Healthcare & Life Sciences: Drug Pricing Digest — Number 76

Congratulations to Phil Perry on his retirement from Latham & Watkins! As part of his expansive career, Phil built a market-leading regulatory litigation practice in the healthcare and life sciences space, earning an extraordinary track record in some of the most complex matters in the field, including in 340B program litigation. Part of his legacy is the exceptional team he leaves behind.

Source: 340B Report.

Inflation Reduction Act, Healthcare Reform, and General Developments  

CMS RELEASES PROPOSED 2027 HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT SYSTEM AND AMBULATORY SURGICAL CENTER RULE

The Centers for Medicare & Medicaid Services (CMS) released the calendar year 2027 Outpatient Prospective Payment System (OPPS) proposed rule, which was published in the Federal Register on July 7, 2026. The comment period ends on August 31, 2026.

Among other things, the OPPS proposed rule would reduce payment for drugs purchased under the 340B program to Average Sales Price (ASP) minus 33.4%, with no add-on payment. CMS cites the survey of hospitals that the agency conducted from January 1, 2026, through April 7, 2026, as a basis for this proposal, explaining that “we found that for drugs acquired through the 340B Program, hospitals’ reported acquisition costs during the specified time period were approximately 33.4 percent below both the mean and the median ASP.” CMS notes that “these results clearly demonstrate that ASP plus 6 percent is not an appropriate payment proxy for hospitals that acquire drugs through the 340B Program.” For drugs with no ASP available, the proposed payment rate would be Wholesale Acquisition Cost (WAC) minus 33.4%.

The reduction in payment would result in a reduction of patient cost-sharing amounts. The savings resulting from the policy would be used to increase payments to providers for non-drug services.

Certain entity types would be exempt from the new 340B policy, including children’s, critical access, and rural emergency hospitals. As part of implementing the new policy, CMS proposes to require providers to report the following two-letter modifiers on all drug claims:

• JG for drugs acquired under the 340B program by providers subject to the new payment policy
• TB for drugs acquired under the 340B program by providers exempt from the new payment policy
• XX for drugs not acquired under the 340B program

CMS proposes to rely on these modifiers when removing 340B utilization from manufacturer rebate invoices for Medicare Part B inflation rebates.

Sources: InsideHealthPolicy, PoliticoPro, BloombergLaw, BioWorld, Law360, PinkSheet, StatNews, 340B Report (first, second).

STAKEHOLDERS CONTINUE TO DISCUSS GLOBE AND GUARD

As discussed in issue No. 75 of this digest, the Globe and Guard final regulations are currently under review by the Office of Management and Budget (OMB). Stakeholders continue to discuss the possible impact of these regulations.

Source: InsideHealthPolicy (first, second).

STAKEHOLDERS CONTINUE TO DISCUSS MFN IMPLICATIONS

Stakeholders continue to discuss the implications of the most favored nation (MFN) drug pricing policy, including possible tariff and other actions the Trump administration may take with respect to ex-US markets.

Sources: PinkSheet (first, second, third), InsideHealthPolicy, PoliticoPro, Reuters (first, second, third).

STAKEHOLDERS DISCUSS FEATURES OF MFN DEALS

Stakeholders continue to discuss the features of the MFN deals that the Trump administration entered into with major pharmaceutical manufacturers, even while crucial details remain undisclosed.

Source: StatNews.

Medicaid Drug Rebate Program (MDRP)

No developments to report.

340B Program

MANUFACTURER CLAIMS DATA REQUIREMENT FOR IN-HOUSE PHARMACY DISPENSES

As discussed in issue No. 64 of this digest, a growing number of manufacturers have begun requiring covered entities to submit claims-level data for all their 340B dispenses, including dispenses from in-house pharmacies. A hospital has now filed litigation to challenge one manufacturer’s policy, and stakeholders continue to discuss these policies.

Sources: BloombergLaw (first, second), Law360, InsideHealthPolicy, 340B Report (first, second, third, fourth).

REBATE PILOT DEVELOPMENTS

As discussed in issue No. 73 of this digest, the Health Resources & Services Administration (HRSA) 340B rebate proposal remains under review with OMB, while stakeholders continue to discuss the rebate model.

Source: 340B Report.

MANUFACTURER CHALLENGES TO STATE 340B LAWS CONTINUE

Drug manufacturer litigation challenging the 340B laws enacted by various states continues.

Sources: BloombergLaw (first, second), Law360 (first, second), 340B Report (first, second).

STAKEHOLDERS CONTINUE TO DISCUSS 340B LEGISLATIVE REFORM

Members of Congress and other stakeholders continue to discuss legislative reforms to the 340B program.

Sources: BloombergLaw, BioWorld, 340B Report (first, second)

Medicare Part B

Medicare Part D

State Law Developments  

COLORADO PDAB LEGAL CHALLENGE

As discussed in issue No. 56 of this digest, the Colorado Prescription Drug Affordability Board (PDAB) was the first to impose an upper payment limit (UPL). Following a legal challenge by a manufacturer, the US District Court for the District of Colorado issued a preliminary injunction stopping the UPL from going into effect.

Sources: Law360, StatNews, InsideHealthPolicy, PinkSheet.