On March 3, 2026, the U.S. District Court for the District of Columbia struck down the Health Resources & Services Administration’s (HRSA’s) requirement that for new offsite outpatient facilities to be eligible to use 340B discounted drugs they must first appear on a hospital’s filed Medicare cost report and be approved in the Office of Pharmacy Affairs Information System (OPAIS). HRSA has 60 days to appeal the decision.
The lawsuit centered around HRSA’s change in its offsite registration policy between 2020 and 2023. In 2020, HRSA permitted new offsite outpatient facilities to use 340B discounted drugs before appearing on the cost report and OPAIS. While the decision was initially pandemic related, the agency appeared to extend the flexibility to a permanent policy change. But then HRSA rescinded this flexibility in a 2023 Notice and provided an inadequate transition period for hospitals to comply. A group of 40 hospitals filed a lawsuit challenging the 2023 Notice.
In its March 3 decision, the DC District Court vacated HRSA’s 2023 Notice after finding that the registration requirement conflicts with the 340B statute. It also declared the 2023 Notice unlawful to the extent it restores the agency’s policy that was in place prior to the pandemic-related flexibility. The Court did not explicitly address earlier guidance (i.e., the 1994 HRSA guidance that was the initial basis for the requirements) but did state that the underlying policy is unlawful.
Notably, the court upheld HRSA’s authority to require hospital covered entities to register new sites in OPAIS and verify a site’s eligibility but stated that HRSA cannot prevent the hospital from participating in the 340B Program during the waiting period. At this time, new offsite outpatient facilities may use 340B discounted drugs before the facility appears on the hospital’s cost report and OPAIS.
If you have any questions about how this court decision may impact you, please reach out to any Eyman Partners attorney to discuss.