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Judge Rules 340B Cuts in 2019 Unlawful

A federal judge for the U.S. District Court for the District of Columbia issued a decision in the association’s ongoing 340B Drug Pricing Program lawsuit, finding the Department of Health and Human Services’ (HHS’) Medicare outpatient payment cuts to 340B hospitals to be unlawful in 2019.

Previously, in a significant victory for America’s Essential Hospitals and other hospital plaintiffs in December, the judge ruled that the cuts to payments in the calendar year 2018 Outpatient Prospective Payment System (OPPS) final rule were unlawful. But at that time, the court could not rule on the lawfulness of the 2019 cuts because they had not yet taken effect. Along with that decision, the court asked for additional input on the appropriate remedies for hospitals.

In the May 6 opinion, the judge agreed with the association and found the 2019 cuts also unlawful.  However, the judge declined to order a specific remedy for the 340B hospitals for which payments were reduced in 2018 and 2019, instead sending the case back to HHS to determine the appropriate remedy.

America’s Essential Hospitals and the other plaintiffs had asked that HHS make 340B hospitals whole by repaying them the difference between what it paid them and what they would have been paid in the absence of the cut, without recouping the increased payments for other OPPS services in 2018 and 2019. The district court judge declined to weigh in on the appropriate remedy, allowing HHS to fashion a response in the first instance but retaining jurisdiction to reconsider if the agency “fails to fulfill its responsibilities in a prompt manner.”

The court has asked the parties by Aug. 5 to submit a status report on HHS’ progress toward crafting an appropriate remedy, indicating that it expects the department to “act expeditiously” in resolving the matter.

America’s Essential Hospitals welcomed the ruling extending the court’s decision to the 2019 OPPS cuts and called on HHS to swiftly remedy the harm to 340B hospitals.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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