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A federal judge in Maine has temporarily blocked the Department of Health and Human Services from implementing a pilot for a 340B rebate model.
On Dec. 29, Judge Lance Walker ruled in favor of the American Hospital Association and other provider plaintiffs in granting a preliminary injunction.
HHS is barred from implementing the rebate program pending a further order, Walker said.
On Monday, the same day that the court ruled in favor of the hospitals, HHS Secretary Robert F. Kennedy Jr. appealed the decision to the United States Court of Appeals. The next day on December 30, Walker denied the motion to stay the preliminary injunction pending appeal.
Also, on Tuesday, pharmaceutical companies AbbVie, Pharmacyclics, AstraZenaca Pharmaceuticals, LP, Boehringer Ingelheim Pharmaceuticals, Novo Nordisk and the Pharmaceutical Research and Manufacturers of America, appealed to the Court of Appeals for the First Circuit on a decision from the federal court in Maine to deny them intervenor status.
WHY THIS MATTERS
The 340B rebate pilot was to have gone into effect on January 1.
The American Hospital Association and other groups sued to prevent implementation of a model they said would harm safety net providers.
The model would change hospital reimbursement for drugs in the 340B program from upfront payments to back-end rebates.
Defendants state that a stay is needed to “prevent disruption of industry preparation to implement a pair of significant programs scheduled to take effect on January 1,” Walker said.
The judge ruled in favor of the American Hospital Association and the other plaintiffs because HHS did not meet the minimum standards of the government’s Administrative Procedure Act before launching a new program or policy.
“Those minimal requirements are simply that the agency action be reasonable and reasonably explained,” the ruling said. The government must provide a reasoned explanation for its course of action, Walker said.
THE LARGER TREND
There’s competing directives to officer price concessions under both 340B and the Inflation Reduction Act’s Drug Price Negotiation Program, according to the court.
The Health Resources and Services Administration planned to “launch a hastily assembled 340B Rebate Model Pilot Program on January 1, 2026 to ‘deduplicate’ these price concessions,” the ruling said.
This has involved a “rather threadbare administrative record that likely fails to consider and reasonably explain the impact of a rebate model on 340B hospitals, who rely on upfront price concessions to stretch few resources as far as possible to serve rural and poor communities,” Walker said. “The APA likely requires more from defendants.”
Email the writer: SMorse@himss.org