Federal Court Dismisses Lawsuit Challenging 340B Cuts

On December 29, the U.S. District Court for the District of Columbia dismissed a lawsuit filed against the Department of Health and Human Services regarding a Medicare reimbursement policy that would reduce hospital payments for outpatient drugs purchased through the 340B Drug Pricing Program.

Because the policy was allowed to take effect on January 1, it is expected to reduce Medicare hospital reimbursements by $1.6 billion. 
The American Hospital Association, Association of Medical Colleges, America’s Essential Hospitals, and several individual hospitals filed the lawsuit. The judge did not rule against the merits of the case, but specifically stated that the plaintiffs failed to exhaust other means of challenging the policy prior to the January 1, 2018, implementation date.  As a result, the plaintiffs have the opportunity to pursue the case now that the cuts have been implemented.

On a separate track, supporters of legislation introduced in December to stop the implementation of the Medicare 340B cuts that CMS included in the outpatient PPS rule, are now pushing for a moratorium on the new outpatient 340B rule. With the current federal spending bill expiring on January 19, the 340B champions are pushing for the moratorium to be included in the next spending bill to be completed by January 20. Chances of success remain unclear.

The new outpatient rule means CMS will reimburse hospitals for drugs purchased through the 340B program at the average sales price minus 22.5%. The 340B legislation, HR 4392, was introduced by Reps. David McKinley (R-W.Vir.) and Mike Thompson (D-Calif.), and a growing number of Massachusetts House members have signed on to the bill. The current Massachusetts co-sponsors are Reps. Joe Kennedy, Mike Capuano, Jim McGovern, Niki Tsongas, Stephen Lynch, Seth Moulton, and Katherine Clark.