About half of U.S. hospitals are 340B providers, so any change would have a major impact on the industry. Covered entities and their affiliated sites spent more than $7 billion to purchase 340B drugs in 2013, which was three times the amount in 2005.
The Trump administration has turned up the heat on the 340B program. CMS changed the rate of the discount from up to 6% more than the list price of a drug to 22.5% less than the list price. Hospitals fear the change will lead to $1.6 billion in payment cuts.
Four industry associations sued HHS twice this year after the 340B program cuts. The lawsuit, which was filed by the American Hospital Association, the Association of American Medical Colleges, America's Essential Hospitals and 340B Health, requests the court to declare the department's delay in implementing new 340B regulations unlawful.
Hospitals defend the program, which was intended to help safety net hospitals. The thinking goes that providing these discounts can provide funding for those facilities to offer care for low-income patients.
One criticism of the program is the lack of transparency on rules and ceiling prices. Critics charge there isn't enough program oversight. The Government Accountability Office said in June that the HHS Health Resources and Services Administration should take action to ensure that 340B participants use the savings properly.
Following complaints about 340B oversight, AHA released 340B stewardship principles in September in hopes of improving transparency. The AHA's 340B task force suggested that hospitals publish an annual report on how they're using the savings for community benefit. The task force also recommended a standardized method to make sure hospitals are meeting rules.
Federal and state officials are concerned about the program's discounts and oversight and it may be only the beginning. Over the summer, HHS Secretary Alex Azar said "change is coming" to the program.
That would affect hospitals already facing razor-thin margins.