Federal Court Rules Against CMS Cuts to Reimbursement for 340B Drugs

Yesterday, a D.C. federal court ruled that cuts from the Centers for Medicare & Medicaid Services (CMS) to 2022 reimbursement for drugs under the 340B Drug Pricing Program must stop immediately. In practice, this would require CMS to bump the current ASP – 22.5% reimbursement rate for covered entities up to ASP + 6% for the remainder of the year. The judge noted that while “the court recognizes that the Department of Health and Human Services (HHS) budget will be unbalanced if it must immediately start to pay 340B hospitals their proper due for the remainder of 2022… the disruption would be minimal, because HHS admits that vacating the 340B reimbursement rate for the remainder of 2022 would account for ‘only a small sliver of the overall time periods challenged in this action.’”

Yesterday’s decision follows the United States Supreme Court's ruling in June that CMS overstepped its authority in cutting 340B reimbursement for hospitals in 2019 and 2020. The Supreme Court remanded the case back to the federal court to determine the appropriate remedies for 340B underpayments to hospitals.

“Although yesterday’s ruling does not provide a remedy for underpayments in other calendar years, it is a first step to making safety-net hospitals whole,” said Tom Kraus, ASHP vice president of government relations. “CMS should act promptly to reimburse hospitals for underpayments from 2019 through 2022 and ensure that reimbursement mechanisms aren’t harming other critical areas of service, including outpatient care.”

ASHP remains committed to safeguarding the 340B program. ASHP has supported litigation to protect 340B covered entities. In addition to litigation efforts, ASHP and our partners undertook a joint national advocacy effort to safeguard the 340B program, including launching a digital advertising campaign opposing pharmaceutical manufacturers’ actions that threaten to undermine this program. ASHP also coordinated with our partners to promote messaging on social media about how the 340B program benefits hospitals, health centers, clinics, and patients, and mobilized our members to write to their federal legislators urging them to protect the program.

ASHP will continue to keep our members informed regarding ongoing 340B litigation and our aggressive advocacy efforts to safeguard this critical program for our members and the patients they serve.