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September 13, 2018

Hospitals and Legislators Continue to Press Trump Administration Over 340B Program

Several hospital groups recently refiled a lawsuit against the Trump Administration for cuts to the 340B Drug Discount Program under the Hospital Outpatient Prospective Payment System (OPPS) Final Rule for CY 2018. The litigation, led by the American Hospital Association, America’s Essential Hospitals and the Association of American Medical Colleges, alleges that 340B payment reductions are outside of the U.S. Department of Health and Human Services’ (HHS) statutory authority thereby violating the law. The refiling of this lawsuit does not come as a surprise because the plaintiffs had already gone on record in July that they would file suit again after their original lawsuit was struck down by the U.S. Court of Appeals. This complaint was thrown out because the appellate court agreed with a lower court that the November 2017 filing was premature given that cuts to the program did not go into effect until January 1, 2018. It remains to be seen how the court will rule this time, but the case is almost certain to be heard given that payment reductions under Medicare Part B have been in effect for almost a year.

In related news, a bipartisan group of lawmakers from two Congressional committees with authority over the 340B program, sent a letter to the Health Resources and Services Administration (HRSA), the federal agency tasked with 340B oversight. In the letter, legislators urge HRSA to use their existing rulemaking authority to issue regulations as soon as possible in three areas:

  • Implementation of an administrative dispute resolution process to address compliance related disputes with 340B requirements
  • Imposing civil monetary penalties against manufacturers that willfully overcharge a covered entity for a 340B drug
  • Defined methodology standards to calculate 340B ceiling prices

If you recall, a HRSA representative testified in a June 19 hearing before the Senate Health, Education, Labor and Pensions (HELP) Committee that they needed broad rulemaking authority to address some of the longstanding oversight issues with 340B. However, in the letter, lawmakers expressed concern that HRSA was not using the authority they already had at their disposal. As such, I don’t anticipate any major legislative action prior to the issuance of regulations.

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