By Michelle Korpela, B.S., PharmD

This year is shaping up to bring significant changes and uncertainty to the hospital pharmacy landscape. A federal court recently struck down the Health Resources and Services Administration’s (HRSA) policy regarding the 340B group purchasing organization (GPO) prohibition. The statute prohibits disproportionate share hospitals, children’s hospitals, and free-standing cancer hospitals from purchasing covered outpatient drugs through a GPO. HRSA’s 2013 policy required hospitals subject to the GPO prohibition to make their initial purchases of covered outpatient drugs outside of both GPO and 340B pricing.

The court’s decision followed a 2024 lawsuit filed by Premier, a health system GPO, which argued that HRSA’s policy violated the Administrative Procedure Act (APA). The court agreed and vacated the policy, concluding that HRSA failed to provide adequate justification for its interpretation. Importantly, however, the ruling did not invalidate the statutory GPO prohibition itself. As a result, several possible paths remain moving forward, and affected hospitals should begin preparing now for potential outcomes.

HRSA has until early June to appeal the decision. It could also revise its policy to mirror the prior guidance more closely, supported by a stronger explanation of its position. Formal rulemaking would likely take longer and include a public comment period. A third option is for HRSA to adopt a different interpretation or decline to reissue guidance on the issue. Although that outcome appears less likely, pharmacy organizations continue to push for policy changes that would increase 340B program flexibility and support financial sustainability.

GPO prohibition has had longstanding operational implications for eligible hospitals. Pharmacies have been required to purchase a larger portion of outpatient drugs at wholesaler acquisition cost (WAC), while also creating complex purchasing structures that often involve at least three separate accounts for 340B, GPO, and WAC purchases. Audit findings related to incorrect account usage can create substantial financial liability and potentially jeopardize a hospital’s 340B eligibility.

So what could this ruling mean for 340B-eligible hospitals? At this stage, it is still too early to know definitively, but it is not too early to begin planning. Many hospitals have already invested significant time and resources into developing procedures, wholesaler account structures, eligibility attachments, and workflows to address operationally complex settings such as emergency departments, infusion centers, and high-cost drug programs.

Hospital administrators should carefully consider how quickly they are willing and able to revise longstanding policies and procedures. Some organizations are well positioned to adapt rapidly to regulatory changes. Others may lack the staffing or operational flexibility necessary to rewrite procedures and retrain staff if the policy environment changes again.

If initial purchases are not required to be through WAC accounts, pharmaceutical distributors can   help organizations transition purchasing practices relatively quickly. While establishing new accounts can be time-consuming, converting inactive WAC accounts to GPO accounts – or simply leaving them inactive – is a comparatively simple adjustment and streamlines purchasing. However, if HRSA ultimately reaffirms its original policy with additional justification, hospitals will likely continue to face the operational burden associated with managing multiple purchasing accounts and child sites.

No matter what happens to the GPO prohibition in the coming months, hospitals and distributors must continue to partner together to ensure the most simplified approach while limiting patient disruption.