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Judge Denies Preliminary Injunction on 340B Medicare Cuts

A federal district court judge denied a preliminary injunction against cuts to the Medicare 340B rule that was finalized in November. Judge Rudolph Contreras of the Federal District Court for the District of Columbia ruled on Dec. 29, 2017, denying the motion filed by the American Hospital Association (AHA) and other stakeholders.

The Centers for Medicare & Medicaid Services (CMS) announced the rule in November 2017, concerning the amount that hospitals will be paid for delivering drugs to patients in the outpatient setting. Starting in January 2018, CMS will pay minus 22.5%, rather than plus 6% of the average sales price (ASP) for these outpatient Part B drugs in the 340B program.

The AHA sued the Department of Health and Human Services (HHS) in November, arguing that the HHS exceeded its authority and that the 340B cut should have been acted upon by Congress. The group sued pursuant to the Administrative Procedure Act that would have allowed the court to set aside the agency’s action if it was found to be arbitrary, capricious, or an abuse of their discretion. The complaint outlines the alleged imminent harm that would come to hospitals and patients covered by the 340B program if the cuts were enacted as proposed.

In denying the injunction, the judge ruled that the court did not have subject matter jurisdiction. “[T]he plaintiff’s problem is that they have not yet presented any specific claim for reimbursement to the secretary upon which the secretary might make a final decision,” according to the ruling. This, according to the court, would have made a ruling on the merits of the case premature.

The ruling is a setback for the AHA and other stakeholders. The district court’s ruling does not preclude the AHA and others from moving forward with their case, though they may face an uphill battle since the rule is being implemented. As of press time, no public comment on the ruling was available from the AHA.

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