06 Oct The 340B GPO Prohibition Is Still Law After the Court Vacated HRSA’s 2013 Policy
The 340B GPO prohibition is the statutory rule that stops disproportionate share hospitals, children’s hospitals and free-standing cancer hospitals from buying covered outpatient drugs through a group purchasing organization. On March 31, 2026 a federal court vacated HRSA’s 2013 policy on how that rule applies to replenishment purchasing. The rule itself did not move. HRSA’s explanation of it did.
That distinction is the one most of the coverage skipped, and it’s the one your auditor won’t. The question on a pharmacy director’s desk isn’t “did we win”. It’s “what do we change on Monday, and what do we write down”.
What Did the Court Decide in Premier v. HRSA?
The court set aside HRSA’s 2013 GPO Policy because the agency hadn’t explained it, not because the statute permits what the policy forbade. In Premier, Inc. v. HHS, No. 24-cv-3116 (D.D.C. Mar. 31, 2026), the District Court for the District of Columbia held that the 2013 policy was arbitrary and capricious under the Administrative Procedure Act and vacated it. The court did not decide whether the 340B statute allows a replenishment model, and it said HRSA remains free to reach the same conclusion again if it does the explaining the APA requires.
The 2013 policy was a February 2013 policy release from HRSA’s Office of Pharmacy Affairs. Its position was that a hospital subject to the prohibition violates it the moment a covered outpatient drug is bought through a GPO, and that the violation can’t be cured afterwards by an accounting reclassification. That’s the sentence that made virtual inventory and replenishment models a compliance problem for thirteen years, because those models dispense first and settle the purchasing account later.
According to ArentFox Schiff’s summary of the opinion, the court found HRSA “offered virtually no reasoned explanation” for concluding that replenishment violated the prohibition, and that the 2013 release neither acknowledged nor explained why the agency’s view had shifted from the guidance before it. Restating the statute isn’t reasoning. That was the whole holding.
HRSA didn’t appeal. Premier’s June 12, 2026 statement records that the government’s appeal window closed without a filing, which is why we’re comfortable writing about this now rather than in April, when the position was still live.
Which Hospitals the GPO Prohibition Covers
The prohibition sits in the statute at 42 U.S.C. 256b(a)(4)(L)(iii), where a disproportionate share hospital’s eligibility for 340B is conditioned on the hospital not obtaining covered outpatient drugs “through a group purchasing organization or other group purchasing arrangement.” Subparagraph (M) applies the same conditions to children’s hospitals and free-standing cancer hospitals. Critical access hospitals, rural referral centers and sole community hospitals are not subject to it, which HRSA confirms in its 340B FAQs under the GPO Prohibition heading.
Two other things in those FAQs matter more now than they did in March. The prohibition attaches at enrollment, when the authorizing official attests the hospital won’t participate in a GPO for covered outpatient drugs as of its listing date. And HRSA’s stated position on after-the-fact fixes is unchanged.
It doesn’t authorize a covered entity to reclassify a purchase as 340B after the fact, and it expects 340B pricing to be requested at the time of the original purchase with a clear audit trail. Neither of those FAQs was before the court. Both are still on HRSA’s site.
What Changes for Your Purchasing Right Now
For most hospitals, nothing should change this month without counsel in the room, and we’d rather say that plainly than sell a purchasing redesign.
What’s gone is HRSA’s 2013 statement that a replenishment model is a per se violation. What isn’t gone is the statute, the enrollment attestation, the 1994 guidance the 2013 release sat on top of, and HRSA’s authority to write a new interpretation that survives the APA. A hospital that reads the ruling as permission to move its initial outpatient purchases onto a GPO account has read more into it than the court wrote. A hospital that keeps a three-account structure it built in 2014 purely to satisfy the vacated policy is paying for a rule that no longer exists in that form.
The honest position is in between, and it’s specific to how your accumulator, wholesaler accounts and split-billing software are set up. If you run a replenishment model today with a non-GPO initial purchase account, keep it running until you’ve decided what to do deliberately, and put the review on the calendar of whoever runs your compliance monitoring. If you’re a DSH that was told in 2013 to unwind a replenishment model and did so at real cost, the question of whether to reinstate it is a purchasing and legal decision that deserves a memo, not a reaction to a headline.
