AHF: Fed Court Throws Out California Pharmacy Cuts

Federal Court Permanently Enjoins the State of California’s Department of Health Care Services (DHCS)—the Agency that Administers the State’s Medicaid Program—From Enforcing a California Law that Slashed Reimbursements for Safety Net Providers that Participate in the Federal 340B Drug Pricing Program

<0> AHF: Fed Court Throws Out California Pharmacy Cuts </0>

AIDS Healthcare FoundationGeneral Counsel & Chief of Public Affairs+1.323.860.5259 (work)orChief Counsel for Operations+1.323.860.5202 (work)orSenior Director, Communications+1.323.308.1833 (work)+1.323.791.5526 (cell)

In a sharp rebuke to California Medicaid officials, a federal court has invalidated a California state law that hurt safety net medical providers that participate in a federal program known as the 340B Drug Pricing Program, which allows qualified health care organizations that care for underserved people to purchase outpatient drugs at discounted prices.

On Friday, the United States District Court, Central District of California, ruled that defendant Toby Douglas, Director of the California Department of Health Care Services (DHCS) and The ruling came in the case (case number CV 09-8199-R). The legal action, filed by challenged the State’s attempt to solve its fiscal woes by slashing drug reimbursements to 340B safety net providers and forcing them to accept an amount that undisputedly could not cover their actual dispensing costs. The court granted AHF’s motion for summary judgment because:

In other words, the State slashed 340B providers’ drug reimbursement – but not those of their commercial pharmacy counterparts – without considering whether doing so would be consistent with Medicaid program efficiency, economy, and quality of beneficiary care, nor did the State consider whether Section 14105.46 would have an adverse impact on Medi-Cal beneficiaries’ access to health care services to the same extent as the general public.

“The federal court has slapped down yet another California state effort to fix its budget problems on the backs of the poor and the powerless,” said , Chief Counsel for Operations for AHF. “This is an important victory for safety net providers throughout California and nationwide. Thanks to the court’s ruling, State Medicaid agencies cannot single out safety net providers, pay them less for the same services than they pay big pharmacies like CVS and Walgreen's, all the while expecting them to bear the burden of caring for the state’s sickest and neediest residents. By invalidating the law, 340B providers are restored to a more level playing field, giving them the ability to carry on with their vital missions.”

According to the for the Health Resources and Services Administration (HRSA), which oversees and administers the 340B program,

AIDS Healthcare Foundation (AHF) is the largest non-profit HIV/AIDS healthcare provider in the USA. AHF currently provides medical care and/or services to over 200,000 individuals in 28 countries worldwide in the US, Africa, Latin America/Caribbean, Eastern Europe, and Asia. For more information, visit , find us on Facebook: and follow us on Twitter:

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