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.
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