APPEALS COURT KEEPS HRSA 340B REBATE PILOT ON HOLD DURING GOVERNMENT APPEAL
WASHINGTON, D.C.— Yesterday, the U.S. Court of Appeals for the First Circuit denied the federal government’s request to allow the Health Resources & Services Administration (HRSA) to move forward with its 340B rebate model pilot program while the government appeals a lower court decision blocking the program. As a result, the preliminary injunction issued by the U.S. District Court for the District of Maine remains in place, and the rebate program will not take effect while the appeal proceeds on an expedited schedule over the coming weeks.
In its ruling, the three-judge panel concluded the government has not shown it is likely to prevail on its claims that HRSA complied with federal administrative law when approving the rebate program, nor that it will suffer irreparable harm if the program remains on hold. The panel emphasized that the injunction preserves the status quo under which 340B has operated for more than 30 years.
The appeals court also agreed with the district court that the administrative record contains little contemporaneous explanation for the rebate model and does not demonstrate that HRSA adequately considered the significant financial, administrative, and operational burdens the program would impose on 340B hospitals. The panel rejected the government’s argument that HRSA was subject to less rigorous decision-making requirements because it used an informal approval process, underscoring that agencies still must engage in reasoned decision-making under the Administrative Procedure Act.
The following statement can be attributed to 340B Health President and CEO Maureen Testoni:
“The appeals court’s decision is an important affirmation that federal agencies cannot sidestep basic administrative law requirements when making sweeping changes to a program that hospitals rely on to care for vulnerable patients. Keeping this injunction in place protects hospitals and preserves a 340B program that has worked effectively for decades.”
“The 340B program’s upfront discount structure provides hospitals with predictability and stability, enabling them to stretch scarce resources to meet community needs. Replacing that system with an untested rebate model — without a clear explanation, without adequate preparation time, and without accounting for the enormous costs and burden on hospitals — puts patient care at risk. We are pleased the court recognized those concerns.”
Contact: Jon Tilton at jon.tilton@340bhealth.org or 202-536-2285