/ en Fri, 25 Apr 2025 19:27:48 -0500 Tue, 28 Jan 25 16:35:00 -0600 /fact-sheets/fact-sheet-340b-drug-pricing-program <div class="container"><div class="row"><div class="col-md-8"><h3><span>The Issue</span></h3><hr><p><span><strong>For more than 30 years, the 340B Drug Pricing Program has provided financial help to hospitals serving vulnerable communities to manage rising prescription drug costs</strong></span></p><p>Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to health care organizations that care for many uninsured and low-income patients. These organizations include federal grantee organizations and several types of hospitals, including critical access hospitals (CAHs), sole community hospitals (SCHs), rural referral centers (RRCs), and public and nonprofit disproportionate share hospitals (DSH) that serve low-income and indigent populations.</p><p>The program allows 340B hospitals to stretch limited federal resources to reduce the price of outpatient pharmaceuticals for patients and expand health services to the patients and communities they serve. <strong>Hospitals use 340B savings to provide, for example, free care for uninsured patients, offer free vaccines, provide services in mental health clinics, and implement medication management and community health programs.</strong></p><p>Despite significant oversight from the Health Resources and Services Administration (HRSA) and the 340B program’s proven record of expanding access to vital patient care, program critics want to scale it back or drastically reduce the benefits that eligible hospitals and their patients receive from<br>the program.</p><h3><span>AHA Position</span></h3><hr><ul><li>Protect the 340B program for all providers and ensure the program continues to help stretch limited resources and provide more comprehensive services to more patients.</li><li>Thwart drug manufacturers’ efforts to unilaterally and unlawfully change the 340B program, which includes efforts to change the 340B program from an upfront discount to a back-end rebate model.</li><li>Support eliminating the orphan drug exclusion for certain 340B hospitals.</li><li>Oppose efforts to scale back, significantly reduce the benefits of, or expand the regulatory burden of the 340B program, including proposals to dramatically expand reporting requirements on certain 340B hospitals and impose a moratorium on new entrants into the program.</li><li>Support expanding the program to reach additional vulnerable communities, including investor owned hospitals that provide care for underserved populations.</li><li>Support program integrity efforts that hold accountable both providers and drug companies to<br>ensure adherence to the program’s rules and regulations.</li></ul><h3><span>Why?</span></h3><ul><li><span><strong>340B-eligible hospitals are the safety-net for their communities</strong>.</span> The 340B program allows eligible hospitals to further stretch their resources and provide additional benefits and services. These hospitals care for a significant share of the nation’s underserved populations including children, cancer patients living with cancer, and those living in rural communities.</li><li><span><strong>The 340B program generates valuable resources for eligible hospitals to maintain, improve and expand access to programs that improve the health and well-being of patients and communities.</strong></span><span> In 2020 alone, 340B hospitals provided nearly $85 billion in benefits to their communities which was a 25% increase from the prior year. Without the financial support from the 340B program, communities in need across the country could lose access to valuable, lifesaving care.</span></li><li><span><strong>The 340B program is a small program with big benefits.</strong></span> Though the 340B program has grown over time, it remains a small share of drug company revenues. In 2022, the discounts provided under the 340B program accounted for only 3% of drug companies’ global revenues. Moreover, growth of the program has been driven by decisions made by drug companies to increase drug prices and introduce new drugs into the market at record-high prices. In addition, broader changes in health care such as the increased reliance on specialty drugs, the shift away from inpatient care to outpatient care, and the substitution of complex and invasive surgeries in favor or drug therapies have all contributed to growing the program. Nevertheless, the program remains small relative to the benefits it provides to patients and communities across the country. </li><li><span><strong>The 340B Program is not a rebate program.</strong></span> <span><strong>The 340B Program is not a rebate program.</strong></span> In yet another attempt to diminish the program, several drug companies are attempting to convert the way covered entities access discounted 340B pricing from an upfront discount to a back-end rebate. This approach not only violates longstanding federal policy, but also jeopardizes patients’ access to drugs, complicates providers’ access to discounts, requires that financially-strapped organizations provide upfront financing and await reimbursement, and adds considerable burden and cost to the health care system. In addition, some rebate models have sought to usurp HRSA’s authority of overseeing the program by unilaterally imposing onerous standards around patient definition and other aspects of program integrity. AHA has urged HRSA to continue its efforts to block drug manufacturers and their third-party vendors from fundamentally changing the 340B program and harming patients and providers.</li><li><span><strong>Drug manufacturers are undermining the program</strong></span><strong>.</strong> Several of the largest drug manufacturers have unilaterally stopped providing discounts to 340B drugs dispensed through community and specialty pharmacies that contracted with 340B covered entities, violating the 340B statute. This illegal action threatens the integrity of the 340B program and the savings on which covered entities rely to provide care to millions of low-income Americans.