The 340B Drug Pricing Program is a key component of the patchwork federal support essential hospitals rely on to meet their safety net mission. Congress established the 340B program to enable essential hospitals and other covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” With their 340B savings, essential hospitals have the financial flexibility to tailor services and programs to their community’s unique challenges at nearly no cost to taxpayers.
In recent years, drug companies have unilaterally restricted access to 340B drugs dispensed by pharmacies with which hospitals contract to extend the reach of 340B discounts. The drug companies have imposed onerous reporting requirements as a condition for 340B discounts or have ended contract pharmacy discounts entirely. These unlawful actions undermine the 340B benefit for patients and financially strained essential hospitals just to pad manufacturers’ bottom line.
Litigation by drug companies to defend their deplorable actions likely will lead to a protracted legal battle at the expense of patient care. Any delay in resolving these illegal actions harms hospitals and the communities they serve.
In 2022, after legal action by America’s Essential Hospitals and other plaintiffs, the Supreme Court unanimously ruled that the Centers for Medicare & Medicaid Services (CMS) made unlawful cuts to Medicare Part B drug payments from 2018 to 2022.
This past summer, CMS proposed a remedy: The agency would repay 340B hospitals the amount withheld during the nearly five years of cuts but would recoup the higher payments it previously made to all Outpatient Prospective Payment System hospitals, in the name of budget neutrality. But hospitals argue that because the remedy is retroactive, CMS is neither authorized nor required to make it budget neutral.
We urge lawmakers to direct the Department of Health and Human Services and CMS to swiftly finalize and implement a remedy that promptly repays 340B hospitals the difference between what they previously were paid and the legal amount, without recouping money from hospitals to achieve budget neutrality.
The 340B program continues to work as Congress intended. America’s Essential Hospitals urges Congress and the administration to protect the 340B program and ensure all stakeholders comply with the law.