December hearing set for hospital lawsuit against 340B policy

U.S. District Court Judge Rudolph Contreras will hold a hearing December 21 for a lawsuit aimed at halting the CMS payment reduction for hospital outpatient drugs acquired through the 340B program, a policy set to go into effect January 1.

The American Hospital Association (AHA), America’s Essential Hospitals, the Association of American Medical Colleges, and three healthcare systems filed a lawsuit against HHS in the U.S. District Court for the District of Columbia on November 13. The lawsuit argues that a policy finalized in the 2018 OPPS final rule reducing payment to hospitals for drugs purchased through the 340B program from average sales price (ASP) plus 6% to ASP minus 22.5% violates the Social Security Act due to the “arbitrary and capricious and contrary to law” nature of the 28.5% payment reduction. The plaintiffs in the lawsuit are seeking a preliminary injunction preventing the policy from going into effect while the lawsuit is pending.

The 340B payment reduction policy has been controversial since it was first introduced in the OPPS proposed rule over the summer. In addition to a plethora of public outcry, CMS own advisory panel urged the agency against finalizing the policy. In September, a bipartisan letter from Congress also urged CMS to drop the proposal.

After CMS finalized the policy in the 2018 OPPS final rule November 1, Congressmen David B. McKinley, R-W.V., and Mike Thompson, D-Calif., proposed a bill that also aims to prevent CMS from implementing the policy.

According to a brief from the AHA, HHS has until December 1 to file arguments for dismissing the lawsuit. The final HHS brief is due December 15.