</li><li><span><strong>The 340B program requires participating hospitals to meet numerous program integrity requirements</strong></span><strong>.</strong> Hospitals must recertify annually their eligibility to participate and attest to complying with all the program requirements; participate in audits conducted by HRSA and drug manufacturers; and maintain auditable records and inventories of all 340B and non-340B prescription drugs.  The AHA and its 340B hospital members support efforts that help covered entities comply with the program rules and requirements.</li><li><span><strong>340B hospitals are committed to improving transparency.</strong></span> The AHA actively works with its 340B member hospitals on efforts to strengthen the 340B program by increasing transparency in the program and helping 340B hospitals communicate publicly the value the program brings to patients and communities — such as through the AHA Good Stewardship Principles and case studies published on the AHA website..</li><li><span><strong>Additional transparency is needed from drug companies</strong></span><strong>.</strong> While HRSA conducts 200 covered entity audits every year, only five drug companies are audited annually. We urge HRSA to create more parity in oversight of the 340B program to ensure that drug companies are maintaining their compliance with all program rules and regulations. In addition, transparency is needed from drug companies as they continue to raise the prices of their drugs significantly and introduce new drugs at record-high prices.</li></ul><p><a href="/system/files/media/file/2019/03/fact-sheet-340b-drug-pricinig-program-0119.pdf" target="_blank" title="Fact Sheett PDF"><strong>View the Fact Sheet PDF.</strong></a><br><strong> </strong></p><hr><h4><strong>340B Podcast Playlist</strong></h4><div><strong></strong></div></div><div class="col-md-4"><a href="/system/files/media/file/2019/03/fact-sheet-340b-drug-pricinig-program-0119.pdf"><img src="/sites/default/files/inline-images/cover-fact-sheet-340b-drug-pricinig-program-01-28-2025.png" data-entity-uuid="61057745-8e8b-49df-b81e-7687d6318a32" data-entity-type="file" alt="Fact Sheet Cover" width="682" height="882"></a><p><strong> </strong></p><div><strong></strong></div></div></div></div> .resource-block-header .resource-block-title small { color: black; } Tue, 28 Jan 2025 16:35:00 -0600 340B Payment Reductions in the CY2018 Final OPPS Rule <div class="container"> <div class="row"> <div class="col-md-8"> <p>The Department of Health and Human Services Nov. 2 issued its <a href="https://public-inspection.federalregister.gov/2023-24407.pdf" target="_blank">final rule outlining the department’s remedy</a> for the unlawful payment cuts to certain hospitals that participate in the 340B Drug Pricing Program. Although the AHA was pleased that members will receive a one-time, lump-sum repayment from the government in the first quarter of 2024, it was disappointed that HHS declined to address concerns that Medicare Advantage Organizations (MAOs) have not appropriately reimbursed hospitals for their underpayments between 2018 and 2022. HHS stated that these MAO-related issues were “out of the scope of this final rule” and that it “cannot interfere in the payment rates that MAOs set in contracts with providers and facilities.”</p> <p>HHS’ determination is unsurprising given the statutory non-interference provision and the department’s past practice. But this does not mean that MAOs are off the hook for what they might owe hospitals and health systems in light of HHS’ final rule. <strong>Hospitals and health systems may still be able to obtain reimbursement <em>under their contracts</em> with their MAO plans.</strong> Because every hospital and health system has a unique set of contracts with each MAO plan, it is important for each member to carefully review their contracts to determine what redress is available. We encourage all members to do so in conjunction with their internal counsel.</p> <p><strong>To assist members in this effort, we have identified and spoken with four outside law firms that have considerable experience with 340B questions and litigating against insurers on issues like these.</strong> The AHA or its members have worked closely with these firms in the past and are confident that they can provide useful assistance. <strong>As such, we wanted to make our members aware of these firms’ capabilities as you consider how to enforce your contractual rights.</strong> Below is a list of these firms with links to short written descriptions describing their expertise in these areas, which they provided to the AHA:</p> <ul> <li><a href="/system/files/media/file/2023/11/K-L-Gates-LLC-Doc.pdf">K&L Gates LLP</a></li> <li><a href="/system/files/media/file/2023/11/Lash-Goldberg-Statement-on-CMS-Final-Rule-on-340B-Remedies.pdf">Lash Goldberg LLP</a></li> <li><a href="/system/files/media/file/2023/11/Whatley-Kallas-Statement-on-CMS-Final-Rule-on-340B-Remedies.pdf">Whatley Kallas LLP</a></li> <li><a href="/system/files/media/file/2023/11/Wiggin-and-Dana-Statement-on-CMS-Final-Rule-on-340B-Remedies.pdf">Wiggin and Dana LLP</a></li> <li><a href="/system/files/media/file/2023/11/Zuckerman-Spaeder-Statement-on-CMS-Final-Rule-on-340B-Remedies.PDF">Zuckerman Spaeder LLP</a></li> </ul> <h2>Further Questions</h2> <p>If you have further questions, please contact Chad Golder, deputy general counsel, at <a href="mailto:cgolder@aha.org?subject=RE: Special Bulletin: Resources to Address 340B Underpayments by Medicare Advantage Organizations">cgolder@aha.org</a> or <a href="tel:1-202-646-4624">202-646-4624</a>.