September 11, 2018—Today, 340B Health and three other national hospital associations have filed suit to force the U.S. Department of Health and Human Services (HHS) to enforce rules prohibiting manufacturers from overcharging 340B providers. The suit also would compel HHS to post 340B ceiling prices on a secure website.
In 2010, Congress responded to a series of reports by the HHS Office of the Inspector General (OIG) documenting overcharges by a number of drug makers by enacting legislation establishing civil monetary penalties (CMPs) for manufacturers that “knowingly and intentionally” charge 340B providers more than the allowable ceiling price.
In January 2017, as one of its last acts, the Obama administration published a 340B program final rule setting standards for computing 340B prices and establishing a system of CMPs for errant manufacturers. They were due to go into effect on March 6, 2017. The Trump administration, however, has delayed implementing those regulations five times, most recently, until July 1, 2019. HHS’s Health Resources and Services Administration (HRSA) has also put off the launch of a secure website designed to let 340B healthcare providers check whether manufacturers are charging them the right prices. Those delays were heavily criticized by a bipartisan group of members of Congress. Legislation introduced by Rep. Doris Matsui (D-Calif.) would force HHS to end the delays and enforce the rules issued in January 2017.
In filing suit against HHS today, 340B Health and the American Hospital Association, the Association of American Medical Colleges, and America’s Essential Hospitals are saying enough is enough.
“Congress required manufacturer transparency around 340B pricing after a federal watchdog agency documented widespread overcharging,” says 340B Health Interim President and Chief Executive Officer Maureen Testoni. “Here we are eight years later, with no evidence that the overcharging has abated, no transparency around prices, and providers still in the dark as to whether they are being overcharged. Moving forward with these requirements is critical to ensuring that manufacturers provide the 340B discounts they are required by law to provide. Doing so will strengthen the 340B’s goal of helping providers that treat low-income patient populations.”
Three hospital systems joined the national hospital groups in the suit: Genesis Healthcare System in Zanesville, Ohio, Rutland Regional Medical Center in Rutland, Vt., and Kearny County Hospital in Lakin, Kan. The lawsuit seeks a court ruling that HHS’s most recent delay is unlawful and an order voiding the delay so that the regulation can become effective in 30 days.
340B overcharges continue to be a significant problem, as evidenced by recent settlements between the federal government and manufacturers that include repayments to covered entities to resolve overcharge allegations. The situation is exacerbated by covered entities being unable to determine on their own whether they are being overcharged because they do not have access to the 340B ceiling price database.
Healthcare providers cannot sue manufacturers for overcharging, and HRSA cannot require manufacturers and providers to try to resolve pricing disputes. The 340B program’s current dispute resolution system is purely voluntary, allowing parties to choose not to participate. The only penalty for manufacturer overcharging currently available to the federal government is to disallow coverage of a manufacturer’s drugs under Medicaid and Medicare Part B, a move the government is highly reluctant to impose.
Overcharging lessens 340B hospitals’ capacity to meet the 340B program’s historic purpose: to stretch other dollars further to be able to provide more and better care to more patients. Ultimately, today’s lawsuit is aimed at enabling 340B hospitals to continue caring for a higher proportion of low-income patients, to continue providing more uncompensated and unreimbursed care, and to continue providing critical but often underpaid services such as HIV/AIDS treatment, trauma services, and outpatient alcohol/drug abuse services.