Document ID: ./input/supremecourt_opinions/opinions/21pdf/20-1114_09m1.pdf
Page Number: 14

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

11 

Opinion of the Court 

price), the agency still may “adjus[t]” the average price “as 
necessary  for  purposes  of ”  this  statutory  provision. 
§1395l(t)(14)(A)(iii)(II).

It is true that the statutory text of option 2 affords HHS
discretion to adjust the average price.  The parties here vig-
orously  debate  how  much  HHS  may  adjust  the  price.  To 
resolve this case, however, we need not determine the scope 
of HHS’s authority to adjust the price up or down. 

Regardless of the scope of HHS’s authority to “adjust” the
average  price  up  or  down  under  the  statute,  the  statute
does not grant HHS authority to vary the reimbursement 
rates by hospital group unless HHS has conducted the re-
quired  survey  of  hospitals’  acquisition  costs.    Under  the 
statute,  varying  a  rate  by  hospital  group  is  not  a  lesser- 
included power of adjusting price.  Otherwise stated, HHS’s 
power to increase or decrease the price is distinct from its 
power to set different rates for different groups of hospitals.
The text of option 2 confirms the point.  It requires reim-
bursement  in  an  “amount”  that  is  equal  to  “the  average 
price for the drug in the year.”  Ibid.  The text thus requires 
the reimbursement rate to be set drug by drug, not hospital 
by hospital or hospital group by hospital group.  The only
item  that  the  agency  is  allowed  to  adjust  is  the  “average 
price for the drug in the year.”  Ibid.  Such an adjustment
can consist of moving the average-price number up or down,
but  it  cannot  consist  of  giving  a  single  drug  two  different 
average prices for two different groups of hospitals.  (Tell-
ingly, before 2018, the agency never used its adjustment au-
thority to vary reimbursement rates by hospital group.) 

Moreover, HHS’s contrary interpretation of the statute—
and its broad understanding of its adjustment authority—
would  make  little  sense  given  the  statute’s  overall  struc-
ture.  To proceed under option 1 (based on cost) and vary 
the rate by hospital group, HHS must conduct a survey.  In 
HHS’s view, the agency can decline to conduct a survey and 
can proceed under option 2, and then can still do everything