Trump administration blocked from proceeding with pilot drug rebate program by US appeals court

A US appeals court on Jan. 7 rejected the Trump administration's request to lift a Maine judge's injunction, blocking an HRSA pilot that would have required safety‑net hospitals to pay full price upfront for 10 Medicare‑negotiated drugs and await rebates; the injunction followed a lawsuit by the American Hospital Association.

A federal appeals court on Wednesday blocked a Trump administration plan that would have required hospitals serving low-income Americans to pay full price up front for the first 10 costly medications subject to Medicare drug price negotiations and wait for rebates later. The court rejected the administration's request to stay an injunction issued by a U.S. district judge in Maine after a lawsuit brought by the American Hospital Association and several healthcare providers. The contested policy is the Health Resources and Services Administration's 340B Rebate Model Pilot Program, announced in July. Hospital groups argued the pilot would represent a hasty shift away from decades of upfront discounts under the 340B program for safety-net providers. Key facts: - The 1st U.S. Circuit Court of Appeals rejected the administration's bid on Jan. 7 to put on hold the Maine judge's injunction. - U.S. District Judge Lance Walker issued the injunction on Dec. 29, blocking the planned Jan. 1 implementation and citing the agency's failure to consider the program's effects on resource‑strained hospitals serving rural and low‑income communities. - The pilot would have required hospitals to pay wholesale prices up front for ten drugs and receive rebates later; the article lists examples including Eliquis, Xarelto and Januvia. - HRSA described the 340B Rebate Model Pilot Program as a measure to prevent duplicate price concessions to hospitals after Medicare negotiated maximum fair prices under the Inflation Reduction Act. - The American Hospital Association sued under the Administrative Procedure Act, saying the agency did not adequately consider the pilot's impact on hospitals. Summary: The appeals court order prevents the HRSA pilot from taking effect while the injunction remains in place, preserving the longstanding practice of upfront 340B discounts for now. The legal challenge arose from concerns about added costs to safety‑net hospitals and whether the agency followed required procedures. Undetermined at this time.