A federal judge ruled Friday that the Trump administration must halt a policy shift that cut the money hospitals received under a program intended to provide cheaper drugs to uninsured patients.
Created in Congress in 1992, the 340B program has become more controversial amid claims from pharmaceutical companies and other opponents that some safety-net hospitals are abusing the deep discounts provided by drugmakers.
In 2017, the Department of Health and Human Services issued a proposal to cut the payments hospitals receive by nearly 30 percent. The industry’s top lobbying group and others sued to stop the rule, which went into effect this year and was expected to cost healthcare providers billions in lost revenue.
In Friday’s ruling, a federal judge sided with the American Hospital Association and said the administration “did not have the statutory authority” to advance the proposal.
“The changes that the Secretary imposed are not modest,” the order reads. The rate adjustment “does not affect a single drug or even a handful of drugs, but rather potentially thousands of pharmaceutical products found in the 340B program.”
The decision will not make up for any reimbursements lost in 2018, but marks a significant win nonetheless in a period of heightened scrutiny.
The Pharmaceutical Research and Manufacturers of America, the top lobbying group for brand-name drugmakers, claims that healthcare providers have an incentive to provide patients more expensive medications because doing so lets them use the higher rebates to pad profits.
The hospital industry demurred, finding support from Sen. Elizabeth Warren, D-Mass., who argued that the loss to drug companies “is a tiny fraction of the many billions of dollars that they pull down every year in profit.”
Lawmakers introduced legislation last year to impose new reporting requirements on hospitals and put a two-year hold on any new registrants. Such a measure will likely be more difficult to advance once Democrats regain control of the U.S. House of Representatives, but members may seek to conduct greater oversight of the 340B program.
“There needs to be more clarity about what the program allows and doesn’t allow,” Sen. Lamar Alexander, R-Tenn., said recently. Alexander is chairman of the Health, Education, Labor and Pensions Committee, which has jurisdiction over the program.
