Court Decision Provides Greater Clarity on GPO Use in the 340B Program

Premier, Inc. today highlighted the significance of a U.S. District Court decision in a lawsuit brought by the company on behalf of its members, which vacated a longstanding Health Resources and Services Administration (HRSA) policy restricting certain 340B hospitals from using group purchasing organizations (GPOs) for initial purchases of covered outpatient drugs.

With the expiration of the government's appeal period and no appeal filed, the court's ruling now provides healthcare providers with substantially greater certainty regarding the use of GPO purchasing for eligible outpatient drug inventory.

The vacated 2013 policy had imposed significant administrative and operational burdens on hospitals by requiring complex purchasing and inventory management processes. Premier challenged the policy because of the unnecessary costs and inefficiencies it created for providers. Premier's analysis found that compliance with the policy could cost hospitals between $500,000 and $1.6 million annually, depending on organizational size and complexity.

As a result of the court's decision, affected hospitals may once again have greater flexibility to utilize discounted GPO pricing for initial outpatient drug purchases, creating opportunities to reduce costs, simplify purchasing workflows and improve operational efficiency while continuing to meet all applicable 340B compliance requirements.

"Healthcare providers continue to face extraordinary financial and operational pressures, particularly in pharmacy," said Bruce Radcliff, President of Supply Chain Services at Premier. "This outcome reflects years of Premier’s advocacy, legal and policy work undertaken on behalf of healthcare providers. The court's decision provides important clarity and removes a policy that created unnecessary complexity and cost for hospitals. We are pleased that providers now have greater flexibility to manage pharmacy purchasing in a manner that supports financial sustainability while maintaining compliance with the 340B program."

While the appeal period has closed, HRSA retains the authority to pursue future regulatory action through a new rulemaking process. Any such effort would require additional administrative procedures, including opportunities for stakeholder input. Premier will continue to monitor developments closely and advocate for policies that support provider efficiency, compliance and patient access to care.

Premier remains committed to helping members evaluate the implications of this decision, identify potential savings opportunities and navigate implementation responsibly.