Federal Court Declares HRSA’s 340B Offsite Registration Policy Unlawful

The U.S. District Court for the District of Columbia struck down March 3 the Health Resources & Services Administration's (HRSA's) requirement that new offsite outpatient facilities appear on a hospital's filed Medicare cost report to be eligible to use 340B Drug Pricing Program discounted drugs.

These outpatient facilities were also required to be approved in the Office of Pharmacy Affairs Information System (OPAIS).

America's Essential Hospitals has long advocated for HRSA to change this policy, being as it's inconsistent with Medicare rules governing new hospital facilities and causing prolonged, costly delays in access to discounts.

The district court challenged a 2023 HRSA Notice that rescinded flexibility granted in 2020 that allowed the use of 340B drugs at new offsite facilities before meeting the registration requirement. More than 40 hospitals filed to challenge the 2023 action, including hospitals that relied on the flexibility to open new facilities dependent on immediate access to 340B discounts.

The district court determined that HRSA's 2023 offsite registration policy conflicts with the 340B statute to the extent it is a condition of being eligible to use 340B discounted drugs. HRSA is permitted to require hospital covered entities to register new sites in OPAIS and may verify the sites' eligibility, but cannot prevent hospitals from accessing discounted drugs at those sites pending such determination.

The 340B statute includes a HRSA eligibility certification requirement for certain grantee clinics, but includes no such language for the hospitals at issue.

The court vacated the 2023 notice and declared it unlawful to the extent it reverts the offsite registration policy to what was in place prior to the COVID flexibilities. The court did not specifically address the 1994 HRSA guidance that was the initial basis for the requirements but did clearly state that the underlying policy is unlawful.

Thus, 340B hospitals do not have to wait for a facility to appear on its filed Medicare cost report and be registered in OPAIS through the quarterly process before determining the site to be eligible to use 340B discounted drugs for its patients. However, hospitals will still need to determine and document that the facility is part of the eligible hospital. The court was not asked to consider when an off-campus site becomes part of the hospital, but HRSA has looked to Medicare provider-based facility rules.

HRSA has 60 days to appeal the decision (Albany Med. Health System v. HRSA, Case No. 23-cv-03252 (APM), Mar. 3, 2026).

Contact Director of Policy Rob Nelb, MPH, at [email protected] or 202.585.0127 with questions.