Supreme Court agrees to hear hospital lawsuit challenging HHS' 340B cuts

Supreme Court
The Supreme Court agreed to hear several healthcare cases in its next term, including a key dispute between hospitals and HHS over 340B cuts. (Getty/BrianPIrwin)

The Supreme Court agreed to hear a major dispute between the hospital industry and the federal government over cuts to 340B hospitals.

The court agreed to hear the case during its next term that begins in October, according to an order list released on Friday. A decision could be rendered sometime next year.

The case called American Hospital Association v. Becerra centers on the Medicare reimbursement rate paid for outpatient drugs and whether the Department of Health and Human Services singled out 340B-covered entities.

HHS traditionally set reimbursement rates for drugs based on the average sales price and applied it across all hospital groups. But the lawsuit said that practice changed in 2018 when HHS singled out 340B hospitals, the lawsuit argues.

RELATED: Drugmakers dig in and signal fight over HRSA's demands to reverse 340B contract pharmacy policies

HHS argued that the cuts were to ensure that Medicare payments were more aligned with the costs expended by the hospital to acquire the drug, which would be lower for a 340B hospital.

The agency has argued it had broad statutory authority to adjust drug payments. A legal challenge from hospital groups followed, but an appellate court found that HHS had the authority to make the cuts.

AHA cheered the Supreme Court’s decision, arguing that the cuts have had an adverse impact on patients.

“We are hopeful the court will reject the appellate court decision deferring to the government’s interpretation of the law that clearly imperils the important services that the 340B program helps allow eligible hospitals and health systems to provide to vulnerable communities,” said Melinda Hatton, general counsel for the AHA, in a statement.

Other healthcare cases that the court agreed to hear next term include:

  • Empire Health Foundation v. Becerra. The case centers on how HHS calculates the payments to disproportionate share hospitals that reimburse facilities for charity care.
  • CVS v. Doe. The case focuses on a class-action lawsuit filed by AIDS patients against the major pharmacy chain. The plaintiffs charge that the chain violated the Affordable Care Act’s anti-discrimination statute when CVS required specialty drugs to be mailed to them in order to receive in-network prices. The class-action lawsuit sought to force CVS to make the specialty drugs available at community pharmacies at in-network prices. CVS argues that the court needs to weigh in on the scope of the anti-discrimination policy.