In a first, a drugmaker’s lawsuit challenges HRSA’s 340B patient definition

In a new chapter for litigation involving the 340B Drug Pricing Program, a drugmaker is suing the federal government over the definition of patient as it pertains to the program.

AbbVie Inc. says the definition established by the Health Resources and Services Administration (HRSA) in 30-year-old guidance is unwieldy and enables inappropriate access to 340B pricing discounts, according to the lawsuit filed this week at the U.S. District Court for Washington, D.C.

The 1996 guidance includes criteria such as requiring the covered entity (i.e., the provider) to have records of the individual’s care and for the prescribing clinician to be affiliated with the covered entity. Although the guidance appears to be more exacting than the 340B statute, AbbVie argues that it allows for instances of diversion, meaning a 340B-discounted drug is dispensed to individuals who do not meet the program’s definition of an eligible patient.

“HRSA’s reading is overly inclusive, capturing individuals who may have had only a cursory encounter with the covered entity a long time ago,” the lawsuit states.

AbbVie specifically expresses concerns about occasions in 2025 when HRSA turned down the company’s request to audit the discounts obtained by a pair of 340B covered entities. The lawsuit claims that the agency rejected the audit plans because of AbbVie’s intention to apply a stricter definition of patient eligibility.

A primary goal of the lawsuit is to ensure the company can conduct audits using the narrower definition.

Legal context shaping the dispute

AbbVie states that HRSA’s reliance on the nonbinding 1996 guidance allows covered entities to claim the 340B discount even if their contact with the patient is minimal or outdated.

The 340B statute does not precisely define patient, leaving HRSA to interpret eligibility through the guidance, which AbbVie argues is overly broad and should not take precedence in the wake of the Supreme Court’s landmark 2024 decision that overturned the so-called Chevron doctrine. Since then, court rulings on regulations are supposed to defer to strict interpretations of the relevant statute rather than to government agencies.

AbbVie lays out conditions that it says should determine 340B eligibility, among them:

• The prescription is tied directly to care at the covered entity.
• The clinical encounter involved diagnosis or treatment by the covered entity.
• There is ongoing active care management of the patient by the provider.
• The patient was seen within the past 12 months.

“This understanding of ‘patient’ is based on the best reading of the text, structure and history of the 340B statute,” AbbVie says in the lawsuit.

The statute does not include precise language about the definition of patient, however, merely stating that 340B drugs are prohibited from being sold or transferred to anyone who is not a patient of the covered entity. AbbVie says the points made in the complaint are derived from “applying traditional tools of statutory construction” to identify the most accurate reading of the text.

Comparison with prior 340B litigation

Amid a vast volume of federal and state 340B litigation, the new lawsuit appears to be the first of its kind.

A 2017 case also centered on the definition of patient but was brought by a federally qualified health center (FQHC) rather than a manufacturer.

Whereas AbbVie is seeking to narrow the definition, the earlier lawsuit sought to do the opposite, challenging HRSA’s audit findings that 340B drugs had been improperly diverted to fill prescriptions not initiated by the FQHC.

Following numerous twists and turns, the FQHC prevailed in 2023, having argued that covered entities should be able to claim 340B discounts even when the prescription originated with a different provider, as long as the patient has received services from the covered entity.

“The only statutory requirement for 340B eligibility of a person is that the person be a patient of a covered entity,” stated the ruling by the U.S. District Court for South Carolina, adding that “the plain wording of the 340B statute does not require the ‘covered entity’ to have initiated the healthcare service resulting in the prescription.”

“An ongoing patient relationship between the individual and the ‘covered entity’” is, in fact, required, according to the decision, to avoid hypothetical scenarios where covered entities obtain 340B savings from the care of patients whom they had not seen or treated for many years. However, the court did not perceive that condition to carry a specific time frame.

The ruling applied only to the plaintiff rather than nationwide, and it remains to be seen whether the court’s reasoning will be considered in the AbbVie case, and which side’s argument would be supported. AbbVie did not refer to the prior case, Genesis Health Care, Inc. v. Becerra, in its new complaint.

Potential consequences of the outcome

In its filing, AbbVie seeks to put its complaint in a wider context, mentioning government data showing that 340B spending increased from $6.6 billion in 2010 to nearly $44 billion in 2021. It also cites government analyses indicating that savings are not always passed on to patients (such an accommodation is not required by the 340B statute).

The complaint highlights contract pharmacy arrangements, telehealth prescribing, and referrals from non-employed physicians as areas in which patient eligibility merits closer scrutiny. If the new case gives AbbVie leverage to audit those aspects using its preferred definition of patient, hospitals could face increased compliance risk and subsequent exposure to repayment obligations, along with reduced 340B savings under tighter eligibility standards.