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Court Dismisses 340B Lawsuit; Case to be Refiled

July 20, 2018

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PRESS CONTACTS
Ivy Baer, Senior Director and Regulatory Counsel

The U.S. Court of Appeals for the District of Columbia July 17 dismissed a lawsuit filed by the AAMC, the American Hospital Association, and America’s Essential Hospitals, and three hospital plaintiffs (Henry Ford Health System, Eastern Maine Healthcare Systems, and Park Ridge Health), which challenged the reductions to certain Medicare Part B drugs for 340B disproportionate share hospitals under the Medicare Outpatient Prospective Payment System (OPPS). The OPPS final rule reduced payments for non pass-through drugs from average sales price (ASP) plus 6% to ASP minus 22.5% beginning Jan. 1 [see Washington Highlights, Nov. 3, 2017].

The Court never considered the merits of the case and dismissed it for lack of subject-matter jurisdiction. In a 3-0 decision, the Court determined that the hospitals did not meet the requirement that claims for payment must be filed while the case was pending in District Court, and that this requirement cannot be waived. A second requirement, the exhaustion of all administrative remedies, can be waived.

The lawsuit contends that the 340B provisions of the OPPS rule violate the Social Security Act and should be set aside, as they exceed the authority of the Health and Human Services Secretary.

In a joint press release, the associations expressed their disappointment and note, “We will continue to fight to reverse these unwarranted cuts and protect access for patients, and we expect to refile promptly in district court.”

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