Through the 340B program, pharmaceutical manufacturers sell drugs used in eligible safety net hospitals’ outpatient settings at discounted prices. Participating entities can achieve savings of 25 to 50 percent on pharmaceutical purchases. Hospitals reinvest 340B savings for a wide range of purposes, including providing low-cost or free prescriptions for uninsured and low-income populations, expanding services offered to patients and providing services to more patients. The 340B program involves no federal spending. Currently, one in four Texas hospitals participate in the program.
In November 2017, the Centers for Medicare & Medicaid Services finalized a
rule to limit hospitals’ Medicare reimbursement for prescription drugs purchased under the 340B Drug Discount Program. Beginning Jan. 1, 2018, 340B-participating hospitals face an almost 30 percent reduction in Medicare reimbursements for these drugs, which significantly reduce hospitals’ ability to sustain necessary patient programs. The financial impact to Texas hospitals is estimated to be a loss of nearly $41 million in 2018.
The American Hospital Association, America’s Essential Hospitals and Association of American Medical Colleges filed a lawsuit in U.S. District Court on Nov. 13 to stop CMS from enforcing the rule. THA joined 19 other state hospital associations in filing an
amicus brief in the suit, The American Hospital Association, et al. v. Eric D. Hargan. THA joined the amicus on the grounds that the final reimbursement rule is unlawful because CMS does not have the proper statutory authority to decrease reimbursement for 340B hospitals. In late December, a federal judge dismissed hospitals’ case. Hospitals filed notice of their intention to appeal the case in mid-January.
THA encourages the Texas Congressional delegation to cosponsor
HR 4392, a bipartisan bill that will stop CMS from implementing or enforcing the reimbursement reduction. THA members are encouraged to contact members of Congress directly or through THA's Voter Voice system to ask that they cosponsor HR 4392.
Finally, THA is seeking stories and feedback about the positive impact and opportunities the program affords to Texas hospitals and health systems. Contact
Stephanie Limb for additional information.
Texas Hospitals Reinvest 340B Savings in Improving Access to Care
Read how hospitals in Texas' 36 Congressional districts invest 340B savings.