Up Next in 340B
Your Exclusive Client Update
NEWSLETTER
Date: January 30, 2026
By: RxX Consulting
Lilly’s Policy Extended to In-House Use
As you have all heard, Eli Lilly announced its plans to require all covered entities to submit claims-level data for in-house pharmacy dispensing and direct patient administration to the 340B ESP platform effective next month. The policy is in effect 2/1 with entities having a 45 day lookback period.
In 2023, the 3rd Circuit in Sanofi v. HHS / Novartis v. HHS concluded that drug manufacturers may impose reasonable conditions on the distribution of 340B drugs through contract pharmacies, so long as they do not restrict a covered entity’s access to 340B drugs through its own in-house pharmacy.
The Third Circuit explicitly recognized that manufacturers may require:
Claims data submission
Anti-duplication safeguards
Proof of compliance
Limits on contract pharmacy arrangements
As long as:
The covered entity still has access to 340B drugs, and
The manufacturer does not block in-house pharmacy access
We are just waiting for HRSA to maybe cite this? Maybe say that Lilly wasn’t even among those that were supposed to have a rebate pilot?
Rx|X has reached out to Eli Lilly to inquire about potential other alternatives to the new rule. We have also been in touch with OPA leadership (Chantelle and Michelle) and they stated they are reviewing the email. Clearly it was a surprise to them as well! On 1/26, AHA sent a letter to HRSA asking them to block Lilly’s policy.
We have a meeting with AHA on 2/6. We will keep you posted on any updates via the newsletter and the Rx|X portal.
Federal Court Reviews HRSA Rollback of COVID-Era 340B Flexibility
On January 7, 2026, the U.S. District Court for the District of Columbia heard arguments in Albany Med Health System et al. v. HRSA, a case that directly affects how hospitals bring new outpatient locations into the 340B program.
Why This Case Matters to Hospitals
During the COVID-19 public health emergency, HRSA issued guidance that many hospitals relied on to begin using 340B pricing at new child sites immediately upon opening, even before they appeared on the Medicare cost report or were formally registered in OPAIS. This flexibility helped hospitals rapidly expand services, establish new clinics, and maintain continuity of care during a period of extreme clinical demand.
In 2023, HRSA reversed that flexibility and reinstated the pre-pandemic requirements. According to these new requirements, a child site must first appear on the Medicare cost report and must then be formally registered in OPAIS before the hospital may use 340B pricing.
Hospitals argue this reversal is a major policy change that required a public notice-and-comment process and that HRSA does not have statutory authority to block 340B use simply because paperwork and reporting cycles lag behind real-world clinical operations.
What the Judge Focused On
Judge Amit Mehta engaged deeply with the timeline and acknowledged that HRSA’s guidance over the years has been difficult to interpret. He noted that hospitals seemed to reasonably read the 2020 guidance as permission to use 340B drugs at new off-site clinics right away. He also noted that the 2023 action “un-waived the waiver” hospitals thought they were relying on.
The judge’s primary questions centered on:
1. Standing – did hospitals experience real harm? He asked whether any plaintiff had a clinic that was already listed on the cost report, but was blocked from 340B use while waiting for HRSA registration. This period is where many hospitals experience lost savings under the 2023 policy.
2. Was 2020 a true policy change or just temporary leniency? The court will need to determine whether HRSA’s 2020 FAQ substantively expanded eligibility, or merely paused enforcement during the pandemic.
3. Does the statute allow HRSA to condition eligibility on paperwork timing? Hospitals emphasized that the 340B statute defines eligibility based on being a hospital, not on the pace of administrative filings.
What This Means for Hospitals Right Now
Nothing changes yet. HRSA’s current policy (cost-report listing + registration before 340B use) remains in effect unless the court rules otherwise.
However, the outcome of this case could meaningfully impact:
How quickly hospitals can activate 340B at new outpatient sites
Financial exposure during the lag between opening and cost-report listing
Operational planning for service line expansion
Program compliance strategy across multi-site systems
The Bottom Line
The court recognizes the complexity and the real operational impact of HRSA’s shifting guidance. The judge did not indicate how he will rule, but the case could reshape future expectations around child-site onboarding and 340B eligibility.
Hospitals should continue documenting:
provider-based status,
integration into the main hospital, and
the clinical and financial impact of delayed 340B participation.
This case remains one to watch closely.
What’s Coming Up
📅 Connect with Madeline and Suzanne at the Winter 340B Coalition Meeting! Email mwallack@rxxconsulting.com to schedule a time to meet!
What Working with Rx|X Means
Rx|X is built on higher standards.
While HRSA audits don’t require Yellow Book standards, Rx|X voluntary incorporates them. This means:
Stronger planning and documentation
Clear, transparent reporting
Evidence-driven conclusions
Learn about Rx|X’s new tool Avanti340B, a major driver in this standard.
Need help?
If any additional team members would like to receive these updates directly, please have them either fill out the form using the button below or email us directly at info@rxxconsulting.com.