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Published: Friday, 03 November 2023 18:14

Written by 340B Editor

A South Carolina federal judge stuck down the HRSA definition of "patient" in the 340B program, a federal program designed to provide discounts on prescription drugs. Chief Judge R. Bryan Harwell, in the case of Genesis Health Care v. Becerra, ruled that the 340B statute does not require a healthcare service to be initiated before a prescription filled with a 340B drug can qualify under the program.

Judge Harwell's decision overruled a statement made by the Health Resources and Services Administration (HRSA) in a 2019 audit letter to Genesis Health Care, a federally qualified health center (FQHC). The HRSA letter stated that, in order for an individual to be considered a 340B patient, Genesis had to initiate the healthcare service leading to the prescription, regardless of whether the patient had any unrelated billable FQHC encounter.

Judge Harwell criticized HRSA's interpretation of the term "patient," calling it unconvincing, and asserted that the court is not legally bound to defer to HRSA's viewpoint on the matter. He emphasized that the healthcare industry has evolved significantly since the 340B statute's inception in 1992. Although he acknowledged the challenges HRSA faces in adapting to these changes, he argued that HRSA's attempt to limit covered entities' ability to increase their profit margin by altering the definition of "patient" exceeds its authority. He stated that any desire to amend the 340B program should come from Congress rather than HRSA.

However, Judge Harwell did not grant Genesis' request to declare that HRSA lacks broad rulemaking authority regarding the diversion of 340B drugs to ineligible patients. He recognized HRSA's authority to interpret the term "patient" to administer the 340B program's dispute resolution process but stressed that HRSA's interpretation must align with the statute's plain language and Congress's intent. In this case, the judge found HRSA's interpretation to be inconsistent with both.