The American Hospital Association, joined by the Maine Hospital Association and several hospitals, including Northern Light Eastern Maine Medical Center, sued Robert F. Kennedy Jr. and the federal Department of Health and Human Services Friday over changes to a drug pricing program that the organizations say could cost struggling hospitals more than $1 billion.
The 340B drug pricing program was established by Congress in 1992 to help safety-net healthcare providers buy outpatient drugs at a discount, protecting low-income patients from rising drug prices.
But this summer, the Trump administration announced changes to a pilot effort that will allow some pharmaceutical companies to offer rebates instead of upfront discounts, a controversial move. The changes are set to go into effect Jan. 1.
Maine hospitals warn that the Trump administration’s changes to the program could upend an already-fragile financial ecosystem for the state’s medical providers. Much of the state is designated as a health professional shortage area, and Northern Light, the largest hospital system serving northern and eastern Maine, is working to recover from significant losses in recent years.
The U.S. Department of Health and Human Services did not immediately respond to a request for comment.
“This revised pilot helps modernize program oversight by improving visibility into 340B transactions while helping preserve the program’s long-term sustainability for the patients and communities it was created to serve,” Tom Engels, administrator for the federal Health Resources and Services Administration, said in a statement earlier this year.
The American Hospital Association and the other parties in the lawsuit say those changes would impose significant costs and divert resources away from caring for patients. The hospitals estimate the changes could add $1 billion annually in administrative costs, far higher than the $537 million federal government estimate.
The federal government previously tried to advance a similar rebate program in 2025 but was blocked by the U.S. District Court in Maine and the 1st U.S. Circuit Court of Appeals. The government has said the changes will improve transparency as the pharmaceutical industry has argued that hospitals abuse the discount program.
Lance Walker, the Maine district court judge who issued the injunction last year, wrote in his decision that the pilot “likely fails to consider and reasonably explain the impact of a rebate model on 340B hospitals, who rely on upfront price concessions to stretch few resources as far as possible to serve rural and poor communities.”
Jeff Austin, president of the Maine Hospital Association, said in an affidavit that the state has been losing hospital capacity for a decade, pointing to four hospital closures and 10 birthing units that have shuttered. Twenty-seven Maine hospitals participated in the drug pricing program in fiscal year 2024, he added.
“Maine hospitals cannot afford this rebate program,” Austin said in a statement. “They already operate with an average of less than two weeks cash-on-hand, so these significant new costs will jeopardize their ability to care for the most vulnerable patients in their communities and affect the affordability and accessibility of care across Maine.”
Dr. Guy Hudson, Northern Light Health president and CEO, said that “for rural health systems in Maine, these changes will divert resources away from direct patient care and create new financial challenges at a time when healthcare providers are already under strain.”
Aside from EMMC, the two hospital associations are joined in the lawsuit by 340B safety-net hospitals in North Dakota, Arkansas and New York.