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340B Drug Pricing Program Litigation Update: American Hospital Association, Et Al. v. Azar

On July 17, 2018, the Court of Appeals for the D.C. Circuit upheld the D.C. District Court’s decision to dismiss the lawsuit led by the American Hospital Association, the Association of American Medical Colleges, and America’s Essential Hospitals challenging $1.6 billion in cuts to the 340B Drug Pricing Program. American Hospital Association, et al., v. Azar.

The dismissal was based upon the same jurisdictional grounds that were used by the D.C. District Court when it first dismissed the suit – the Court lacked subject-matter jurisdiction because the hospitals filed their suit prior to filing any claims with the Secretary. As Judge Gregory Katsas wrote, “When the plaintiffs filed this lawsuit, neither the hospital plaintiffs, nor any members of the hospital-association plaintiffs, had challenged the new reimbursement regulation in the context of a specific administrative claim for payment, nor could they have done so, for the new regulation had not yet even become effective.”

In response to the Court’s decision, the American Hospital Association, Association of American Medical Colleges, and America’s Essential Hospitals stated that they, “expect to ‘refile promptly in district court’ their lawsuit challenging a nearly 30% Medicare payment reduction for many hospitals in the 340B drug savings program.”

As we await further action by the American Hospital Association and others, Republicans in the White House and in Congress are continuing to strategize on how to reign in the 340B Drug Pricing Program. Congressional committees in both the House and Senate have signaled widespread interest in doing so.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume VIII, Number 200


About this Author

Kenneth Yood Healthcare Attorney SheppardMullin

Ken is a partner in the Corporate practice group in the firm's Los Angeles office. Chambers USAranks him highly for Healthcare, where he was commended for his "broad-based ability in the regulatory area." Clients appreciate that "his explanations are clear, and he understands the business side of things," notes Chambers 2016.

Areas of Practice

Ken represents a wide range of healthcare providers and healthcare companies, including specialty and general acute hospitals (including local district, nonprofit and...