Hospitals sue to block CMS 340B drug rebate pilot

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The American Hospital Association, joined by four community-based hospitals, has sued HHS over a pilot program to reimburse drug costs to safety net hospitals enrolled in the 340B program through a rebate—a departure of the status quo of up-front discounts. 

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By law, the Food and Drug Administration is required to determine whether a drug, device, biologic, or medical device is “safe and effective.” But the FDA determination does not control whether the Centers for Medicare & Medicaid Services will pay for it.  To satisfy CMS, medical products and services must be “reasonable and necessary,” meaning...

A federal judge has blocked the Health Resources and Services Administration from rolling out a pilot program that would reimburse safety net hospitals that get a discount on drugs through the 340B program via a rebate, as opposed to the status quo of up-front savings. The preliminary injunction was issued on Dec. 29, just a few days before the program was slated to begin on Jan 1. 

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