Court blocks HHS' 340B rebate programme pilot

 After winning a preliminary reprieve at the end of 2025, hospitals that challenged the start of an HHS pilot scheme to implement a new rebate model for medicines provided to low-income people in the US have scored another victory.

Judges in the First US Circuit Court of Appeals in Boston have rejected an effort to overturn last month's injunction on the 340B rebate model, which had been due to start on 1st January, further delaying the pilot.

The 340B drug discount programme requires pharma companies to discount outpatient drug sales to 'safety net' healthcare systems that serve uninsured and low-income patients, often in rural communities.

At the moment, these discounts are applied upfront, but pharma companies have been pushing for rebates to be paid to hospitals only after medicines have been purchased at normal commercial prices.

The judges sided with the American Hospital Association (AHA) and other plaintiffs in the lawsuit and upheld the lower court in Maine's injunction on the pilot, which would require full price purchasing of an initial block of 10 medicines; namely, those subject to the first round of price cuts resulting from Medicare negotiations, which were applied at the start of this year.

The court in Maine determined that the Trump administration had failed to consider the impact that the changes would have on hospitals, which it said could face harm and potentially even closure. It also denied the federal government's request for a stay pending appeal.

In the last ruling, the three-judge panel – all of whom were appointed by previous President Joe Biden – concluded that the administration had been unable to make a strong enough case that its appeal was likely to succeed, so it should continue to be heard with the injunction in place.

"The federal government has not carried its burden to justify a stay," they wrote, adding that they "agree with the district court that the administrative record […] is devoid of evidence that [it] considered the hospitals' significant reliance interest."

According to the Maine judgement, the hospitals could face "hundreds of millions of dollars" in new costs per year that they could not recoup.

The AHA welcomed the judgement, saying the changes "would have caused a devastating sea change in a 30-year-old programme relied upon by hospitals that serve America's most vulnerable patients and communities."

The outcome will be a blow to several pharma companies, and trade organisation PhRMA, which joined the lawsuit in support of the HHS' Health Resources and Services Administration (HRSA), which came up with the pilot programme.

The companies have claimed that the 340B programme has long since strayed away from its primary purpose of ensuring access to medicines for vulnerable people, and that recipients of the discounted medicines charge both uninsured patients and insurance companies higher prices, pocketing the difference.

https://pharmaphorum.com/news/court-blocks-hhs-340b-rebate-programme-pilot