</p> </div> <div class="col-md-4"> <div><a class="btn btn-wide btn-primary" href="/system/files/media/file/2023/11/K-L-Gates-LLC-Doc.pdf">K&L Gates LLP</a></div> <div><a class="btn btn-wide btn-primary" href="/system/files/media/file/2023/11/Lash-Goldberg-Statement-on-CMS-Final-Rule-on-340B-Remedies.pdf">Lash Goldberg LLP</a></div> <div><a class="btn btn-wide btn-primary" href="/system/files/media/file/2023/11/Whatley-Kallas-Statement-on-CMS-Final-Rule-on-340B-Remedies.pdf">Whatley Kallas LLP</a></div> <div><a class="btn btn-wide btn-primary" href="/system/files/media/file/2023/11/Wiggin-and-Dana-Statement-on-CMS-Final-Rule-on-340B-Remedies.pdf">Wiggin and Dana LLP</a></div> <div><a class="btn btn-wide btn-primary" href="/system/files/media/file/2023/11/Zuckerman-Spaeder-Statement-on-CMS-Final-Rule-on-340B-Remedies.PDF">Zuckerman Spaeder LLP</a></div> <p><a href="/system/files/media/file/2023/11/340B-Advocacy-Alliance-Special-Bulletin-Resources-to-Address-340B-Underpayments-by-Medicare-Advantage-Organizations.pdf" target="_blank" title="Click here to download the Special Bulletin: Resources to Address 340B Underpayments by Medicare Advantage Organizations PDF."><img alt="Special Bulletin: Resources to Address 340B Underpayments by Medicare Advantage Organizations" data-entity-type="file" data-entity-uuid="cc3eb7ff-acbc-44c8-bc54-8c922b2f2dfb" src="/sites/default/files/inline-images/Special-Bulletin-Resources-to-Address-340B-Underpayments-by-Medicare-Advantage-Organizations-updated.png" width="690" height="900"></a></p> </div> </div> </div> Tue, 07 Nov 2023 12:00:00 -0600 340B Payment Reductions in the CY2018 Final OPPS Rule <div class="container"> <div class="row"> <div class="col-md-8"> <p>Following last year’s<a href="/special-bulletin/2022-06-22-supreme-court-rules-unanimously-favor-aha-others-340b-case" target="_blank"> unanimous Supreme Court decision</a> in favor of the AHA and others, the Department of Health and Human Services Nov. 2 issued a <a href="https://public-inspection.federalregister.gov/2023-24407.pdf" target="_blank">final rule outlining the agency’s remedy</a> for the unlawful payment cuts to certain hospitals that participate in the 340B Drug Pricing Program.</p> <p>HHS’ rule largely adopts the <a href="https://www.federalregister.gov/documents/2023/07/11/2023-14623/medicare-program-hospital-outpatient-prospective-payment-system-remedy-for-the-340b-acquired-drug" target="_blank">scheme it proposed last summer</a> and contains three central components:</p> <ul> <li><em>First</em>, HHS will repay 340B hospitals that were unlawfully underpaid from 2018 to 2022 in a single-lump sum payment. HHS also will, as set forth in the proposed rule, reimburse hospitals the amount they would have received as cost-sharing payments from beneficiaries. The final rule contains the calculations of the amounts owed to the approximately 1,600 affected 340B covered entity hospitals. <strong>Eligible hospitals should expect to receive their one-time, lump-sum repayment from their Medicare Administrative Contractors in the first quarter of 2024. Any hospital that believes the Centers for Medicare & Medicaid Services has made an error in calculating its lump-sum payment should contact CMS detailing the error and any supporting documentation by emailing <a href="mailto:outpatientpps340B@cms.gov">outpatientpps340B@cms.gov</a> by 11:59 p.m. on Nov. 30, 2023.</strong><br>  </li> <li><em>Second</em>, HHS finalized its proposal to recoup funds from those hospitals that received increased rates for non-drug services from 2018 to 2022. HHS will recoup these funds by adjusting the outpatient prospective payment system conversion factor by minus 0.5% starting in calendar year 2026 — one year later than HHS had originally proposed and as AHA strongly advocated in its comments — making this adjustment until the full amount is offset, which the department estimates to be 16 years.<br>  </li> <li><em>Third</em>, HHS declined to address concerns related to Medicare Advantage Organizations, including that they have not appropriately reimbursed hospitals for underpayments between 2018 and 2022. HHS stated that these issues were “out of the scope of this final rule” and that it “cannot interfere in the payment rates that MAOs set in contracts with providers and facilities.”</li> </ul> <h2>AHA TAKE</h2> <p>In a <a href="/press-releases/2023-11-02-aha-statement-final-340b-remedy" target="_blank">statement shared with the media</a>, AHA President and CEO Rick Pollack said, “Following years of litigation and a unanimous Supreme Court win, the AHA is very pleased that 340B hospitals finally will be reimbursed in full for what HHS unlawfully withheld from them for five years. The one-time, lump-sum repayment hospitals will soon receive will help them to continue providing high-quality care to their patients and communities. However, HHS made a grievous mistake in choosing to claw back billions of dollars from America’s hospitals, especially those that serve rural, low-income and other vulnerable communities. HHS decided to ignore hundreds of comments from hospitals and other providers explaining why this Medicare cut is both illegal and unwise. The AHA will continue to review this rule and consider all available options going forward.”</p> <h2>NEXT STEPS</h2> <p>AHA will continue to review the final remedy and share additional information with members. Watch for more information, particularly about how members can address past underpayments by Medicare Advantage plans.</p> <h2>FURTHER QUESTIONS</h2> <p>If you have further questions, please contact Chad Golder, deputy general counsel, at <a href="mailto:cgolder@aha.org">cgolder@aha.org</a> or 202-646-4624.</p> </div> <div class="col-md-4"> <p><a href="/system/files/media/file/2023/11/hhs-issues-final-remedy-for-its-unlawful-340b-payment-cuts-from-2018-to-2022-bulletin-11-3-23.pdf" target="_blank"><img alt="HHS Issues Final Remedy for Its Unlawful 340B Payment Cuts from 2018 to 2022" data-entity-type="file" data-entity-uuid src="/sites/default/files/2023-11/cover-hhs-issues-final-remedy-for-its-unlawful-340b-payment-cuts-from-2018-to-2022-bulletin-11-3-23.png"></a></p> </div> </div> </div> Fri, 03 Nov 2023 12:05:09 -0500 340B Payment Reductions in the CY2018 Final OPPS Rule <div class="container"> <div class="row"> <div class="col-md-8"> <p>The United States District Court for the District of Columbia today <a href="/legal-documents/2022-09-28-judge-orders-hhs-immediately-halt-unlawful-reimbursement-cuts-remainder" target="_blank">ruled</a> in favor of the AHA, holding that the Department of Health and Human Services must immediately halt the departments’ unlawful cuts to outpatient reimbursement rates for the remainder of 2022 for certain hospitals that participate in the 340B Drug Pricing Program.