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Hospital Groups Suing the Trump Administration Over Drug Subsidies

Pills Lawsuit Claims Drug Subsidies Cuts Will Make it Harder to Help Low-Income Patients

The American Hospital Association is hoping a lawsuit against the Trump administration will help save a drug subsidies program they claim is designed to help hospitals treat lower-income patients. According to the Wall Street Journal, the new administration proposed $1.6 billion in cuts to drug subsidies for some hospitals. The subsidy program, known as 340B, has been in place for two decades.

Drug Subsidies

According to the WSJ, the drug subsidies were put in place to help hospitals with large numbers of uninsured patients. The way it works is that 340B lets hospitals, that qualify, buy drugs with a generous discount. Then the Medicare program pays hospitals a little more than the average sales price for the drugs-- and the hospitals would get to keep the difference. The money is to be put towards uninsured patient costs and the community at large.

Critics of the drug subsidies have said that hospitals might use more expensive drugs unnecessarily. Under the Trump administration, Medicare will cut what it pays hospitals starting in January.

The Lawsuit

The WSJ reports that a lawsuit has been filed in U.S. District Court for the District of Columbia. It alleges the U.S. Department of Health and Human Services has “exceeded its authority” by moving to cut the drug subsidies program. The suit is hoping the courts will stop the cuts until the case is settled.

Carlos Angulo is an attorney for the AHA and other plaintiffs in the lawsuit. He is quoted in the article as saying these cuts go against the original intent of the law. He says Congress always intended Medicare to pay more than what hospitals paid for the drugs. He maintains that 340B allows hospitals to use the savings to benefit local communities.

The article notes that hospitals have been against the cuts since they were first announced, this past summer. Different hospital associations say they will gut local outreach programs and transportation for patients. Rick Pollack, president and chief executive of the AHA said in a statement, “From its beginning, the 340B Drug Pricing Program has been critical in helping hospitals stretch scarce federal resources to enhance comprehensive patient services and access to care,”

The article says that HHS officials didn’t respond to a request for comment.

Jeffrey A. Newman represents whistleblowers: 1-800-682-7157

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