Washington’s hospital lobby lost an effort to stop the Trump administration from cutting payments under a drug discount program for hospitals that cover low-income patients.
The U.S. Court of Appeals for the District of Columbia upheld a lower court ruling that struck down a lawsuit from the American Hospital Association and other hospital groups on the payment cuts to a program called 340B. The decision issued Tuesday is a major win for the Trump administration and the pharmaceutical lobby that had been pressing for changes to the program.
The program requires drugmakers to provide steep discounts on certain drugs to hospitals that serve a certain number of low-income patients. But the Trump administration charged in November 2017 that the program had grown too much, and it made $1.6 billion in cuts to reimbursements to hospitals starting on Jan. 1, 2018.
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The AHA, two other hospital groups, and three hospitals sued the administration in November 2017 to roll back the cuts. The lawsuit aimed to stop the cuts and claimed the administration didn’t have the authority to make them comply.
But a lower court ruled that the groups and hospitals sued the Trump administration too soon, and the appellate court agreed.
“When the plaintiffs filed this lawsuit, neither the hospital plaintiffs, nor any members of the hospital-association plaintiffs, had challenged the new reimbursement regulation in the context of a specific administrative claim for payment,” the ruling said. “Nor could they have done so, for the new regulation had not yet even become effective.”
The ruling added that since it had not exhausted all avenues over the payment cuts then the lower court properly dismissed the lawsuit.
The ruling was a major win for the pharmaceutical industry, which had been lobbying Congress and the White House for major changes to the 340B program. “While clinics that receive government grants largely use the program to improve access to medicines for needy patients, not all 340B hospitals are good stewards of the program,” according to the website for the drug lobby Pharmaceutical Research and Manufacturers of America.
The hospital lobby, in response, has said that any effort to cut the payments will result in safety net hospitals that primarily care for low-income patients will be hurt. The AHA said in a release on the lawsuit last year that the program represents less than 2.8 percent of the $457 billion in U.S. drug purchases and gives savings to hospitals at no cost to taxpayers.
The decision to “cut Medicare payments for so many hospitals for drugs covered under the 340B program will dramatically threaten access to health care for many patients, including uninsured and other vulnerable populations,” AHA President Rick Pollack said in a statement in November when the lawsuit was filed.
The groups were “deeply disappointed” that the courts didn’t rule on the merits of the case and that it will continue to pursue the lawsuit.
“We will continue our fight to reverse these unwarranted cuts and protect access for patients, and we expect to refile promptly in district court,” according to a statement Tuesday from AHA, Association of American Medical Colleges and America’s Essential Hospitals.