</p> <p>“The prospective portion of the 2022 reimbursement rate shall be vacated because it is defective and because vacating this portion of the 2022 OPPS Rule will not cause substantial disruption,” wrote Judge Rudolph Contreras. “HHS should not be allowed to continue its unlawful 340B reimbursements for the remainder of the year just because it promises to fix the problem later.”</p> <p>The AHA in August urged the court to halt the 2022 cuts, explaining that “each and every passing day” HHS continues to underpay for 340B drugs pursuant to this unlawful” policy.</p> <p>Judge Contreras has not yet ruled on AHA’s motion to include 2020-2022 reimbursement cuts in AHA’s case, as well as AHA’s motion to repay hospitals for the unlawful cuts since 2018 without penalizing other hospitals. AHA’s August <a href="/2022-08-03-aha-files-motions-340b-case" target="_blank">brief</a> noted that nothing in the 340B law authorizes HHS to retrospectively take back these funds, and in similar circumstances HHS has never recouped funds already spent without explicit congressional authorization, which does not exist here.</p> <p>The Supreme Court of the United States on June 15 unanimously ruled in favor of the AHA’s challenge to HHS’ drastic cuts to outpatient reimbursement rates for certain hospitals that participate in the 340B program. The Supreme Court did not, however, specify the remedy for HHS’ unlawful cuts and remanded the case to the District Court for the District of Columbia.</p> <h2>FURTHER QUESTIONS</h2> <p>If you have further questions, please contact AHA at 800-424-4301.</p> <p> </p> </div> <div class="col-md-4"> <p><a href="/system/files/media/file/2022/09/judge-rules-hhs-must-immediately-halt-unlawful-reimbursement-cuts-to-certain-340b-hospitals-for-rest-of-2022-bulletin-9-28-22.pdf" target="_blank"><img alt="Special Bulletin: Judge Rules that HHS Must Immediately Halt Unlawful Reimbursement Cuts to Certain 340B Hospitals for Rest of 2022. " data-entity-type="file" data-entity-uuid src="/sites/default/files/2022-09/cover-judge-rules-hhs-must-immediately-halt-unlawful-reimbursement-cuts-to-certain-340b-hospitals-for-rest-of-2022-bulletin-9-28-22.png"></a></p> </div> </div> </div> Wed, 28 Sep 2022 16:05:08 -0500 340B Payment Reductions in the CY2018 Final OPPS Rule /legal-documents/2022-09-28-judge-orders-hhs-immediately-halt-unlawful-reimbursement-cuts-remainder <p class="text-align-center"><strong>UNITED STATES DISTRICT COURT<br /> FOR THE DISTRICT OF COLUMBIA</strong></p> <p>AMERICAN HOSPITAL  ASSOCIATION, <em>et al., </em><br /> <br />                                Plaintiffs,                                       Civil Action No.: 18-2084 (RC)<br /> <br />                                v.                                                    Re Document No.: 67<br /> <br /> XAVIER BECERRA, in his official capacity :<br /> as the secretary of Health and Human Services, :<br /> <em>et al.,</em><br /> <br />                              Defendants.</p> <p> </p> <p class="text-align-center"><strong>MEMORANDUM OPINION<br /> GRANTING PLAINTIFFS’ MOTION TO VACATE<br /> I. INTRODUCTION</strong></p> <p>As part of its duty to administer the Medicare statute, the Department of Health and Human Services (“HHS”) establishes annual rates reimbursing hospitals for outpatient services and drugs through the Outpatient Prospective Payment System (“OPPS”). In <em>���������� Association v. Becerra</em>, 142 S. Ct. 1896 (2022), the Supreme Court unanimously held that HHS exceeded its statutory authority by varying its 2018 and 2019 OPPS reimbursement rates for a particular group of hospitals—“340B hospitals”—without having first conducted a statutorily mandated survey of hospitals’ acquisition costs. <em>Id</em>. at 1899. The case has returned to this Court to decide the issue of remedies. Plaintiffs, a group of hospital associations and non-profit hospitals, now ask the Court to vacate the prospective portion of the 340B reimbursement rate in the 2022 OPPS Rule—in other words, to “forbid Defendants from underpaying 340B claims for the remainder of 2022.” Pls.’ Mot. to Vacate (“Mot.”) at 2, ECF No. 67.1 For the reasons stated below, the <em>prospective</em> portion of the 2022 reimbursement rate shall be vacated because it is defective and because vacating this portion of the 2022 OPPS Rule will not cause substantial disruption. Moreover, the Court finds that injunctive relief is not necessary because vacatur will immediately revert the 340B reimbursement rate to the default rate.</p> <p>View the detailed order below.</p> Wed, 28 Sep 2022 14:28:34 -0500 340B Payment Reductions in the CY2018 Final OPPS Rule /legal-documents/2022-08-17-ahas-reply-support-plaintiffs-motion-vacate-unlawful-portion-2022-opps <p class="text-align-center"><strong>UNITED STATES DISTRICT COURT<br /> FOR THE DISTRICT OF COLUMBIA</strong></p> <p> </p> <p>THE AMERICAN HOSPITAL ASSOCIATION, et al.,</p> <p>                                                   <em>          Plaintiffs,</em></p> <p>                                                                                                                 Civil Action No. 18-2084 (RC)</p> <p>                                                           –v–</p> <p>XAVIER BECERRA, in his official capacity as the Secretary of Health and Human Services, et al.,</p> <p>                                                  <em>         Defendants</em></p> <p class="text-align-center"><strong>REPLY IN SUPPORT OF PLAINTIFFS’ MOTION TO VACATE<br /> THE UNLAWFUL PORTION OF THE 2022 OPPS RULE</strong></p> <p>The Department of Health and Human Services (HHS) is asking the Court for permission to continue violating the law, each and every day, for the remainder of 2022. HHS agrees that “the 2022 OPPS Rule is unlawful,” which is an unavoidable concession in light of the Supreme Court’s decision in this case. Opp’n to Pls.’ Mot. to Vacate the Unlawful Portion of the 2022 OPPS Rule (“HHS Opp’n”), ECF 71 at 5 (emphasis added). Yet in the same breath, HHS asks to be allowed to apply its unlawful policy to future reimbursement decisions for a period of time which it alone would determine. HHS’s position should not be countenanced, especially given how much time HHS has had to prepare for the possibility of its policy being held unlawful (at least since the Supreme Court granted certiorari on July 2, 2021) and how long it has known to an absolute certainty that its policy violates the law (since the Supreme Court’s decision on June 15, 2022).</p> <p>View the detailed reply below. </p> Wed, 17 Aug 2022 14:39:34 -0500 340B Payment Reductions in the CY2018 Final OPPS Rule /special-bulletin/2022-06-22-supreme-court-rules-unanimously-favor-aha-others-340b-case <div class="container"> <div class="row"> <div class="col-md-8"> <p>The Supreme Court of the United States today <a href="https://www.supremecourt.gov/opinions/21pdf/20-1114_09m1.pdf" target="_blank">ruled unanimously</a> in favor of the AHA and others, reversing a 2020 court of appeals decision upholding the authority of the Department of Health and Human Services to significantly cut payments to certain hospitals that participate in the 340B Drug Pricing Program, and thereby threatening access to care for patients.</p> <p>The Supreme Court held that “HHS’s 2018 and 2019 reimbursement rates for 340B hospitals were contrary to the statute and unlawful.” Noting that “340B hospitals perform valuable services for low-income and rural communities but have to rely on limited federal funding for support,” the Supreme Court observed that “this case has immense economic consequences, about $1.6 billion annually.”</p> <p>Despite those serious practical impacts, the Supreme Court concluded that “[u]nder the text and structure of the statute,” the case is “straightforward” as a matter of law: “Because HHS did not conduct a survey of hospitals’ acquisition costs, HHS acted unlawfully by reducing the reimbursement rates for 340B hospitals.”</p> <p>The AHA was joined in the case by the Association of American Medical Colleges, America's Essential Hospitals and three hospital members.</p> <p>In a <a href="/press-releases/2022-06-15-joint-statement-340b-supreme-court-decision-aha-aamc-americas-essential">statement following the decision</a>, the AHA, AAMC and AEH said, “We are pleased that the U.S. Supreme Court unanimously agreed with us that the Department of Health and Human Services’ outpatient payment cuts to hospitals in the 340B Drug Pricing Program were unlawful. This decision is a decisive victory for vulnerable communities and the hospitals on which so many patients depend.</p> <p>“340B discounts help hospitals devote more resources to services and programs for vulnerable communities and increase access to prescription drugs for low-income patients.</p> <p>“Now that the Supreme Court has ruled, we look forward to working with the Administration and the courts to develop a plan to reimburse 340B hospitals affected by these unlawful cuts while ensuring the remainder of the hospital field is not disadvantaged as they also continue to serve their communities.”</p> <p>Watch for more information from the AHA on the decision and next steps.</p> <h2>Further Questions</h2> <p>If you have further questions, please contact AHA at <a href="tel:1-801-424-4301">801-424-4301</a>. </div> <div class="col-md-4"> </div> </div> </div> Wed, 22 Jun 2022 12:47:20 -0500 340B Payment Reductions in the CY2018 Final OPPS Rule /amicus-brief/2022-05-17-novartis-united-therapeutics-corp-v-johnson-re-340b <p class="text-align-center"><strong>NOS. 21-5299, 21-5304</strong></p> <p class="text-align-center"><strong>IN THE UNITED STATES COURT OF APPEALS<br /> FOR THE DISTRICT OF COLUMBIA CIRCUIT</strong></p> <p>NOVARTIS PHARMACUETICALS CORPORATION,<br />                                          Plaintiff-Appellee,<br />                                          v.<br /> CAROLE JOHNSON, in her official capacity as Administrator, U.S. Health<br /> Resources and Services Administration, et al.,<br />                                          Defendants-Appellants.</p> <p>UNITED THERAPEUTICS CORPORATION,<br />                                          Plaintiff-Appellee,<br />                                          v.<br /> CAROLE JOHNSON, in her official capacity as Administrator, U.S. Health<br /> Resources and Services Administration, et al.,</p> <p>                                        Defendants-Appellants.<br /> On Appeal from the United States District Court<br /> for the District of Columbia</p> <p class="text-align-center">_____________________________</p> <p class="text-align-center">BRIEF OF AMERICAN HOSPITAL ASSOCIATION, 340B HEALTH,<br /> AMERICA’S ESSENTIAL HOSPITALS, ASSOCIATION OF AMERICAN<br /> MEDICAL COLLEGES, AND CHILDREN’S HOSPITAL ASSOCIATION<br /> AS AMICI CURIAE IN SUPPORT OF APPELLANTS<br /> _______________________________</p> <p>William B. Schultz<br /> Margaret M. Dotzel<br /> Casey Trombley-Shapiro Jonas<br /> ZUCKERMAN SPAEDER LLP<br /> 1800 M Street NW, Suite 1000<br /> Washington, DC 20036<br /> T: 202-778-1800<br /> wschultz@zuckerman.com<br /> mdotzel@zuckerman.com<br /> cjonas@zuckerman.com</p> <p>Counsel for Amici</p> Tue, 17 May 2022 14:31:05 -0500 340B Payment Reductions in the CY2018 Final OPPS Rule /news/blog/2021-11-30-blog-key-insights-todays-supreme-court-oral-arguments-ahas-340b-case <p>With a few hours to digest this morning’s oral argument in <em>���������� Association v. Becerra,</em> I wanted provide a few high-level reactions.</p> <p><em>First,</em> the vast majority of the argument focused on the knotty statutory interpretation questions about whether HHS appropriately exercised its authority to “calculate[] and adjust[]” average price as “necessary for purposes of this paragraph.”