follow-ups and calls.[21] That may be true, but whether a practice would choose to forgo billing for injection training is less clear. And it seems unlikely courts would extend a physician’s duty to include ongoing technical support for autoinjectors, which some patients still struggle with even after initial training.

Without allegations of misconduct or overreach by nurses, it's also difficult to see how injection training and education alone stray into clinical monitoring. And given Texas pharmacists can provide comparable training and counseling at no cost to prescribers,[22] proving these services have independent value may be difficult. But DOJ left the door open to future cases.

9. LillyDirect Is Mentioned but Not Central

The complaint briefly mentions LillyDirect, the company’s new telehealth and pharmacy platform, but it makes no concrete allegations. The reference may be rhetorical, though it coincides with a Senate report scrutinizing manufacturer-backed telehealth ventures.[23] Texas and the Relator may be hinting at future angles.

10. State AGs Are Stepping Forward

Historically, DOJ has led AKS enforcement, with states following. Here, Texas consented to dismissing the Relator’s federal cases in 2019.[24] Its evident reversal begs the question: why? Has Texas’ kickback jurisprudence changed?

Whatever the answer, this action underscores state AGs’ growing independence in health care enforcement, particularly around Medicaid. Paxton’s press release also linked this case to his office’s 2024 complaint concerning Lilly’s pricing of insulin and GLP-1 products.[25]

Also unknown are the potential impacts this case may have on stakeholders beyond the litigants. For example, are Texas’ physicians aware the state acknowledges their plight yet seeks an outcome that could end up grinding them down further? And if the Relator gains traction here, will manufacturers face a new wave of state-driven litigation elsewhere?

Practical Takeaways for Life Sciences

Pay Attention to Risks Beyond Federal Enforcement. Activities that seem settled under federal law can still draw scrutiny at the state level. Compliance, legal, and government affairs teams should scan the landscape together, collaborate on mitigating risk and expect to adapt as circumstances change.

Ensure Clinical Independence. OIG’s core concern about company influence over clinical judgment remains the compliance bedrock. Clients often see their plans as helping patients but documents can undermine stated rationale down the road. Pressure test business assumptions and make sure business colleagues pull key details through in execution. Also, recognize nurses are natural helpers who don’t always appreciate how their good intentions might be misconstrued. Don’t just “train” them on your rules—learn their reality and design compliance support to match their challenges.

Structure Programs Carefully. Patient support programs have many moving parts and look different for every product in your portfolio. Focus on patient needs, differentiate by channel, and scrutinize vendor arrangements. Then step back and assess how the pieces interrelate.

Bottom Line. Texas v. Lilly may seem like déjà vu, but whether it proves a distraction or harbinger remains to be seen. Either way, its outcome could impact players across the health care spectrum—from manufacturers and payers to physicians, pharmacists, and patients. And that makes it worth watching.

About the Author

Mary Kohler is founder and principal of Kohler Health Law, PC. As a former in-house biopharma executive, she now advises clients on product-related legal matters and helps them build compliance solutions that are practical and sustainable.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Copyright 2025, American Health Law Association, Washington, DC. Reprint permission granted. This Briefing was co-sponsored by AHLA's Fraud and Abuse and Life Science Practice Groups.

[1] Office of the Attorney General of Texas, Press Release, Attorney General Ken Paxton Sues Big Pharma Drug Manufacturer Eli Lilly for Bribing Providers to Prescribe Its Medications, Aug. 12, 2025 (Tex AG Press Release).

[2] The State of Texas ex rel. Health Choice Alliance, LLC v. Eli Lilly & Co., No. ____ (Tex. Dist. Ct. filed Aug. 12, 2025). https://www.texasattorneygeneral.gov/sites/default/files/images/press/Lilly%20Marshall%20Petition%20Filed.pdf (accessed Sep. 19, 2025).

[3] Frazer Kansteiner, Eli Lilly Pledges Vigorous Defense As Texas Sues Over Alleged Drug Kickbacks, FiercePharma (Aug. 12, 2025).

[4] In a recent hearing, Senator Elizabeth Warren chided Health and Human Services Secretary Robert Kennedy that FDA approval of COVID vaccines is meaningless if patients don’t have a clear path for coverage. See, Senate Finance Committee, The President’s 2026 Healthcare Agenda, Sep. 4, 2025.

