The United States District Court of South Carolina recently ruled that the proposed definition of “patient” under the 340B Drug Pricing Program by the Health Resources and Services Administration (HRSA) was excessively limited and restrictive. In the case, Genesis Healthcare brought a claim against the United States Department of Health and Human Services (HHS) after a HRSA audit found Genesis had committed diversion by using discounted drugs for a patient HRSA considered to be an “ineligible patient,” as they were “not a patient of the entity.” HRSA believed that “eligible patients” were only those for which the prescription for the 340B drug originated from a health care encounter with Genesis or one of its contract health care providers.
HRSA attempted to remove Genesis from the 340B program, at which point Genesis sued the agency. After filing suit, HRSA did reverse the audit’s finding, but Genesis appealed (despite claims that the case was moot) to settle the overall legal controversy over the definition of “patient.” Genesis argued that a covered entity was able to use the discounted drugs to fill prescriptions from any originating source, since an individual becomes its patient once they have received services from Genesis. Genesis further argued that HRSA’s more restrictive definition of a 340B-eligible patient was inconsistent with the 340B statute that does not specifically define the term. As noted above, HRSA required that a covered entity must initiate the services that result in the relevant prescription before they can claim them as a patient.
Chief United States District Judge R. Bryan Harwell found that HHS published guidance in 1996 that outlined a “flexible application to accommodate the large number of covered entities and the wide diversity of eligible patients,” and that more restrictive guidance – more in line with HRSA’s definition – had since been proposed and withdrawn. The court further noted that there was nothing in the 340B statute or supporting regulations to support the strict definition of eligible patient HRSA was trying to implement and that the 340B statute actually requires a broad definition of a 340B-eligible patient and a covered entity only needs to initiate a prescription for it to be filled with a 340B drug.
The court’s decision further found that a covered entity must have an “ongoing relationship” with an individual to meet the broad definition of an eligible patient, but there was no specific period of time required by statute.
Harwell also pointed out in the decision that HRSA’s role is not to “legislate and limit the 340B program,” but that “Congress is the appropriate entity” to introduce any new restrictions on the program.
The American Society of Health-System Pharmacists (ASHP) applauded the decision, “which protects covered entities from regulatory overreach,” said Tom Kraus, ASHP vice president of government relations. “Attempts to restrict the program — whether from HRSA or from manufacturers attempting to unilaterally impose their own program requirements — harm providers and our patients.”