Axios.com

The Trump administration paused a contentious drug purchasing pilot program that was due to take effect on Jan. 1, after a federal judge ruled that officials didn’t sufficiently consider the impact on safety net hospitals.

Why it matters: 

It’s a blow to some large drugmakers, who want to make providers pay full price for medicines they currently get at a steep discount and reimburse them later if they’re found to qualify under the federal 340B program.

Driving the news: 

The payment experiment covering 10 outpatient drugs was paused after U.S. District Court Judge Lance Walker found on Dec. 29 that it likely violated the Administrative Procedure Act.

• The American Hospital Association and individual facilities had challenged the program, saying individual facilities would have to make millions in upfront payments that would otherwise be spent on low-income and rural patients.
• Critics of the pilot have said up-front savings from 340B discounts allow hospitals to invest billions of dollars annually into free clinics, charity care and community-based programs.

What’s next: 

The administration has said it’s appealing the ruling. For now, manufacturers who were approved for the pilot have to continue to offer all covered drugs with an up-front discount.