[5] U.S. Dep’t of Health & Human Servs., Office of Inspector Gen. (OIG), Compliance Guidance for Pharmaceutical Manufacturers, 68 Fed. Reg. 23731, 23735 (May 5, 2003)(OIG Guidance). See also Final Rule, Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements, HHS-OIG, 81 Fed. Reg. 88368, 88396 (Dec. 7, 2016)(providing patients with educational materials and informational programs alone would not constitute remuneration).

[6] See e.g., OIG Advisory Opinion No. 24-04, HHS OIG (Jun. 20, 2024)(opining favorably on manufacturer’s proposed limited reimbursement guarantee for rare disease product); and OIG Advisory Opinion No. 23-02, HHS OIG (Feb. 23, 2023) (opining favorably on manufacturer proposal to provide limited free product to start new patients on therapy while payors resolve coverage issues).

[7] Press Release, U.S. Dep’t of Justice (DOJ), Warner Chilcott Agrees to Plead Guilty to Felony Health Care Fraud Scheme and Pay $125 Million to Resolve Criminal Liability and False Claims Act Allegations (Oct. 29, 2015); and Press Release, DOJ, Allergan Agrees to Plead Guilty and Pay $600 Million to Resolve Allegations of Off-Label Promotion of Botox® (Sep. 1, 2010).

[8] Stipulated Settlement Agreement, California Dep’t. of Ins. v. AbbVie Inc., No. 34-2018-00246134 (Cal. Super. Ct. Sept. 18, 2020); Press Release, California Department Of Insurance Fraud Lawsuit Results In Reforms Of HUMIRA Marketing And $24 Million Payment By Drugmaker Abbvie (Aug 6, 2020).

[9] United States ex rel. Health Choice All., LLC v. Eli Lilly & Co., No. 5:17-CV-123, 2021 WL 2934830 (E.D. Tex. Sept. 27, 2019), aff’d, 4 F.4th 255 (5th Cir. 2021)(Health Choice v Lilly I).

[10] See Memorandum of Law in Support of the United States’ Motion to Dismiss at 2-3, United States ex rel. SMSF, LLC v. Biogen, Inc., No. 1:16-cv-11379 (D. Mass. Dec, 2018) (listing the 11 related actions).

[11] Id. (citing Joseph C. Herz, Medicare Scammers Steal $60 Billion a Year. This Man is Hunting Them., Wired (Mar. 7, 2016).

[12] Id.

[13] DOJ observed NHCA appeared to exist “solely to file qui tam actions,” treating litigation as a “massive business opportunity” and obtaining information “under false pretenses.” Id. at 3-4.

[14] The Tex Complaint lists drugs with at least four different administration routes – oral pills, infusions, autoinjectors, and syringes. Tex Complaint at 3-4.

[15] See, OIG Guidance at 23735 (contemplating services with independent value as something that confers a benefit on the referring provider “such as a reimbursement guarantee that eliminates normal financial risks”).

[16] See, U.S. Dep’t of Health & Human Servs., HHS Secretary Kennedy, CMS Administrator Oz Secure Industry Pledge to Fix Broken Prior Authorization System (June 23, 2025), https://www.hhs.gov/press-room/kennedy-oz-cms-secure-healthcare-industry-pledge-to-fix-prior-authorization-system.html.

[17] Tex Complaint at 17 (citing Deloitte fee analysis of hub vendors).

[18] Tex. 28 Tex. Admin. Code § 19.1820 (a Texas Department of Insurance regulation establishing a standard PA form for prescription drugs but not specifying who must fill it out); and 4 Tex. Admin. Code Subtitle I. § 531.073 (Texas Medicaid regulation requiring PA for some drugs be “obtained by the prescribing physician or prescribing practitioner”).

[19] Tex Complaint at 18 (citing Texas Medicaid Provider Procedures Manual § 1.7.10 (July 2024)).

[20] Genius Bar is registered trademark of Apple, Inc.

[21] Id. at 11-13.

[22] Tex. Admin. Code Title 22 § 291.33(c)(1)(A) (2025).

[23] S. Comm. On Finance, Big Pharma’s New Sales Scheme: Expanding Patient Access or a Virtual Pill Mill? (July 17, 2025).

[24] Health Choice v Lilly I, supra note 2.

[25] See, Tex AG Press Release, supra note 1.