</p> <p>The Justices were deep in the weeds of the statutory scheme, although at times they—like all of us listening at home—acknowledged just how complex it is. For example, at one point, Justice Kagan humorously remarked: “Roman ii. I don’t even know how to do this.” And, at another point, Chief Justice Roberts sounded as if he chuckled (it’s never easy to tell when merely listening in) when referencing a statutory provision crammed with lowercase letters, capital letters, Roman numerals, and romanettes (“Section 1395l(t)(14)(A)(iii)(II)”).</p> <p>But the Chief, Justice Kagan, and their colleagues all carefully drilled down on the statute and pressed both advocates about how best to interpret its many interrelated parts. It was refreshing to hear all of the Justices, regardless of ideology or who appointed them, work together to answer a complicated set of legal questions. In fact, there were moments when multiple Justices spoke up at the same time to ask the same question. It definitely seemed as if there was common cause in untangling this uncommonly complicated statutory scheme.</p> <p><em>Second,</em> the Court’s predominant focus on the statutory text and structure is especially noteworthy because of what the Justices focused far <em>less</em> on throughout the argument: (1) the government’s contention that courts cannot review the kinds of adjustments HHS made here and (2) the broader questions about whether and how to apply <em>Chevron</em> deference.</p> <p>This is not to say that there was no discussion of <em>Chevron.</em> As noted in the <a href="/news/blog/2021-11-29-live-analysis-supreme-court-hears-oral-arguments-ahas-340b-case">live blog</a>, the very first question of the argument from Justice Thomas was about the continuing viability of <em>Chevron,</em> and some of the final questions of the argument, from Justice Gorsuch, were about how to determine whether a statute is sufficiently ambiguous to invoke the <em>Chevron</em> doctrine.</p> <p>In addition, Justice Alito directly asked counsel for Petitioners, Don Verrilli, whether <em>Chevron</em> should be overturned if that was the only way he could win his case. (Unsurprisingly, he said yes.) And numerous times during the arguments, the Justices mentioned footnote 9 of <em>Chevron,</em> which says: “The judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear congressional intent. . . . If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.”</p> <p>For those who follow the Court’s administrative law docket, this was no surprise. This is clearly a Supreme Court that is wrestling with how much deference it owes to administrative agencies as compared to its own role as the ultimate interpreter of federal law.</p> <p><em>Third,</em> there is an important connection between these two points that may foretell how this case is ultimately resolved. The usual caveats apply: it is always difficult to predict outcomes based on oral argument.</p> <p>That said, it did not seem as if the Court believed it needed to — or was even prepared to — overrule <em>Chevron</em> in <em>this</em> case, on <em>these</em> facts, with <em>this</em> statute. The tone and tenor of the argument seemed — at least to me — to feel as if <em>Chevron</em> will live to fight another day.</p> <p>Instead, the Court may continue to chip away at the <em>Chevron</em> doctrine as it has repeatedly done in recent years, making it harder for lower courts to reflexively defer to agency interpretations of statutes.</p> <p>One such case was 2019’s <em>Kisor v. Wilkie.</em> As Mr. Verrilli pointed out in response to a question by Justice Kavanaugh, the Court explained in <em>Kisor</em> (while citing footnote 9 of <em>Chevron):</em> “[B]efore concluding that a rule is genuinely ambiguous, a court must exhaust all the ‘traditional tools’ of construction.” As Mr. Verrilli put it: “you have to exhaust the toolkit.” And although Mr. Verrilli did not mention this particular passage, the Court notably went on in <em>Kisor</em> to state:</p> <blockquote>That means a court cannot wave the ambiguity flag just because it found the regulation impenetrable on first read. Agency regulations can sometimes make the eyes glaze over. But hard interpretive conundrums, even relating to complex rules, can often be solved.”</blockquote> <p>This may be exactly what we have here: An eye-glazingly complex statute that, with some hard work, nevertheless yields an unambiguous meaning. In the end, the Court may very well agree with Mr. Verrilli’s final words in his rebuttal: “How much ambiguity is enough? I think the answer is waaaaaaay more than you have here.”</p> <p>If Mr. Verrilli is right, we will now just have to wait a few more months to find how the Court decides to unambiguously interpret the statute.</p> <p><em>Chad Golder is an attorney who authored an amicus brief filed by 37 state and regional hospitals associations in support of the AHA’s arguments in the 340B case. If you missed his live blog during the oral arguments, <a href="/news/blog/2021-11-29-live-analysis-supreme-court-hears-oral-arguments-ahas-340b-case">view it here</a>. The views of the author do not necessarily represent the views of the AHA.</em></p> Tue, 30 Nov 2021 15:25:07 -0600 340B Payment Reductions in the CY2018 Final OPPS Rule /news/blog/2021-11-29-live-analysis-supreme-court-hears-oral-arguments-ahas-340b-case <div class="container"> <div class="row"> <div class="col-md-8"> <p>The Supreme Court of the United States Nov. 30 will hear oral arguments in a case brought by the AHA and others asking the court to reverse the 2020 federal appeals court decision that upheld the authority of the Department of Health and Human Services to significantly cut payments to certain hospitals that participate in the 340B Drug Pricing Program, threatening access care for patients. For more on the case, visit AHA’s <a href="/legal/litigation">litigation</a> page and see materials under the “340B Payment Reductions” header.</p> <p>Attorney Chad Golder, who authored an amicus brief filed by 37 state and regional hospitals associations in support of the AHA’s arguments in the case, will listen to the oral arguments and provide live insights and analysis. Visit this page on Nov. 30 beginning at 11:15 a.m. ET to see the live analysis. (Please note at the oral arguments may start a little bit later depending on the court’s schedule). AHA 340B members also will receive additional updates related to the oral arguments.