340B Drug Pricing Program

Below is an excerpt of an article published in American Health Law Association’s Regulation, Accreditation, and Payment Practice Group on March 21, 2024.

The 340B program, as established under Section 340B to the Public Health Service Act (PHSA), Pub. L. No. 78-410, 58 Stat. 682 (1944) (“340B Statute”),[1] has experienced significant legal challenges

On September 27, 2023, the Health Resources and Services Administration (HRSA) issued a Notice in the Federal Register applicable to all 340B Program hospitals that formally ends a COVID-era waiver of the long-standing HRSA requirement that off-site, outpatient facilities be (1) listed as reimbursable on the hospital’s Medicare Cost Report (MCR) prior to participating in the 340B Program; and (2) registered and listed in the Office of Pharmacy Affairs Information System (OPAIS) prior to participating in the 340B Program.Continue Reading HRSA Confirms End of COVID Waiver of Advance Registration Requirement for Provider-Based Clinics

On June 27, 2023, Connecticut Governor Ned Lamont signed into law Public Act 23-171“An Act Protecting Patients and Prohibiting Unnecessary Health Care Costs” (Act), which includes changes to the state’s implementation of the federal 340B Drug Pricing Program. The Act: (a) requires the Commissioner of Social Services to convene a working group to evaluate the myriad issues affecting the 340B Program and opportunities for the state to support the 340B Program; and (b) prevents pharmacy benefit managers (PBMs) from incorporating certain contract provisions in agreements with qualifying Covered Entities under the 340B Program that lower reimbursement to such Covered Entities, among other restrictions.Continue Reading Connecticut Places Checks on PBM Contracts in Support of 340B Covered Entities

We follow up on our previous blog post concerning the U.S. Supreme Court’s unanimous ruling in favor of 340B hospitals. The Supreme Court previously held that “absent a survey of hospitals’ acquisition costs, HHS may not vary the reimbursement rates for 340B hospitals” and therefore, that HHS exceeded its statutory authority by varying the 2018 and 2019 rates for 340B hospitals without first conducting such survey.Continue Reading 340B Update: District Court Rejects 2022 Payment Methodology for 340B Hospitals Following Supreme Court Win

On June 15, 2022, the U.S. Supreme Court unanimously ruled in favor of “340B” hospitals in a notable statutory interpretation case concerning how the federal Medicare program reimburses hospitals for prescription drugs. The case, which was brought by the American Hospital Association, arises from reimbursement reductions imposed by the Department of Health and Human Services (HHS) in 2018 and 2019 on hospitals participating in the 340B program (which the Court noted are hospitals that “generally serve low-income or rural communities”). In those years, HHS sought to impose reductions in reimbursement due to favorable pricing available to 340B hospitals under that program. The hospitals challenged those reductions based on the process HHS followed when setting the reimbursement rates, claiming that HHS’s failure to conduct a survey of hospitals’ average acquisition costs for the drugs prevented HHS from varying reimbursement rates for this distinct group. Therefore, according to the hospitals, HHS was required to pay them based on the average sales price charged by manufacturers for the drugs.Continue Reading Supreme Court Decides in Favor of 340B Hospitals Regarding Medicare Reimbursement Methodology

A federal court in Delaware recently determined that the Health Resources and Services Administration (HRSA) – the federal agency responsible for administering the 340B drug pricing program – did not comply with the Administrative Procedure Act (APA) when it issued a May 17, 2021 letter to AstraZeneca to enforce the use of contract pharmacies under the 340B statute (“Enforcement Letter”).  In its decision, AstraZeneca v. Becerra, No. 1:21-cv-00027 (D. Del.) (Feb. 16, 2022), the federal district court for the District of Delaware vacated and set aside HRSA’s Enforcement Letter, and remanded the matter to HRSA for further consideration. The Court stated that it will further solicit the parties’ views on the impact of the Court’s conclusions to assess if and how the case should proceed, in terms of affording relief under AstraZeneca’s complaint.
Continue Reading Delaware District Court Determines that HRSA Enforcement Letter Targeting 340B Program Restrictions Violates the APA

On June 1, 2018, the Health Resources and Services Administration (HRSA) announced it was once again delaying the final rule that had set forth the calculation for the 340B Program ceiling price and drug manufacturer civil monetary penalties (Final Rule).  Enforcement on the Final Rule is delayed to July 1, 2019. 
Continue Reading HHS Delays 340B Program Final Rule on Drug Ceiling Price and Manufacturer Civil Monetary Penalties (Again)