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Hospital Stakeholders File 340B Suit Against HHS

Analysis  |  By John Commins  
   September 11, 2018

The plaintiffs want a judge to order HHS to make 2017 340B regulations effective within 30 days.

The federal government is getting sued by hospital advocates for allegedly failing to impose transparency regulations and overcharge penalties on drug makers.

The American Hospital Association, the Association of American Medical Colleges, America's Essential Hospitals, and 340B Health filed their lawsuit against the Department of Health and Human Services on Tuesday in a federal court in Washington, DC.

The four stakeholders said they've been waiting for years for HHS to implement final regulations requiring drug companies to disclose the maximum per-unit "ceiling" price that can be charged to 340B providers for outpatient drugs.

The stakeholders are asking a federal judge to order HHS to make effective the January 2017 340B regulation within 30 days.

"As prescription drug prices continue to skyrocket, the 340B program is as crucial as ever in helping hospitals and health systems provide access to health care services for vulnerable patients and communities," AHA President and CEO Rick Pollack said in a media release.

"Our lawsuit will ensure that drug companies provide the transparency and accuracy that the government has found lacking and hold price gouging drug companies accountable," Pollack said.

In their complaint, the plaintiffs noted that Congress in 2010 gave HHS the authority to regulate and impose penalties on drug companies that fail to provide transparency on ceiling prices or overcharges.

HHS issued a final rule in January 2017 but the department, led by former Eli Lilly & Co. President Alex Azar, has delayed imposing the rule five times.

The plaintiffs say the delays are "arbitrary and capricious and an unreasonable delay in violation of the Administrative Procedure Act."

"While hospitals routinely meet rigorous requirements for accountability in the 340B program, the government has failed to hold manufacturers to the same standard," said Bruce Siegel, MD, president and CEO of America's Essential Hospitals.

"We must have a level playing field to ensure this program works as Congress intended, which is to help hospitals and other covered entities give vulnerable patients greater access to affordable drugs and health care services," Seigel said.

The plaintiffs are joined in the suit by: Rutland Regional Medical Center in Rutland, Vermont; Genesis HealthCare System in Zanesville, Ohio; and Kearny County Hospital in Lakin, Kansas.

The drug makers' lobby issued a statement Tuesday night saying that they are not to blame for the delays.

"PhRMA supports regulations on ceiling price calculations and civil monetary penalties that are in line with the 340B law and eliminate needless regulatory burdens on manufacturers."

"As we have stated in comments to HRSA on the rule, we encourage the Administration to issue any new proposals quickly and to make the 340B ceiling price database operational as soon as possible," the association said.

Hospitals Sue HHS Over 340B by HLMedit on Scribd

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


Plaintiffs want HHS to impose transparency and overcharge penalties on drug makers.

Hospitals call the five delays of the 340B final rule 'arbitrary and capricious.'

AHA says regulations needed to 'hold price gouging drug companies accountable.'

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