</p> <p><em>Chad Golder is an attorney who authored an amicus brief filed by 37 state and regional hospitals associations in support of the AHA’s arguments in the 340B case. The views of the author do not necessarily represent the views of the AHA.</em></p> <p><strong>If you are watching the live blog, you should refresh the page regularly to see the latest posts, which will appear at the bottom of the page as they are posted.</strong></p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 11:00 AM EST</small></strong></p> <p>Thanks to the ���������� Association for the opportunity to live blog this important and interesting case. For those interested, you can listen to the live audio yourself here:</p> <ul> <li>C-SPAN: <a href="https://www.c-span.org/video/?516167-1/american-hospital-association-v-becerra-oral-argument" target="_blank">https://www.c-span.org/video/?516167-1/american-hospital-association-v-becerra-oral-argument</a></li> <li>SupremeCourt.gov: <a href="https://www.supremecourt.gov/oral_arguments/live.aspx" target="_blank">https://www.supremecourt.gov/oral_arguments/live.aspx</a></li> </ul> <p>You can find the briefs in the case here:</p> <ul> <li><a href="https://www.supremecourt.gov/search.aspx?filename=/docket/DocketFiles/html/Public/20-1114.html" target="_blank">https://www.supremecourt.gov/search.aspx?filename=/docket/DocketFiles/html/Public/20-1114.html</a></li> </ul> <p>When the argument begins, Donald Verrilli, counsel for the Petitioners (���������� Association, the Association of American Medical Colleges, America’s Essential Hospitals, Northern Light Health, Henry Ford Health System, and Fletcher Hospital, Inc., d/b/a AdventHealth Hendersonville), will be up first. He will be followed by Christopher Michel, counsel for the government Respondents. Both are experienced oral advocates, which should make for an enlightening oral argument. Stay tuned here for updates and analysis along the way.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 11:05 AM EST</small></strong></p> <p>As we wait for the argument to begin, readers can take a look at these case previews, including a colorful one on SCOTUSBlog from my friend and former co-clerk, Nicholas Bagley, a professor at the University of Michigan Law School who teaches administrative and health law.</p> <p><a href="https://www.chiefhealthcareexecutive.com/view/supreme-court-will-hear-case-on-cuts-to-hospitals-in-340b-program" target="_blank">https://www.chiefhealthcareexecutive.com/view/supreme-court-will-hear-case-on-cuts-to-hospitals-in-340b-program</a></p> <p><a href="https://www.scotusblog.com/2021/11/chevron-deference-at-stake-in-fight-over-payments-for-hospital-drugs/" target="_blank">https://www.scotusblog.com/2021/11/chevron-deference-at-stake-in-fight-over-payments-for-hospital-drugs/</a></p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 11:27 AM EST</small></strong></p> <p>The argument has begun. Counsel for Petitioners, Don Verrilli is now delivering his two-minute opening. He argues that the statute was intended to constrain agency discretion, that Congress wanted courts to review actions like those HHS took here, which was a “substitution” and not an “adjustment.”</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 11:30 AM EST</small></strong></p> <p>As in the other cases this Supreme Court Term, Justice Thomas asks the first question of counsel for Petitioners, Don Verrilli. He asks whether Mr. Verrilli is arguing that <em>Chevron</em> should be overturned if the Court is unwilling to accept some of his other arguments. Without addressing the issue head on, Verrilli responds that there are several ways to resolve the case before reaching that question because AHA should prevail under both steps of <em>Chevron</em>. But Justice Thomas’ immediate focus on overturning <em>Chevron</em> illustrates the importance of that legal issue lurking within this case. For those interested, see this opinion in yesterday’s <em>Wall Street Journal:</em> <a href="https://www.wsj.com/articles/courts-and-the-regulatory-state-american-hospital-association-agencies-chevron-rulings-11638123948?mod=opinion_lead_pos1">https://www.wsj.com/articles/courts-and-the-regulatory-state-american-hospital-association-agencies-chevron-rulings-11638123948?mod=opinion_lead_pos1</a>. We will see if other Justices return to this issue as the argument unfolds.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 11:38 AM EST</small></strong></p> <p>Chief Justice Roberts presses Verrilli on what the meaning of “purposes” is, and what the appropriate limiting principle is, for the statutory phrase “as necessary for purposes of this paragraph.” Justice Kagan picks up on this line of questioning, asking what adjustments are permitted to meet this standard. Verrilli answers that the agency needs to follow the steps that the statute proscribes to ensure that the rates are accurate and transparent, and he provides a series of specific examples of the kinds of adjustments are appropriate. All of the adjustments, he contends, should be made to make it a more accurate average price number.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 11:43 AM EST</small></strong></p> <p>Verrilli argues that Congress did not grant the agency to distinguish among hospital subgroups—like 340B hospitals—in the statute for differential reimbursement rates. In response, Justice Alito asks whether there is any dispute that 340B hospitals pay less. Verrilli says no, but forcefully responds that this was something that Congress was well-aware of. It would be very odd, Verrilli argues, for Congress to let this feature of 340B hospitals “in through the backdoor” when making rate adjustments.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 11:49 AM EST</small></strong></p> <p>As the argument goes along, there is very little questioning on the jurisdictional question in this case. The Justices are quite engaged with the ins-and-outs of the complicated statutory scheme. Less so about the judicial review provision that the government has pushed.