AHA urges HRSA to axe 340B model that would cost hospitals $1B+ a year

 The American Hospital Association has urged the Health Resources and Services Administration to abandon its consideration of the 340B rebate model pilot program, arguing the approach would impose significant financial and administrative burdens on hospitals.

In an April 20 letter responding to an agency request for information, the AHA said the rebate-based structure “is flawed in both conception and design” and would deviate from the intent of the 340B program, which aims to support safety-net providers.

“[I]t will inflict more than a billion dollars in costs annually on the hospitals that Congress designed the 340B Program to benefit,” AHA said. “It will jeopardize access to care for millions of Americans. It will force 340B hospitals to divert their scarce resources away from providing comprehensive services to patients and toward compliance with a new discount mechanism that benefits only drug companies and their third-party vendor, Second Sight Solutions. And it will do so in a way that has inherent and insurmountable design flaws.”

According to the AHA, hospitals would be forced to manage a new compliance framework tied to rebate processing, benefiting drug manufacturers and third-party vendors rather than providers and patients.

The association also raised concerns about what it described as “”nherent and insurmountable design flaws” in any rebate-based system.

HRSA issued the request for information Feb. 13 after previously abandoning a similar 340B rebate pilot following litigation brought by the AHA, the Maine Hospital Association and four safety-net health systems.

The AHA’s push comes amid broader legal and regulatory turbulence surrounding the 340B program. 

Last month, a federal court vacated a 2013 HRSA policy governing hospital drug purchasing, finding the agency failed to adequately justify its reasoning under the Administrative Procedure Act. The policy — tied to the “GPO prohibition” — had significant financial implications, with some hospitals reporting annual compliance costs ranging from $500,000 to $1.6 million.

The ruling did not resolve the underlying policy question, leaving room for HRSA to revisit the issue if it provides sufficient justification. It also follows a separate February decision in which a court vacated HRSA’s 340B rebate model pilot program on similar procedural grounds, highlighting ongoing scrutiny of the agency’s approach to the program.

Editor’s note: Becker’s has reached out to the HRSA for comment and will update this story as more information becomes available.

https://www.beckershospitalreview.com/finance/aha-urges-hrsa-to-axe-340b-model-that-would-cost-hospitals-1b-a-year/