What to Document While the Position Settles
Write down the decision, whatever it is, and date it. An auditor reviewing this period will want to see that the hospital understood the ruling, considered its options and chose one on advice, rather than drifting.
The documents we’d expect to see in the file are short. A dated memo recording what the hospital’s purchasing structure was on March 30, 2026 and what, if anything, changed after. Counsel’s advice on the replenishment question, or a note that it was sought. The wholesaler account map showing which account each covered outpatient drug purchase lands on, because the prohibition is proved or disproved in transaction data, not in policy statements. And an updated policy and procedure that cites the ruling by name and states the hospital’s current position on GPO use, so the policy HRSA reviews describes the process the hospital actually follows.
If the hospital has a pending or recently closed HRSA audit with a GPO finding tied to replenishment, that finding was written under a policy that has now been vacated. Hooper Lundy’s advice to review pending and recently completed audits is sound, and it’s the conversation to have with counsel before anything else. We support hospitals through exactly that review as part of HRSA 340B audit support, and a program integrity audit ahead of the next engagement letter is how a hospital finds out whether its transaction data tells the story its policy does.
How This Sits Beside the Child Site Registration Ruling
This is the second HRSA 340B policy a D.C. federal court has set aside in 2026, and the two rulings are not the same kind of decision. The March 3 child site registration decision held that HRSA’s registration precondition conflicted with the text of the statute. The GPO decision held that HRSA hadn’t explained its policy well enough to keep it. One is about what the law says. The other is about how an agency has to reason.
That difference decides how much weight each ruling can bear. A statutory holding closes a question. An APA holding sends it back, and the same answer can return in better paperwork. If you’re building a compliance position that assumes replenishment is settled, you’re building on the second kind.
The Questions an Auditor Will Ask About This Period
HRSA’s audit scope still lists the GPO prohibition by name. Its program integrity page states that covered entity audits review compliance with eligibility requirements, the GPO prohibition as applicable, duplicate discounts and diversion, and that auditors verify eligibility including the GPO prohibition as part of the fieldwork. The ruling changed none of that text.
So the questions in a 2027 audit of a DSH will sound familiar. Which wholesaler accounts does the hospital purchase covered outpatient drugs on. How is a drug’s status determined at dispense and at replenishment. What happened to any purchase that couldn’t be obtained at 340B or WAC pricing, and was OPA notified through the unavailable-price template the FAQs describe.
The new question is the one we opened with. What did the hospital decide after March 31, 2026, and where’s the record of the decision. What a HRSA audit reviews and the document that satisfies each item is set out in our September post, and the GPO section of that list now has a date on it.
Our October release on this ruling sets out what we’re advising hospitals not to do in the interim, and a later post this month walks through the first week after an audit notice arrives, which is when a purchasing decision made in April gets tested. If you’d like a second reading of your purchasing structure against the statute as it now stands, start the conversation and we’ll tell you what we’d need to see.
FAQ
What was the court ruling on the 340B program?
On March 31, 2026, in Premier, Inc. v. HHS, the U.S. District Court for the District of Columbia vacated HRSA’s 2013 GPO Policy as arbitrary and capricious under the Administrative Procedure Act. The court didn’t rule on whether the 340B statute permits replenishment purchasing, and HRSA did not appeal.
What is happening to the 340B program?
The program continues under the same statute. Two HRSA policies were vacated by federal courts in 2026, the child site registration precondition in March and the 2013 GPO policy at the end of March, and HRSA’s rebate model pilot was revised in July 2026. Covered entity audits and annual recertification are unchanged.
What changes are expected to be made to the 340B program in 2026?
The only change the GPO ruling guarantees is the removal of HRSA’s 2013 interpretation. HRSA remains free to issue a new interpretation of the GPO prohibition that complies with the APA, and hospitals should treat that as an open possibility rather than a closed question.