Hospitals sue to block planned 340B drug rebate pilot

The American Hospital Association, a Maine hospital lobby and four safety-net hospitals have sued the US Department of Health and Human Services over a planned 340B drug rebate pilot.

The 340B program, created by Congress in 1992, lets eligible providers buy outpatient medicines at steep discounts so they can support care for low-income and uninsured patients.

The pilot would replace discounts at the time of purchase with rebates paid later, meaning hospitals would first have to pay for the drugs.

The hospitals say this could create heavy administrative costs and put pressure on their finances; they argue the government underestimated those costs.

Drugmakers have criticized the program, saying some hospitals profit unfairly from it, while hospitals say it helps them serve vulnerable communities.

A judge struck down an earlier rebate pilot after a previous hospital lawsuit, and the agency later proposed a revised version.

The hospitals are asking a court in Maine to pause the new pilot, which is scheduled to begin in January, while their legal challenge proceeds.