Dive Brief:
- The HHS is scrapping a rebate pilot in the 340B drug discount program, ending the controversial trial before it got off the ground.
- The pilot would have allowed pharmaceutical manufacturers to give post-sales rebates to providers on some drugs, in lieu of upfront discounts. Hospitals sued in December, arguing the agency had illegally rushed the pilot into effect without responding to providers’ concerns.
- Now, the HHS has agreed to cut the pilot. The department and hospital plaintiffs determined further litigation over the 340B changes wouldn’t be “fruitful,” according to court documents filed Thursday.
Dive Insight:
The HHS’ Health Resources and Services Administration first announced the pilot last summer. The trial program would have been a major departure from the traditional 340B model, which provides discounted medications to providers that serve low-income or uninsured patients.
The pilot would have required hospitals to submit data to manufacturers after dispensing certain drugs to receive discounts. The Trump administration said the pilot could help ameliorate concerns from drug manufacturers, who say there’s growing fraud and abuse in the program as the number of 340B purchases has ballooned.
Several drugmakers had sued the HRSA under the Biden administration for blocking their own attempts to give after-the-fact rebates in 340B. Last May, a federal judge ordered manufacturers to continue giving upfront discounts, but noted rebate plans could work if they received prior approval from regulators.
Hospitals, including the American Hospital Association, Maine Hospital Association and four nonprofit health systems, sued over the pilot in December, arguing the Trump administration was pushing ahead with the 340B changes without following the proper notice-and-comment rulemaking process.
The pilot would have cost vulnerable safety-net hospitals hundreds of millions of dollars, jeopardizing their ability to provide care, the hospitals said.
A federal judge then paused the pilot in late December, days before it was set to go into effect. The Trump administration appealed the decision, but the First Circuit Court of Appeals upheld the lower court’s ruling — noting the federal government had failed to convince the judges it would succeed on the merits of its case.
Now, the HHS has agreed to scrap the program entirely. The Trump administration said it had reviewed supporting documents, but did not believe “the full administrative record would change the outcome of this litigation,” according to the filing released Thursday.
Additionally, the HHS has agreed to issue a new notice and solicit public comment if it proposes another rebate program in 340B. Any effective date of a new pilot proposal would be at least 90 days after any drugmakers’ rebate application was approved.
The AHA cheered the decision to scrap the 340B pilot, and thanked the courts for “quickly recognizing the many legal flaws in the original Program.”
“The AHA is eager to work with the Administration on policies that make drugs more affordable and ensure access to care for American families,” AHA President and CEO Rick Pollack said in a statement Thursday. “A rebate program that undermines safety-net hospitals’ ability to offer more comprehensive care would only harm the nation’s most vulnerable communities.”
The HRSA didn’t respond to a request for comment by press time.
