Hospital Groups Sue HHS Over Delayed Implementation of 340B Ceiling Prices, Penalties for Overcharging

September 12, 2018

The lawsuit—filed by the American Hospital Association, America’s Essential Hospitals, the Association of American Medical Colleges, 340B Health, Genesis Healthcare System, Kearny County Hospital, and Rutland Regional Medical Center—is asking a federal court to order HHS to make the final rule effective within 30 days.

The American Hospital Association (AHA) and 6 other 340B stakeholders have filed a lawsuit against HHS over the delayed implementation of a final rule for 340B ceiling prices and penalties for manufacturers for overcharging.

The final rule has been delayed 5 times since HHS issued the final rule in January 2017, most recently on June 5 when HHS delayed the implementation for another year. This would delay the effective date of the rule for 30 months from the date it was issued rather than the 2 months the rule initially provided.

According to HHS, the delays have been to “provide affected parties sufficient time to make needed changes to facilitate compliance.”

To read more on the final rule, click here.

Under the final rule, which includes information for manufacturers to calculate the ceiling price, manufacturers can be fined up to $5000 for each incident of knowing and intentional overcharging of 340B hospitals for drugs purchased under the program. The rule also requires manufacturers to offer refunds for overcharges on new drugs instead of maintaining, rather than requiring covered entities to request refunds.

The lawsuit—filed by AHA, America’s Essential Hospitals, the Association of American Medical Colleges, 340B Health, Genesis Healthcare System, Kearny County Hospital, and Rutland Regional Medical Center—is asking a federal court to order HHS to make the final rule effective within 30 days. The lawsuit states that delays of the effective date of the rule are causing harm to those who filed the lawsuit and, in turn, are causing harm to vulnerable patients.

“As prescription drug prices continue to skyrocket, the 340B program is as crucial as ever in helping hospitals and health systems provide access to healthcare services for vulnerable patients and communities,” said Rick Pollack, president and CEO of AHA, in a statement. “Our lawsuit will promote the transparency and accuracy that the government has found lacking and hold price gauging drug companies accountable.”

The final rule was the first of a few for the 340B program in the past year. Months after HHS issued the final rule for the ceiling prices and penalties, CMS finalized reform that adjusted payments for the program. The final rule adjusted payment for drugs purchased under the program to the average sales price (ASP) minus 22.5%, a significant change from the previous rate of ASP plus 6%.

This July, CMS announced that it was extending 340B drug discounts to off-site hospital clinics.