August 12, 2014—A federal district judge has reaffirmed that California health officials may not enforce a state law that forbids 340B health care providers from “carving out” 340B-purchased drugs from California’s Medicaid program, Medi-Cal. State health care officials say they will appeal.[ms-protect-content id=”2799″]
U.S. District Judge Manuel Real issued the permanent injunction against the carve-out ban, which was part of a 2009 emergency budget-balancing bill, on July 23. It was the second time he issued such an injunction. The first time was in May 2013. The state appealed, and this spring a federal appeals court sent the case back to the judge with instructions to consider the impact of the Centers for Medicare and Medicaid Services’ approval in January of Medi-Cal’s state plan amendment implementing the 2009 law.
Judge Real ruled in June that it was insufficient for the state to have obtained CMS’s approval after implementing the law because, under federal law, the state should have obtained CMS’s approval first before making such a change. The judge also ruled that the state failed to satisfy federal requirements that it “consider factors of efficiency, economy, and quality of care and Medi-Cal beneficiary access to health care services before enacting” the state law. The AIDS Healthcare Foundation, which runs HIV/AIDS clinics and specialty pharmacies in California, sued the state over the ban in late 2009.
The 2009 law that the state has been ordered not to enforce requires Medi-Cal providers that participate in 340B to give only 340B-purchased drugs to Medi-Cal beneficiaries and to bill Medi-Cal no more than a drug’s actual acquisition cost plus a $7.25 professional fee.
The state Department of Health Care Services declined to answer whether it will be issuing updated guidance to 340B health care providers in light of the injunction. “Since we are appealing this case, we must decline comment as it is ongoing litigation,” a spokesperson said. “We would be happy to address these 340B policy issues upon completion of this litigation and when we have a final ruling.”[/ms-protect-content]