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Supreme Court Rejects 340B Payment Cut to Hospitals

AHA suit prevents significant reduction in 340B payments, protects access to care

June 16, 2022

This week, the U.S. Supreme Court unanimously protected hospitals from significant payment cuts in the 340B Drug Pricing Program.

In a ruling Wednesday, the court sided with the American Hospital Association (AHA) and other leading hospital groups that sued the U.S. Department of Health and Human Services following the agency’s changes to the 340B program.

“We conclude that, absent a survey of hospitals’ acquisition costs, HHS may not vary the reimbursement rates for 340B hospitals,” the court said in its ruling. “HHS’s 2018 and 2019 reimbursement rates for 340B hospitals were therefore contrary to the statute and unlawful.”

In Pennsylvania, 66 hospitals participate in the 340B Drug Pricing Program. The program supports safety net hospitals by allowing them to purchase discounted medications from drug manufacturers. Hospitals use these savings to support patient access to care and to help patients secure prescription drugs at reduced or no cost.

HAP joined 36 other regional hospital associations to support 340B-eligible providers. In an amicus brief, the associations noted that 340B providers maintain access to life-saving services in their communities and incur significant costs to care for the uninsured, underinsured, and those who live far from hospitals and clinics.

In a joint statement, the AHA, the Association of American Medical Colleges, and America's Essential Hospitals said they were pleased with the ruling, calling it a “decisive victory for vulnerable communities and the hospitals on which so many patients depend.”

“340B discounts help hospitals devote more resources to services and programs for vulnerable communities and increase access to prescription drugs for low-income patients,” the statement said.

HAP applauds the AHA, the Association of American Medical Colleges, and America's Essential Hospitals for their advocacy on behalf of the hospital community. HAP looks forward to continued collaboration with the Biden administration to ensure proper reimbursement to hospitals affected by the ruling and that all hospitals have the resources they need to deliver outstanding care in their communities.

For more information, contact John Myers, HAP’s vice president, federal advocacy, or Jolene Calla, Esq., HAP’s vice president, health care finance and insurance.