Court rules that companies may not impose 340B rebate model without HHS approval

The U.S. District Court for the District of Columbia July 21 upheld a lower court's decision that Section 340B of the Public Health Service Act does not permit drug companies to impose proposed rebate models on 340B purchasers unless the Secretary of the Department of Health and Human Services approves. The court did not weigh in on the lawfulness of the department's proposed rebate program or any other version of a rebate model that it could approve.

"The manufacturers' reading would also counterintuitively let manufacturers, rather than the Secretary, take the lead in administering the 340B Program, rendering the Secretary's role largely reactive," the court explained. "Put simply, the statute places the Secretary, not the manufacturers, in the driver's seat of this important program."

The AHA, Children's Hospital Association, Association of American Medical Colleges and America's Essential Hospitals filed a joint amicus brief in the case, defending HHS' decision to reject the rebate models offered by appellants Novartis and Johnson & Johnson.