Court grants hospital groups' request for expedited brief in 340B case appeal

Gavel and flag in courtroom
Major hospital groups sued HHS in November after the cuts were finalized. (Image: Getty/AlexStar)

A federal appeals court has agreed to a request from several hospital groups for an expedited brief schedule in their case against the Department of Health and Human Services over cuts to the 340B drug discount program. 

The American Hospital Association, America's Essential Hospitals, the Association of American Medical Colleges, Eastern Maine Healthcare Systems, Henry Ford Health System and Fletcher Hospital sued HHS in November after the Centers for Medicare & Medicaid Services issued a final rule that would slash payments to hospitals that participate in the 340B program. 

CMS changed the program's payment rate from up to 6% more than the average price of drugs to 22.5% less than the average price, which cuts $1.6 billion in 340B payments. There was an immediate outcry to the policy from hospitals and providers enrolled in the program. 

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A federal judge dismissed the AHA's lawsuit at the beginning of January, but the groups filed an appeal (PDF) shortly thereafter. 

RELATED: Hospitals, pharmaceutical companies spar over cuts to 340B drug discount program 

The most recent ruling (PDF) from the U.S. Court of Appeals for the District of Columbia Circuit is in spite of the federal government's request (PDF) for additional time to review the lawsuit. A court date for the case was not set, but all briefs and replies must be filed by April 2. After that date, oral arguments will be scheduled. 

The hospital groups argued (PDF) that an expedited appeal is crucial because they will "suffer increasing irreparable injury" the longer CMS' cuts to 340B payments remain in effect. 

"The nearly-30% reduction in reimbursements to 340B hospitals will jeopardize essential health programs that are currently funded by the difference between the amount that the government reimburses for outpatient drugs prescribed to Medicare patients and the discounted prices the hospitals pay for those drugs under the 340B program," the organizations said in the motion. 

HHS argued, however, that while it did not object broadly to expediting the case, it did not see the need for such a short schedule, especially as the hospitals "have not sufficiently demonstrated" why the financial impacts of the 340B cuts require such a tight window. 

The federal government also said it would need additional time as the staff handling the briefs were not involved in the case at the district court level. 

"The compressed briefing schedule proposed by plaintiffs does not afford adequate time to prepare the government’s brief and coordinate with affected agencies and components," according to the response. 

RELATED: 340B program doesn't increase drug prices, study finds 

The ruling comes down as two new studies question how hospitals are using the discounts from the 340B program, and how much the cuts will actually impact them. 

Researchers at Harvard Medical School and NYU School of Medicine found that many hospitals are not investing the savings from 340B in improving care, while they're maximizing the payouts by buying up physician practices in pricey fields like oncology. 

340B Health, a group that includes 1,300 hospitals enrolled in 340B, disputed the study, saying the findings are misleading as they excluded hospitals with the highest volumes of low-income patients. 

An analysis from Avalere Health also suggests that increases to Medicare Part B payments will offset the 340B cuts for many hospitals. Tom Nickels, the AHA's executive vice president for government relations and public policy, said Avalere's conclusions are also misleading, and that CMS' cuts overstep their authority.