January 3, 2019

Trump Administration’s Cuts to 340-B Funding Ruled Illegal

The Hill reports that, on December 28, Federal Judge Rudolph Contreras “ruled that the administration illegally reduced Medicare payments to hospitals through the 340B Drug Pricing Program by 30 percent — or about $1.6 billion a year”.  The cut-backs, instituted by the Department of Health and Human Services (DHHS) in January 2018, have (for now) been blocked. (see WA issues 2/9/18 and 9/13/18 for more background).

While addressing a conference last summer, DHHS Secretary Alex Azar said that, “The current nature of 340B is such that it is quite possible for the program’s benefits to be diverted to unintended purposes, unrelated to supporting care for low-income patients.” Azar has also argued that cutting 340-B funding helps “lower patients’ expenses” – adding that “Medicare beneficiaries would save $320 million this year, because how much patients pay out of pocket for drugs is calculated as a percentage of what Medicare pays.”

Judge Contreras, however, ruled that “the department lacked the authority to make its cuts under current circumstances.”  The case was brought by the American Hospital Association, Association of American Medical Colleges and America’s Essential Hospitals. These plaintiffs described Contreras’ ruling as a “a carefully reasoned decision [that] will allow hospitals and health systems in the 340B Drug Pricing Program to serve their vulnerable patients and communities without being hampered by deep cuts to the program.”

The 340-B program was established in 1992 by Congress to provide a counter-balance to the expenses that hospitals incur in the course of providing services to uninsured people.

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