340B Drug Payment Case Heads to Supreme Court

The US Supreme Court recently announced that it will hear an ongoing debate over cuts to 340B drug payments to Medicare hospitals.

The case will be heard during the Supreme Court’s upcoming term, which starts in October. A decision is expected sometime next year.

The case was brought on by the American Hospital Association (AHA) and other national hospital groups seeking to overturn HHS’ decision to reduce Medicare reimbursement to hospitals in the 340B Drug Pricing Program by nearly 30 percent.

HHS had finalized the cuts in the 2018 Outpatient Prospective Payment System (OPPS) rule. The federal department said in a fact sheet that the cuts address the “recent trends of increasing drug prices, for which some of the cost burden falls to Medicare beneficiaries.”

Hospital groups led by the AHA challenged the cuts, arguing that reduced drug payments would harm access to care since the 340B Drug Pricing Program includes safety-net hospitals. An appeals court did not agree with their arguments in August 2020, ruling in favor of HHS.

“We are pleased that the U.S. Supreme Court has agreed to hear the compelling arguments in our case on payments cuts to the 340B drug pricing program that are adversely impacting care to patients,” Melinda Hatton, the AHA’s general counsel, said publicly on Friday.

“We are hopeful that the Court will reject the appellate court decision deferring to the government’s interpretation of the law that clearly imperils the important services that the 340B program helps allow eligible hospitals and health systems to provide to vulnerable communities, many of which would otherwise be unavailable,” Hatton continued.

Other hospital groups also cheered the Supreme Court’s decision to hear the 340B drug payment case.

“We are pleased that the Supreme Court has agreed to review the appellate court decision, which we believe was legally flawed,”  Maureen Testoni, CEO of 340B Health, said on the group’s website.* “We are hopeful that the justices will reverse the lower court decision that upheld these damaging cuts to many 340B hospitals treating patients with low incomes. In the meantime, we continue to urge the Biden administration to change this harmful policy by abandoning the payment cuts for 2022 and beyond.”

The other plaintiff, Association of American Medical Colleges (AAMC), also said it is looking forward to the consideration of the case.

“The current reimbursement rates reduce the 340B drug discounts granted to safety-net providers, many of which are teaching hospitals,” explained David J. Skorton, MD, AAMC president and CEO. “These hospitals use the current savings to deliver critical health care services to low-income and vulnerable patients, which includes providing free or substantially discounted drugs to low-income patients, establishing neighborhood clinics, and improving access to specialized care previously unavailable in some areas. A reversal of the cuts will ensure that low-income, rural, and other underserved patients and communities are able to access the vital services they need.”

Neither HHS nor CMS provided a public statement regarding the Supreme Court’s decision to hear the 340B drug payment case.

CORRECTION 07/06/2021: A previous version of this article said Maureen Testoni was the CEO of America's Essential Hospitals. The article has been updated to reflect her role as CEO of 340B Health.