Top 3 Things You’ll Learn
- Federal court endorses broader patient definition for 340B covered entities
- The new ruling may lead to an increase in manufacturers’ withholding rebate dollars for all plan types
- Several outcomes from the decision are possible, and covered entities should proceed with caution
A recent historical federal court ruling has opened the door to a substantially broader interpretation of the 340B “patient definition,” which should grab the attention of every 340B stakeholder. This decision could dramatically expand 340B drug savings for covered entities moving forward.
New Genesis court decision could change the 340B landscape.
On November 3rd, a federal judge issued a decision in the Genesis Health Care, Inc. v. Becerra case regarding HRSA’s “patient definition.” The case began in 2018 when Genesis Health Care, a Federally Qualified Healthcare Center (FQHC) was audited by HRSA and cited for diversion for using 340B drugs for prescriptions written outside of the FQHC that were not related to any 340B encounter taking place at the FQHC.
In a HRSA letter to Genesis presenting the audit findings, HRSA stated, “In order for an individual to qualify as a 340B patient, Genesis must have initiated the healthcare service resulting in the prescription, regardless if the patient had an unrelated billable FQHC encounter.” After having their 340B designation suspended due to the HRSA audit findings, Genesis filed suit to challenge HRSA’s interpretation of the definition of an eligible “patient” and argued that HRSA’s patient definition was not aligned with the language in the 340B statute. Genesis argued that the 340B statute only requires that the individual be a patient of the Covered Entity and does not contain any language limiting 340B eligibility based upon where a prescription originated. Ultimately, the federal judge ruled in Genesis’s favor and found that HRSA’s interpretation of a 340B-eligible patient did not align with the plain language of the 340B statute.
A strong new legal precedent, but it may not change the accepted definition immediately.
This single-court decision is limited to a specific set of facts, and legal experts don’t yet know how this decision will influence 340B cases in other jurisdictions. It remains to be seen how this decision will be applied to HRSA accepted 340B operational standards moving forward. There is also the possibility that HRSA could appeal this case, or the 340B statute could be re-legislated. Nevertheless, this case sets a strong legal precedent for how the 340B patient definition may be interpreted moving forward.
In our latest webinar, “Thriving in the Ever-Changing 340B Landscape”, our expert panel examined this hot topic, with Robert Nahoopii, Vice President of Pharmacy Services at SpendMend, suggesting it’s best to wait on HRSA guidance before implementing changes.
6 potential implications of a broader 340B patient definition
- Covered entities may be able to qualify prescriptions written by outside providers and from off-site location for 340B – as long as that patient had an encounter with the covered entity in the past.
- All employee prescriptions may now be able to qualify for 340B as long as the employee has previously had an ongoing relationship with the covered entity.
- With more prescriptions qualifying for 340B due to a broadened patient definition, drug manufacturers may impose even stricter restrictions on 340B drugs filled through contract pharmacy channels. This makes 340B qualifications on drugs filled through entity-owned in-house pharmacies, which are protected from these manufacturer restrictions, even more integral to 340B savings moving forward.
- Manufacturers may become more aggressive about pulling back rebates from entity-owned pharmacies, claiming all claims as 340B eligible.
- The need for 340B referrals may be negated moving forward, as it no longer matters that the script was written by an outside provider as long as there was a previous encounter at the covered entity.
- HRSA audit criteria may change now with broader patient definition.
The 340B expert team at RxBenefits will continue to monitor this evolving situation and provide updates.
Disclaimer: Interpretation of laws will vary by PBM, state, and a variety of factors beyond the scope of this post. Nothing herein should be construed, or relied upon, as legal advice. Each plan sponsor is responsible for determining the legal requirements applicable to its group health plan. Each plan sponsor should consult with its legal counsel regarding applicable legal requirements.
