Supreme Court Issues Unanimous Decision in 340B Case in Favor of Hospitals

The US Supreme Court has issued its highly-anticipated decision in the Medicare 340B case, ruling unanimously in favor of hospitals. The American Hospital Association (AHA) and other health systems sued the US Department of Health and Human Services (HHS) over 340B reimbursement rates from 2018 and 2019. The program lets certain health providers serving lower-income patient populations buy drugs at a discount but be reimbursed by insurers at normal rates. The Trump and then the Biden administrations reduced reimbursement payments for 340B systems but not non-340B ones.

Laura Joszt writes, “According to the ruling, HHS could have lawfully varied the reimbursement rates for different hospitals if it had conducted a survey of the hospitals’ acquisition costs and set reimbursement rates based on the average acquisition costs. Because HHS had not conducted the survey, it was not afforded the discretion to vary reimbursement rates, the court ruled. ‘HHS has only once attempted to conduct such a survey—in 2020, after this litigation commenced,’ Kavanaugh wrote. Without conducting the survey, HHS is only allowed to set reimbursement rates for each drug based on the average sales price set by manufacturers of the drugs.”

(Source: American Journal of Managed Care, June 15^th, 2022)