Will HRSA Continue To Stonewall?

Most government agencies charged with enforcement responsibilities seek to publicize their enforcement efforts and provide transparency into their standards. Doing so simultaneously increases the reach of those enforcement efforts while also promoting trust in the agency's consistency and accountability.

Not so with the Health Resources and Services Administration (HRSA), the federal agency overseeing the 340B federal drug discount statute. HRSA does not make public the manual it uses to audit health centers, hospitals, other 340B "covered entities," or drug manufacturers; nor does it provide more than a summary of its audit results. Moreover, HRSA does not publish the docket for its 340B Administrative Dispute Resolution (ADR) process, which it delayed implementing until June 2024—nearly 14 years past the Congressionally mandated deadline. When HRSA finally issued the final rule for 340B ADR, it chose not to make its rulings public or grant them precedential value.

One year ago this month, HRSA lost a challenge in the Genesis Healthcare case to its 1996 informal guidance that restricted the meaning of "patient" in the 340B statute. Although HRSA chose not to appeal that decision, it then promptly announced—without further explanation or justification—that it would continue enforcing the rejected 1996 "patient definition." A year later, 340B stakeholders are left to infer compliance standards from non-final audit results, unsure what HRSA considers the operative standards for 340B compliance.

Describing HRSA's existing 340B enforcement as a "black box" is putting it mildly. It is little wonder that HRSA has lost every challenge in the federal courts of appeal to its enforcement efforts. In an era of significant uncertainty regarding the future direction of public health policy, will HRSA alter course? Or will it continue to stonewall on transparency and accountability in 340B enforcement?