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Page Number: 4

Cite as:  596 U. S. ____ (2022) 

1 

Opinion of the Court 

NOTICE:  This opinion is subject to formal revision before publication in the 
preliminary  print  of  the  United  States  Reports.  Readers  are  requested  to 
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order that 
corrections may be made before the preliminary print goes to press. 

SUPREME COURT OF THE UNITED STATES 

_________________ 

No. 20–1114 
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AMERICAN HOSPITAL ASSOCIATION, ET AL., 

PETITIONERS v. XAVIER BECERRA, 
SECRETARY OF HEALTH AND 
HUMAN SERVICES, ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 
APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT 

[June 15, 2022] 

JUSTICE KAVANAUGH delivered the opinion of the Court. 
Under  the  Medicare  statute,  the  Department  of  Health
and Human Services must reimburse hospitals for certain 
outpatient prescription drugs that the hospitals provide to
Medicare patients.  HHS’s total reimbursements to hospi-
tals for prescription drugs add up to tens of billions of dol-
lars every year.

To  set  the  reimbursement  rates  for  the  prescription
drugs,  HHS  has  two  options  under  the  statute.    First,  if 
HHS has conducted a survey of hospitals’ acquisition costs 
for the drugs, HHS may set the reimbursement rates based
on  the  hospitals’  average  acquisition  costs—that  is,  the
amount  that  hospitals  pay  to  acquire  the  prescription 
drugs—and may vary the reimbursement rates for different
groups of hospitals.  Second and alternatively, if HHS has 
not conducted such a survey, HHS must instead set the re-
imbursement  rates  based  on  the  average  sales  price
charged  by  manufacturers  for  the  drugs  (with  certain  ad-
justments),  and  HHS  may  not  vary  the  reimbursement