PhRMA challenges 340B drug discounts again

The Pharmaceutical Research and Manufacturers of America have filed a second lawsuit challenging HHS' implementation of the 340B drug discount program, according to an AHA News report.

PhRMA's suit — filed in the U.S. District Court for the District of Columbia — seeks to vacate an interpretive rule the HHS Health Resources and Services Administration issued in July allowing rural and cancer hospitals to keep accessing 340B discounts on "orphan" drugs (typically expensive medications developed specifically to treat a rare condition) when the drugs are not used for the rare conditions that resulted in orphan designation.

The HRSA issued the interpretive rule after U.S. District Judge Rudolph Contreras ruled against HHS in a previous suit filed by PhRMA seeking to exclude all orphan drugs from a final rule from the federal agency expanding the 340B drug discount program to rural and cancer hospitals as outlined in the Patient Protection and Affordable Care Act.

As part of its previous challenge, PhRMA tried to block the interpretive rule, according to the report. However, in August, the court ruled that attempt went beyond the scope of the original case and that PhRMA would have to file another lawsuit.

The American Hospital Association backs HHS in the suit, according to the report. "The AHA continues to support HHS and HRSA's authority to use interpretive guidance to implement this critical program," said Jeffrey Goldman, AHA vice president of coverage policy. "PhRMA's unrelenting efforts to argue a narrow interpretation of the [PPACA's] orphan drug exclusion would nullify the benefits of the 340B program for critical access and sole community hospitals, and rural referral centers supported by the very same law."

PhRMA's second legal challenge comes days after Health Affairs published a study concluding that hospitals have been using the 340B program to boost profits rather than help low-income and uninsured patients. The 340B program was created by the Veterans Health Care Act of 1992 and allows nonprofit hospitals, community health centers, hemophilia treatment centers, HIV/AIDS clinics and other facilities that serve large numbers of under- or uninsured patients to buy medications from manufacturers at reduced prices. The researchers — Rena Conti, PhD, an assistant professor of health policy and economics in the University of Chicago Departments of Pediatrics and Health Studies, and Peter Bach, MD, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center — found 340B disproportionate share hospitals that registered for the program in 2004 or later served wealthier communities than hospitals that joined the discount program earlier.

Additionally, clinics affiliated with 340B hospitals that registered for the program in 2004 or later served communities with higher incomes and higher levels of insurance coverage than clinics that registered prior to 2004, according to the study. These findings support allegations that hospitals participating in the program are looking to bring in extra money by targeting wealthier and/or insured patients.

The study echoes criticism the 340B program has received in recent years from various groups and healthcare industry stakeholders who claim hospitals are abusing the discount for monetary gain — allegations hospital groups like the AHA have vehemently denied. The program has become particularly controversial since the PPACA expanded it to include providers such as critical access hospitals, freestanding non-prospective payment system cancer hospitals, sole community hospitals, certain non-PPS children's hospitals and rural referral centers with disproportionate share adjustments equal to or greater than 8 percent.

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