340B Drug Pricing Program: Important Benefit, Significant Responsibility

Office of Pharmacy Affairs Update

The 340B Program, administered by the Health Resources and Services Administration (HRSA), plays an integral role in supporting our health care safety net. These designated hospitals, clinics and other providers work with very limited resources to confront the most intractable health problems facing millions of Americans. The 340B Program helps these health care providers stretch scarce federal resources by allowing eligible entities to purchase drugs for outpatient use at a significant discount. Studies show that entities participating in the 340B Program are able to expand the type and volume of care they provide to the most vulnerable patient populations as a result of access to these lower cost medications. The number of providers participating in this program has increased in recent years. The vast majority of these providers (82 percent) dispense these discounted drugs through an in-house pharmacy; a small minority of covered entities (18 percent) contract with pharmacies to dispense these discounted drugs to eligible patients, and of those, 75 percent use fewer than five contract pharmacy arrangements.

The 340B Program provides eligible entities with an important benefit that comes with significant responsibility.   To ensure that both 340B covered entities and participating manufacturers are in compliance with program requirements, HRSA has, in recent years, made a number of noteworthy investments. All entity types now are required to recertify annually, attesting to compliance with all program requirements. In addition, in Fiscal Year 2012, HRSA began conducting a systematic approach to auditing covered entities, including risk-based and targeted audits. Final results from 51 audits, which included review of 410 covered entity sites, are now available at Current Audit Results. The findings of the audits vary; some are fairly minor, requiring basic corrections of information in the 340B database.  Other audit findings include statutorily prohibited practices such as diversion of drugs obtained under 340B pricing, which places providers at risk of having to repay manufacturers.  Depending on the finding, some covered entities are working with HRSA to develop a Corrective Action Plan to ensure ongoing compliance. In addition to the systemic audit approach, HRSA reviews every allegation of non-compliance received. HRSA is using the results of these program integrity efforts to develop best practices for complying with Program requirements. Entities can request technical assistance from HRSA at any time on any issue, such as managing a contract pharmacy arrangement, through the Office of Pharmacy Affairs.

HRSA is currently working to formalize existing program guidance through regulation, designed to cover a number of aspects of the 340B Program. The regulation currently under development will address the definition of an eligible patient, compliance requirements for contract pharmacy arrangements, hospital eligibility criteria, and eligibility of off-site facilities. We expect to publish this proposed regulation, which will be open for public comment, by June 2014. In order to ensure that covered entities retain flexibility based on their size, structure, and patient population, HRSA will continue to hold covered entities accountable for implementing those requirements as appropriate for their specific circumstances.

Through HRSA’s expanding program integrity efforts, the 340B Program will continue to serve its integral role in our country’s health care safety net while remaining accountable to all parties involved.


Date Last Reviewed:  April 2017