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340B hospitals to get day in court over drug pricing cuts

The U.S. Court of Appeals on Tuesday accepted a request by the American Hospital Association and five other healthcare groups for an expedited brief

Susan Morse, Senior Editor

The American Hospital Association, America's Essential Hospitals and four other healthcare organizations have won their request for an expedited schedule for the court to hear their case over 340B drug pricing cuts.

The U.S. Court of Appeals on Tuesday accepted their expedited brief schedule, according to Melinda Hatton, general counsel for the AHA.

[Also: Federal judge denies American Hospital Association's 340B injunction request]

The Department of Justice had argued for more time.

A court date has yet to be set but all briefs and replies must be received by April 2.

In November, the Centers for Medicare and Medicaid Services came out with a final rule to slash 340B reimbursement by close to 30 percent.

That same month, the AHA, Association of American Medical Colleges, America's Essential Hospitals, Eastern Maine Healthcare Systems, the Henry Ford Health System and Fletcher Hospital filed the lawsuit against the Department of Health and Human Services, saying that the outpatient prospective payment system rule was unlawful.

"Many of AHA's member hospitals participate in the 340B Program and rely heavily on the price differential created by Congress through that program to generate resources that are used to provide critical health care programs for their communities, including vulnerable populations in those communities," the lawsuit said.

The U.S. District Court initially dismissed the suit because the 340B cuts had not yet been made. 

In December 2017, Federal District Court Judge Rudolph Contreras ruled to deny a preliminary injunction halting the implementation of the Medicare Part B payment reduction to 340B hospitals.

The groups appealed in January and asked the court to expedite the case because of the immediate effect the cuts would have on 340B hospitals.

The 340B program, which has been in effect for over 25 years, allows qualifying hospitals to buy outpatient drugs at a 20 to 50 percent discount from pharmaceutical companies, sell them at a higher rate, and use the difference to help offset the cost of uncompensated care. 

The program has played a vital role in helping hospitals stretch scarce federal resources to expand and enhance patient services and access to care for vulnerable communities without any cost to the government, Attorney Hatton said. 

"We will continue to pursue our legislative and legal strategies to reverse these cuts, and expect to prevail in holding the agency accountable for overstepping its authority," Hatton said.

But opponents have said the 340B program has gone beyond its intended purpose, and that these hospitals are prescribing the more expensive drugs to gain the profits.

The New England Journal of Medicine suggested in a study that hospitals use of the 340B program ran "contrary to the goals of the program." 

340B Health said the study was misleading because it excluded about a third of disproportionate share hospitals that are part of the 340B program. DSH hospitals make up 36 percent of all acute care hospitals, but provide 60 percent of the nation's uncompensated care, 340B Health said.

In January, Senator Bill Cassidy of Louisiana introduced HELP - Helping Ensure Low Income Patients - legislation that would make changes to the rules for which hospitals could participate in 340B,  reducing the number that qualified. It would also impose new reporting requirements.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com

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