- A judge has again ruled against HHS cuts to reimbursements under the 340B Drug Discount Program and remanded the rate adjustment rules back to the agency. He did not, however, order hospitals be compensated for lost 340B payments.
- In the ruling filed Monday, U.S. District Judge Rudolph Contreras of the U.S. District Court for the District of Columbia said the 30% payment cut HHS put into effect for 2019 — despite his declaration at the end of last year that implementing the change exceeded the department's statutory authority — was unlawful. Vacating the outpatient payment rule with the adjustment, however, "is not the best course of action, given the havoc [it] may wreak on Medicare's administration," the judge wrote.
- The plaintiffs, the American Hospital Association, America's Essential Hospitals and the Association of American Medical Colleges, celebrated the ruling in a joint statement: "We urge HHS to promptly comply with the judge's ruling and restore to 340B hospitals all funds that have been unlawfully withheld."
The decision is another win for hospitals, although the court did not grant the plaintiffs' preferred outcome of payment relief. The 340B program has come under scrutiny, largely prompted by concerted opposition from the pharmaceutical industry's trade group, PhRMA. Lawmakers have called for more transparency and oversight.
The judge warned HHS to "resolve the issue promptly" and ordered the agency to issue a status report on its progress by Aug. 5. A trade group representing 340B hospital also focused on fast action, saying the cuts "have reduced hospitals' ability to care for those in need."
Contreras said his decision is based on the same logic he used in his December ruling — that HHS overstepped its authority and the intent of Congress in changing the rate from average sales price plus 6% to average sales price minus 22.5%. HHS had said the rate adjustment would better represent the average acquisition cost of the drugs.
This week's ruling builds on a string of legal victories for hospitals in the 340B program. In addition to the 2018 payment cut being struck down in December, HHS last month finally published ceiling prices for prescription drugs in the program following a lawsuit HHS settled with AHA and other groups in November.
Still, providers face questions regarding how they spend the money saved from 340B drug discounts and whether it is funneled back into patient care. In a March 2018 Senate hearing on the topic, HELP Committee Chairman Lamar Alexander, R-Tenn., suggested hospitals provide more information. "We don't know how much goes directly to patients or how much is spent for other services that presumably benefit patients," he said. "Would that not be something we should know?"
The number of hospitals in the program has jumped in the past few years, from 1,465 in 2011 to 2,399 in 2016, according to the Government Accountability Office. Of those participants, 45% are general acute care facilities and 45% are critical access. Also, 62% of 340B hospitals are in rural locations.
HHS said Tuesday it would not comment on the specific case, but a spokesperson pointed Healthcare Dive to comments agency chief Alex Azar made at the 340B Coalition Summer Meeting last year. He said then the "gap between prices paid by 340B entities and the compensation they receive has, in many cases, grown far too wide" and the new payment rate would "help many seniors pay less for their drugs, avoiding situations where they may be owed more in cost-sharing than the provider paid for the drug."