HHS says it will scrap current 340B Rebate Model Program

The Department of Health and Human Services Feb. 5 in a court filing said it would scrap its current 340B Rebate Model Pilot Program and potentially restart the administrative process for such a program.

These moves come after the 1st U.S. Circuit Court of Appeals Jan. 7 denied the government’s motion for a stay in a lawsuit filed by the AHA, the Maine Hospital Association, and four safety-net health systems challenging the 340B Rebate Model Pilot Program. The 1st Circuit ruling followed a Dec. 29 decision from the U.S. District Court of Maine granting a preliminary injunction blocking implementation of the 340B Rebate Model Pilot Program, which was scheduled to go into effect Jan. 1.

In a joint motion filed today with the district court, HHS explained that following those two decisions, it has “considered the documents that would comprise the full administrative record in this matter,” and it does not believe that the “full administrative record would change the outcome of this litigation.” Consequently, HHS concluded that further litigation would not be “fruitful.” HHS therefore agreed to vacate the existing program so it could consider whether to proceed with a new administrative process.

If HHS moves forward with a new administrative process, it agreed it would issue a new notice and invite comment from the public. HHS also agreed to set any effective date for any new 340B rebate program to no earlier than 90 days following any approval of drug manufacturer applications.

AHA President and CEO Rick Pollack said in a statement shared with the media Feb. 5, “The AHA appreciates HHS’ decision to go back to the drawing board and rethink its Rebate Program. We remain grateful to the district court and First Circuit for quickly recognizing the many legal flaws in the original Program.

“The AHA is eager to work with the Administration on policies that make drugs more affordable and ensure access to care for American families. A rebate program that undermines safety-net hospitals’ ability to offer more comprehensive care would only harm the nation’s most vulnerable communities.

"“The AHA is eager to work with the Administration on policies that make drugs more affordable and ensure access to care for American families. A rebate program that undermines safety-net hospitals’ ability to offer more comprehensive care would only harm the nation’s most vulnerable communities."