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January was set to be the first month of a new 340B rebate pilot program, marking a seismic shift in how the drug discount program functions. But a flurry of court activity just before and after the new year put a sudden pause on the rebate program and left the future of the rebate pilot in question. Amanda Nagrotsky, vice president of legal and policy with 340B Health, joins the show to fill us in on the latest.

HRSA Pauses Rebate Implementation After Court Ruling

In late December, a federal court in Maine issued a ruling that temporarily blocks the Health Resources & Services Administration (HRSA) from moving forward with the 340B rebate pilot. HRSA then announced it was pausing the pilot and instructed drug companies to continue providing 340B pricing through the traditional upfront discount model. Nagrotsky says the judge found that hospitals had demonstrated a high likelihood of irreversible harm if rebates went forward.

Government Appeals, Then Reconsiders

Immediately after the ruling, HRSA unsuccessfully argued to the Maine court and an appeals court that the agency still should be able to implement the 340B rebate pilot program while it appealed the initial ruling. After the courts denied that request, the government agreed to voluntarily dismiss its appeal and said it would reconsider its rebate program approvals. Nagrotsky stresses that it is unclear what this means. It could mean the government might overhaul or scrap the rebate program, or it might issue revised approval notices to better explain the rebates’ purpose and address concerns of potential harm to 340B hospitals.

Medicare Maximum Fair Price Provisions Still Take Effect

Despite the legal questions surrounding the 340B rebate pilot program, new Medicare maximum fair price (MFP) provisions did take effect at the beginning of January for the drugs that would have been subject to the rebates. Nagrotsky says that while 340B still can be used for these drugs, covered entities are not entitled to MFP refunds from drug companies in those scenarios. She recommends hospitals closely track expected MFP rebates to identify any missing refunds for claims that did not use 340B drugs.

Resources

1. Dismissal of Appeal Sets Stage for HRSA Reconsideration of 340B Rebates