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Hospital groups refile HHS lawsuit protesting drug discount rule changes

The American Hospital Association and two other hospital organizations have refiled a lawsuit against the U.S. Department of Health and Human Services seeking to reverse a rule that would reduce discounts hospitals receive for the 340B drug pricing program.

The 340B program allows HHS to give discounts for outpatient drugs to certain hospitals such as share hospitals, children's hospitals and sole community hospitals. The hospitals are then able to use the savings in other areas.

AHA's lawsuit is challenging a rule issued by HHS in November 2017 that would cut those discounts by nearly 30%, or $1.6 billion, according to the group. The current discount is the average sales price of a drug plus 6%, and the new rule would reduce this reimbursement to average sales price minus 22.5%. Specific hospital types such as children's hospitals, sole community hospitals and some cancer hospitals were exempt from the change.

When the rule was finalized, the Centers for Medicare and Medicaid Services, an agency within HHS, said the changes were meant to address increasing drug prices that are negatively impacting Medicare beneficiaries.

AHA's lawsuit claims that DHS violated its authority by making these changes. The hospital group also said in a Sept. 5 press release that the savings received through the program improved care in the local communities of those hospitals. The Association of American Medical Colleges and America's Essential Hospitals, both large hospital organizations, and several individual hospitals also have joined AHA's suit.

The lawsuit has been refiled with the U.S. District Court of the District of Columbia. An appeals court in July delayed ruling on the matter because no claims had been filed when the case was originally brought to prevent the rule from going into effect, AHA said. The new lawsuit addresses this procedural concern and asks the court to find the rule unlawful and set it aside.