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 11:55 AM EST</small></strong></p> <p>Returning to Justice Thomas’ opening question, Justice Alito asks Verrilli if the only way to win the case is to overturn <em>Chevron</em>, does he want the Court to overturn <em>Chevron</em>. He answers yes. Justice Gorsuch asks what Verrilli would replace <em>Chevron</em> with. Verrilli says there are some options for what to do in a <em>Chevron</em>-free world. One is that even if the D.C. Circuit’s reading is within the realm of possibility, there is still a “best reading”—AHA’s reading.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 11:58 AM EST</small></strong></p> <p>Verrilli argues that if HHS was really unhappy with the subsidy given to 340B hospitals have, it has two choices. Follow the means in the statute by doing a cost study or go to Congress to change the law. On that strong note, Verrilli sits down. Christopher Michel is up for HHS.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 12:00 PM EST</small></strong></p> <p>In his opening, Michel begins by emphasizing the jurisdictional issue and the government’s argument that the budget neutrality requirement make remediating any error difficult, which he says bolsters his claim of no judicial review. He argues that the agencies made modest adjustment, which was well within its statutory authority.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 12:03 PM EST</small></strong></p> <p>Justice Thomas again asks the first question: why would an agency ever act under subclause one by conducting a survey when it has the government’s claimed authority under subclause two. Michel says there’s a higher showing required under subclause 2 and there is a lot of data available under a study. Thomas asks how many times HHS has conducted a study. Michel responds only once, in 2020, while this case was pending. He points, however, to a GAO report saying that HHS shouldn’t do many studies because it is burdensome and the results of studies are poor. He says, however, that despite this, the 2020 study lead to roughly the same data as HHS applied here.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 12:16 PM EST</small></strong></p> <p>Justice Alito asks whether HHS could do a survey of JUST 340B hospitals or all of the hospitals. Michael says that is a hotly debated issue because 340B hospitals don’t want to see the results. Alito contends, then, that if you have a group of hospitals that indisputably pay less but the only way to make an adjustment for those hospitals is to survey ALL hospitals, then it would make sense to adjust in the way HHS did here. Michael unsurprisingly agrees.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 12:17 PM EST</small></strong></p> <p>Point of personal pride: Justice Kavanaugh talks about the importance of 340B hospitals, citing the state associations’ amicus brief. He argues that Congress was aware of this, so it isn't right to call it an "overpayment" of 340B hospitals.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 12:18 PM EST</small></strong></p> <p>Michel, in response, encourages the Court to review other amicus briefs in the case (e.g., the brief by the Federation of ����������s and the Rural Hospital Coalition), but he does note that HHS supports the work of 340B hospitals.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 12:24 PM EST</small></strong></p> <p>Justice Sotomayor asks Michel for a one sentence description of the purpose of the paragraph. Michel responds that the purpose of paragraph is setting reimbursement rate equivalent to acquisition cost.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 12:31 PM EST</small></strong></p> <p>Justices Barrett, Breyer, and Gorsuch again raise questions about <em>Chevron</em> issues. Justice Gorsuch, for example, asks how much ambiguity is enough to invoke <em>Chevron</em>. Michel says no one can really answer that question, but it’s not ambiguous at all here. Gorsuch follows up with some surprise that the government can't tell us how much ambiguity is enough after 40 years of <em>Chevron</em>.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 12:34 PM EST</small></strong></p> <p>Justice Kavanaugh says the argument hasn’t focused enough of the word “adjust.” He says that the Court’s decision in the <em>MCI</em> case suggest it’s a word of constraint, a word of modest changes. Michel says that “adjust” has to take its meaning from context, and here the context is making an adjustment that corresponds to the difference between acquisition costs and reimbursements. He argues that the adjustment is a cautious estimate of the difference between those two things on the facts of the case.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 12:38 PM EST</small></strong></p> <p>Verrilli up for rebuttal. He makes four points. First, consistent with the flavor of much of the argument, he begins by focusing on the particular text of the statute. Next, he critiques the 2020 agency study that Michel raised during his argument, noting that MedPac recommended a far smaller adjustment in reimbursement rates. Verrilli then talks about the consequences of reducing money to 340B hospitals, responding specifically to the concerns raised by Justice Kavanaugh about the role they play in our healthcare system. Finally, he says that way more ambiguity is needed to invoke <em>Chevron</em> deference than is present here. The argument then concludes and the case is submitted.</p> <hr /> <p><strong><small>Tue, Nov 30, 2021 at 12:39 PM EST</small></strong></p> <p>Thanks to AHA for the opportunity to live blog this case. I’ll be back later today with a brief bigger-picture reaction to the argument.</p> <hr /></div> <div class="col-md-4"> <div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/legal/litigation" target="_blank">See More on AHA's 340B Case</a></div> </div> </div> </div> Mon, 29 Nov 2021 09:10:00 -0600 340B Payment Reductions in the CY2018 Final OPPS Rule