Bass, Berry & Sims attorney Jeff Davis discussed the request by drug companies to convert 340B Drug Pricing Program discounts into a rebate program. The drug companies claim the 340B statute does not specify whether manufacturers must offer 340B pricing through discounts or rebates. The Health Resources and Services Administration (HRSA) contends that manufacturers cannot use rebates without government approval, which has prevented the drug companies from implementing a rebate model for now.
Hospitals argue that the statute does not authorize manufacturers to use rebates at all, but in the event that courts take a different approach, the government has support for its position.
“I do think the government has a strong position there in terms of the language that’s in the statute that talks about [rebates] ‘as provided by the secretary,’ and that has to mean something,” Jeff told the healthcare financial management association (hfma) in an interview.
“From a provider perspective, we hope that HRSA approves none of these rebate models,” Jeff said. “But they are different, and so they’re going to need to be evaluated differently.”
He added that in the 340B statute, Congress “made very clear that when deciding what type of mechanism should be appropriate, the [HHS] secretary should consider what’s the most effective and efficient mechanism, and what’s effective and efficient for one covered-entity type may not be effective and efficient for another covered-entity type. The details of the rebate models do matter in terms of effectiveness and efficiency.”
The full article, “Trump Administration Keeps Up the Fight on 340B, Inflation Reduction Act Concerns,” was published by hfma on March 20 and is available online.