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The Trump administration is cutting generous subsidies that Medicare pays so-called safety-net hospitals for prescription drugs, a move that was supported by the pharmaceutical industry, but is prompting threats of lawsuits from major hospital groups.

In a rule released on Wednesday night, the Centers for Medicare and Medicaid Services indicated it will cut reimbursement for medicines purchased under the federal 340B Drug Discount Program, which was designed to boost revenues for hospitals that primarily serve low-income patients.


The program, which was created in 1992, requires drug makers to offer discounts of up to 50 percent on all outpatient drugs — for everything from AIDS to diabetes — to hospitals, clinics, and health centers that are known as safety-net providers because they serve indigent populations. Currently, there are about 12,470 such providers, according to the U.S. Human Resources and Service Administration.

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