340B Decision Offers Broader Definition of a ‘Patient’
Pharmaceutical companies, 340B consultants, and healthcare providers have all been waiting patiently for a decision in a key case involving the 340B Drug Pricing Program. Now that a decision has been reached, everyone involved has to deal with a broader definition of a ‘patient’.
The case, Genesis Health Care Inc v. Becerra et al, pitted Genesis Health Care against the Health Resource and Service Administration (HRSA) following an audit that found Genesis applying a definition of ‘patient’ the government found unacceptable. But the U.S. District Court of South Carolina has found in favor of Genesis. Healthcare providers and their contract pharmacies can continue applying the broader definition despite government and pharmaceutical company objections.
Several years ago, the HRSA conducted a standard audit to determine whether Genesis was still eligible to participate in the 340B program as a covered entity. They found that Genesis was dispensing lower-priced prescription medications to consumers who were not directly receiving care from them. It was the government’s position that such consumers were not genuine patients belonging to Genesis.
HRSA sent Genesis a corrective action document in 2019, a document in which it outlined its interpretation of a patient under the 340B program. They claimed that an eligible patient must receive the care resulting in a prescription being written from the same provider that produced the prescription. This would suggest that Genesis cannot dispense 340B drugs to patients who did not get their original prescriptions from them.
In its decision, the court recognized that the law only requires covered entities to have an ‘ongoing relationship’ with patients to be able to legally dispense 340B drugs to them. That ongoing relationship doesn’t have to be the originating relationship responsible for a patient’s prescription.
The court also found that, while Genesis’ definition of a patient may be a bit broad, the government’s definition was far too narrow. Allowing HRSA to enforce its interpretation of the patient definition would close off the 340B program to large numbers of patients the program is explicitly designed to help.
In addition, the court determined that Congress meant for the program to remain flexible enough to “accommodate the large number of covered entities and the wide diversity of eligible patients”. The court found that a broader definition of ‘patient’ was necessary to remain faithful to lawmakers’ original intent.
For covered entities, the ruling is a welcome one. Covered entities need to prove their eligibility for the 340B Drug Pricing Program on an annual basis. They also need to be prepared for both government and pharmaceutical company audits at all times. Any audit that raises questions of eligibility could result in financial penalties and a covered entity being removed from the program.
Proving eligibility is complicated enough that covered entities often rely on 340B consultants like Ravin Consultants. But even with expert consulting help, demonstrating a covered entity’s eligibility and compliance can be tricky. This case helps a lot by making compliance easier on covered entities.
It is a safe bet that big pharma isn’t happy with the decision. Pharmaceutical companies want to limit access to 340B drugs as much as possible. The greater the access, the less revenue they generate. Allowing covered entities to apply a more broad definition to ‘ patient’ only takes more money out of big pharma’s pockets.
Expect to see more litigation on this topic in the future. While the court’s decision is an important one, it has failed to answer all the questions brought forth by the original lawsuit.