Health Law Matters

Court Blocks 340B Payment Cuts

Highlights from the Week in Health Law

  • A federal judge issued a permanent injunction blocking cuts to payment rates in the 340B drug discount program that were scheduled to take effect on January 1.
  • The judge determined the Department of Health and Human Services (“HHS”) exceeded its authority in reducing reimbursement rates for Part B drugs purchased through the program from the average sales price (“ASP”) plus 6%, down to ASP minus 22.5%.
  • The legal action stems from a November 2017 final rule issued by the Centers for Medicare and Medicaid Services (“CMS”) for the hospital outpatient prospective payment system that included the nearly 30% cut in Medicare payments for 340B drugs. The rule drew swift criticism from hospital groups, which filed a legal action to block implementation of the payment changes before the cuts went into effect.
  • However, the judge deferred ordering the remedies sought by the plaintiff hospitals, which would have required HHS to reimburse them retroactively for the difference in the payments they would have received under the higher rate. Instead, the judge ordered supplemental briefing within 30 days on the question of a proper remedy. The judge was concerned that the relief sought by the plaintiffs would be “highly disruptive,” particularly in light of Medicare Part B's requirement for budget neutrality.

More trending Health Law topics this week:

  • States Appeal Ruling Striking Down Affordable Care Act


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Thomas D. Anthony is the former chair of FBT's Health Care Industry Team. He focuses on counseling health care entities on corporate transactions, regulatory compliance and joint ventures.