The healthcare safety net went into the holiday season pinning its hopes on a federal judge in Maine, who promised to rule “very soon” on a last-ditch effort to pause the 340B rebate pilot program that is set to begin Jan. 1. Yet a Supreme Court ruling from 2025 may severely limit any relief.
Chief Judge Lance E. Walker of the U.S District Court in Maine, a Trump appointee, heard oral arguments Dec. 19 from attorneys representing the plaintiffs, led by the American Hospital Association, and the Department of Health and Human Services (HHS) and HRSA as the defendants. The plaintiffs sought a temporary restraining order pausing the rebate program.
In a lawsuit filed Dec. 1, the AHA, Maine Hospital Association and four health systems accuse the department and agency of violating administrative law in approving the program without considering the financial implications for 340B entities — citing The Craneware Group’s own financial modeling of 340B rebates in its complaint. They also allege HRSA violated the law by failing to respond to or act on public comments and by not providing a satisfactory explanation for its actions, “in stark contrast with HRSA’s past practice.”
The complaint notes that HHS is currently defending itself from lawsuits by drugmakers that are currently on appeal.
“At the same time the government attorneys representing Defendants were highlighting the risks of rebate programs in federal courts, and after thirty-three years of implementing the 340B Program through upfront discounts, HRSA abruptly announced that it was launching a 340B rebate program that would have a devastating financial impact on covered entities across the country, especially rural and other safety-net hospitals,” the lawsuit says.
Unfortunately, any order halting rebates may be limited in scope. In a 6-3 ruling in June, the Supreme Court barred federal courts from issuing nationwide injunctions that prevent the government from implementing a law or regulation on all parties, regardless of whether they were involved in the litigation at question. How exactly that plays out given that the AHA is a nationwide organization remains to be seen.
Stay tuned on this one.
In the meantime, program stakeholders are pressing for help in stopping rebates:
- Advocates for Community Health and more than 260 provider and advocacy groups wrote to House and Senate leaders, arguing that in an already challenging time for safety net healthcare providers, 340B rebates “might be the tipping point.”
- 340B Health, America’s Essential Hospitals, the American Society of Health-System Pharmacists (ASHP) and other organizations penned a letter asking congressional leaders to stop the rebate program, adding an amicus brief in the AHA lawsuit
- The National Association of Community Health Centers is asking HRSA and manufacturers to exempt health centers from the 340B rebates altogether.
Separately, ASHP surveyed 298 members and found that while 60% believed that all manufacturers would require rebates to access 340B pricing by 2030, only 41% said their organizations were prepared.
Covered entities in California will certainly have their preparedness put to the test: Medi-Cal, the state’s Medicaid agency, announced that it will only accept claims for the drugs subjected to the pilot program after 340B rebates have been issued, a move that many observers note will only add more complexity. It highlights how the rebate pilot has complicated the question of how to submit 340B claims to state Medicaid agencies, which typically require providers to submit their actual acquisition costs.
If the rebates go forward, let’s hope HRSA agrees to monitor things closely, especially around how covered entities reconcile rebate payments with specific claim-level NDCs — an issue for which the Beacon platform has offered no insight.
340B spending growth
The news that 340B spending reached $81.4 billion in 2024 is giving foes ample ammunition to attack the program. Adam Fein of Drug Channels writes that the program “now accounts for nearly one-fifth of the total U.S. gross-to-net bubble,” a common industry measurement of the difference between list price and what drugmakers are actually paid. He also predicts that the onset of the Inflation Reduction Act will slow 340B spending growth.
On the other hand, the AHA in a blog post said that program growth follows the rise of outpatient care. Critically, it also noted the $370,000 median launch price for new drugs in 2024 was up by 23% — the exact same growth rate as 340B spending over that time.
Other news
- Some welcome good news: Federal judges have rejected motions from drug manufacturers seeking to block enforcement of contract pharmacy access laws in Colorado, Nebraska and South Dakota. AstraZeneca is appealing the Colorado ruling, while AbbVie had argued a preliminary injunction was needed in the other states to comply with data-collection requirements under the 340B rebate pilot program.
- A federal judge in Oklahoma extended his previous order blocking the state from enforcing its contract pharmacy law to all members of the Pharmaceutical Research and Manufacturers of America, or PhRMA, while the trade group’s lawsuit is under way. The judge had previously blocked enforcement against three drugmakers.
- Lastly, California-based Puma Technology became the 40th manufacturer to announce contract pharmacy restrictions. It is also the second manufacturer that will use the Truzo platform from Kalderos for claims submissions and processing.
If I can offer any New Year’s solace for a year that brings so many unknowns for safety net providers, it’s that you’re not alone. The healthcare safety net stands together in strong solidarity, and the events over the past few months show that we won’t stop trying to defeat 340B rebates and Big Pharma’s efforts to undermine safety net healthcare in our country.
Stay strong!
If you’d like to continue this conversation, please contact me at [email protected].