Hospitals sue HHS over 340B ceiling price delay

The hospital industry is taking the Trump administration to federal court again over the 340B drug discount program. In this round, they are suing to force HHS to publish delayed regulations to set the maximum ceiling prices drugmakers can charge hospitals in the program.

The complaint, filed Tuesday in the U.S. District Court in the District of Columbia, is the second lawsuit led by the American Hospital Association (AHA) against HHS. The AHA also spearheaded a suit to halt the $1.6 billion in cuts to Medicare Part B payments made to 340B providers. The CMS recently proposed expanding those cuts. Two major provider trade groups, the Association of American Medical Colleges and America's Essential Hospitals, joined the complaint along with the pro-340B not-for-profit advocacy group 340B Health and three hospitals.

The latest suit challenges the Trump administration's decision to delay the regulations that include the ceiling price until July 1, 2019.

Azar has repeatedly defended the additional delay in speeches and congressional testimony, saying it's part of the administration's drug pricing strategy roll-out. The administration wants to make regulatory tweaks to the program as part of its overarching plan to bring down drug costs.

Once the regulations are released, the federal government could fine drugmakers that charge 340B hospitals more than the ceiling price.

But the groups allege that the repeated delays, including the most recent one in June, violate the Administrative Procedure Act and are causing "significant harm" to providers. Three health systems are plaintiffs in the lawsuit: Ohio-based Genesis Healthcare System, Kearny County Hospital of Kansas and Colorado, and Vermont-based Rutland Regional Medical Center.

The AHA is still waiting on the courts to rule on the merits of the lawsuit to stop the Part B cuts to 340B hospitals. In July, a federal appellate court rejected the hospitals' appeal of an earlier district court decision.

Last week, the AHA and other hospital groups and systems refiled the suit in federal district court in Washington.

The latest lawsuit gets to a fundamental tension that played out earlier this year before the Senate health committee where Republican lawmakers and government watchdogs questioned whether hospitals were being transparent about how they use the money they save via significant 340B discounts.

Current law doesn't require hospitals to pass on the discounts to the low-income patients who qualify for them. Providers must use the program to "stretch scarce federal resources to provide more comprehensive services" to poor and vulnerable populations.

Bruce Siegel, CEO of America's Essential Hospitals, argued in his testimony that any transparency measure demanded of hospitals should be matched with requirements on drug manufacturers in the program.

The healthcare groups spearheading the suit reiterated that argument.

"Our lawsuit will ensure that drug companies provide the transparency and accuracy that the government has found lacking and hold price gouging drug companies accountable," AHA president and CEO Rick Pollack said.