Hospital groups to appeal dismissal of 340B lawsuit

The American Hospital Association (AHA), America’s Essential Hospitals, the Association of American Medical Colleges (AAMC) and three health systems will appeal the dismissal of its lawsuit seeking to block $1.6 billion in cuts to Medicare payments made through the 340B drug discount program.

The suit had been tossed on Dec. 29, 2017, on procedural grounds, with U.S. District Court Judge Rudolph Contreras saying the plaintiffs had to wait until the reductions went into effect. That happened Jan. 1, and the groups noted in their reactions to the dismissal Contreras didn’t address the merits of their case.

“The court’s decision, while not ruling on the merits, still permits CMS to make drastic cuts to safety net hospitals that participate in the 340B program, which allows teaching hospitals to strengthen care for low-income, rural, and other underserved patients. As a result, institutions will have greater difficulty maintaining critical services that vulnerable patients often cannot access elsewhere,” said Darrell G. Kirch, MD, president and CEO of the AAMC.

Also involved in the suit are Brewer, Maine-based Eastern Maine Healthcare Systems, Detroit-based Henry Ford Health System and Henderson, North Carolina-based Park Ridge Health.

The change made by CMS would lower the reimbursement rate under 340B from the average sales price (ASP) plus 6 percent to ASP minus 22 percent. In all, $1.6 billion would be cut, though for most hospitals their total Medicare Part B revenue would be reduced by less than 5 percent.

Pharmaceutical companies have supported the cuts, saying 340B has been used by hospitals to pad profits, not help low-income patients as originally intended. In comments to Kaiser Health News, Stephen Ubl, president of the drug industry lobby Pharmaceutical Research and Manufacturers of America (PhRMA) argued the program “needs fundamental reform.”