Dive Brief:
- The U.S. Court of Appeals for the D.C. Circuit denied the American Hospital Association's lawsuit against the Department of Health and Human Services for $1.6 billion in cuts made to the 340B drug pricing program beginning this year. Drugmakers are required to provide discounted medicines to certain safety-net hospitals under the program.
- The lawsuit had previously been denied because the cuts hadn't yet taken effect. In Tuesday's ruling, Circuit Judge Gregory Katsas wrote that hospitals failed to present a reimbursement claim to HHS Secretary Alex Azar before filing its lawsuit, a requirement the industry argued was fulfilled by submitting comment during the rulemaking process.
- AHA, the Association of American Medical Colleges and America’s Essential Hospitals said in a joint statement that they plan to "refile promptly in district court," but after this ruling, they will first have to meet the requirements laid out by the court.
Dive Insight:
The decision is definitely a setback for the hospital industry, which has been fighting tooth-and-nail to prevent cuts to the much-contested 340B program. The pharmaceutical industry has been harshly critical of how the current system is run, and are likely cheering.
Oversight of the program has ramped up under the Trump administration and spilled into a public fight between hospitals and pharmas over the level of drug discounts and how the savings are used.
The hospital groups filed the lawsuit in November after the Centers for Medicare and Medicaid Services' final rule that lowered payments for 340B.
The industry argues the cuts will hurt hospitals' ability to provide community care and that the reimbursement change exceeds HHS authority.
U.S. District Judge Rudolph Contreras dismissed the lawsuit late last year, saying changes to the federal drug discount program had not taken effect before the suit was filed. Contreras said his decision was based upon the “plaintiffs’ failure to present any concrete claim for reimbursement to the (HHS) secretary for a final decision.” Contreras also refused to comment on the merits of the case.
Katsas did the same in this ruling, saying the three-judge panel that presided over the appeal has "no authority to consider the merits" of the case due to a lack of subject-matter jurisdiction.
In their joint statement, the hospital associations said they are "deeply disappointed that the courts have once again failed to rule on the merits of our case," but plan to refile.