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 January 29, 2023

Supreme Court shoots down HHS over drug reimbursement practices

One of President Joe Biden's top Cabinet members took a huge loss last year when the U.S. Supreme Court unanimously ruled against a shady practice by the Department of Health and Human Services (HHS). 

The issue pertained to HHS drug reimbursement payments to hospitals and clinics that serve low-income communities. The massive reductions in reimbursements by HHS, led by Xavier Becerra, cost those facilities, which were already struggling in many cases, billions of dollars.

CNN noted: "At issue in the case was how HHS set Medicare reimbursement rates for certain prescription drugs in its so-called 340B drug program. The hospital industry group challenged a Trump-era rule that reduced the rates."

The high court said HHS acted "unlawfully" in how it varied the rates for the drug reimbursements to hospitals that served largely disadvantaged communities, making for an embarrassing round of PR for the Biden administration.

Conservative Justice Brett Kavanaugh wrote the opinion in the unanimous, 9--0 ruling against the U.S. government.

"In short, the statute allows HHS to set reimbursement rates based on average price and affords the agency discretion to ‘adjust’ the price up or down. But unless HHS conducts a survey of hospitals’ acquisition costs, HHS may not vary the reimbursement rates by hospital group," Kavanaugh wrote.

The high court's ruling was widely celebrated by medical advocacy groups.

"This decision is a decisive victory for vulnerable communities and the hospitals on which so many patients depend,” the American Hospital Association, the Association of American Medical Colleges and America’s Essential Hospitals said in a joint statement.

It added: "340B discounts help hospitals devote more resources to services and programs for vulnerable communities and increase access to prescription drugs for low-income patients."

"The question is whether the statute affords HHS discretion to vary the reimbursement rates for that one group of hospitals when, as here, HHS has not conducted the required survey of hospitals’ acquisition costs. The answer is no. We therefore reverse the judgment of the U. S. Court of Appeals for the D. C. Circuit," Kavanaugh wrote.

The case, called AMERICAN HOSPITAL ASSN. v. BECERRA, was one of many losses taken by the Biden administration in the Supreme Court in 2022.

Only time will tell what happens in 2023, but the high court is set to take up several major cases once again, and it could spell more PR trouble for a struggling Biden administration.

Written By:
Ryan Ledendecker

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