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H H S Department of Health and Human Services
Health Resources and Services Administration
Health Resources and Services Administration

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FAQs

HRSA and its contracted 340B Prime Vendor Program (PVP) are the only sources of information related to the 340B Program that are verified and endorsed by HRSA. The responsibility to ensure compliance with 340B Program requirements remains with covered entities and manufacturers that participate. Information received from vendors, consultants and other third parties cannot be assumed to be compliant with HRSA policy. Therefore we recommend all information and guidance received from outside parties is verified by HRSA or the PVP.

General

What recommendations can you provide regarding ensuring the information our entity has received regarding 340B policy is accurate?

View Answer

Covered entities should refer to the 340B statute, HRSA published guidance, and HRSA policy releases to confirm the accuracy of 340B policy. HRSA establishes 340B policy and communicates via policy releases, its website and through email communication. In addition, HRSA uses the HRSA contracted 340B Prime Vendor Program, managed by Apexus, to assist in communicating that policy.

HRSA cannot ensure the accuracy of information provided by other sources beyond Apexus. Covered entities that are either unsure of past HRSA guidance or information received beyond HRSA or Apexus should contact the Apexus Answers Call Center to validate the information. Covered entities should also use their own legal counsel to assist in ensuring compliance with 340B program requirements. Liability for compliance with 340B program requirements resides with the covered entity.

May a manufacturer require only 340B entities to purchase covered outpatient drugs through specialty distribution channels?

View Answer

The 1994 guideline (59 Fed. Reg. 25110 (May 13, 1994)) states that “manufacturers may not single out covered entities from their other customers for restrictive conditions that would undermine the statutory objective” and that “manufacturers must not place limitations on the transactions (e.g., minimum purchase amounts) which would have the effect of discouraging entities from participating in the discount program.” This policy is consistent with section 340B(a)(1) of the Public Health Service Act which requires manufacturers to “offer each covered entity covered outpatient drugs for purchase at or below the applicable ceiling price if such drug is made available to any other purchaser at any price.” HRSA has also provided additional information that 340B providers are treated the same as non-340B providers (Clarification of Non-Discrimination Policy. Release No. 2011-1.1 (May 23, 2012)). Therefore, in the case of specialty distribution, manufacturers must ensure that they are not discriminating against 340B providers and that other non-340B providers are also going through the specialty distribution channel. In addition, the manufacturer must always ensure they are providing the drug at or below the ceiling price. Manufacturers should work with HRSA regarding specialty distribution channels to ensure compliance and to ensure that entities are aware of the appropriateness of the distribution channel in order to be transparent and limit any disputes.

Are products that have a 340B price, but do not meet the definition of covered outpatient drug, subject to the requirements of the 340B statute?

View Answer

No, products where a manufacturer has voluntarily offered a drug a price that is at or below the 340B discount pricing, but does not meet the definition of covered outpatient drug, is not subject to the 340B statute.

If a product does not have a 340B price, does that mean it is not considered a covered outpatient drug for the purposes of the 340B Program?

View Answer

The definition of covered outpatient drug is found in section 1927 (k) of the Social Security Act. The availability of a 340B price is not dispositive in determining whether that drug meets this definition of a covered outpatient drug.

What is the 340B Drug Pricing Program?

View Answer

The 340B Drug Pricing Program is a federal program that requires drug manufacturers participating in the Medicaid drug rebate program to provide outpatient drugs to enrolled “covered entities” at or below the statutorily-defined ceiling price. This requirement is described in Section 340B of the Public Health Service Act and codified at 42 USC 256b. The purpose of the 340B Program is to permit covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992). Please see for additional information and a complete list of covered entity types.

What is the Prime Vendor Program (PVP)?

View Answer

As part of the original 340B legislation, the government was required to establish a prime vendor program (PVP). The PVP serves its participants in three primary roles: 

  1. Negotiating sub-340B pricing on pharmaceuticals;
  2. Establishing distribution solutions and networks that improve access to affordable medications; and 
  3. Providing other value-added products and service. The PVP is a voluntary program for 340B covered entities. All covered entities may participate in the PVP including those hospitals that are prohibited from purchasing in a group purchasing arrangement. The PVP negotiates discounts for all participating entities.

Does the Prime Vendor Program (PVP) negotiate inpatient discounts on pharmaceutical products for its participants?

View Answer

The PVP does not negotiate inpatient pricing. Its efforts are dedicated to outpatient products and services.

Can a covered entity use 340B drugs for patients with private insurance?

View Answer

The 340B Program does not prohibit covered entities from providing 340B drugs to individuals with private insurance as long as the individual is a qualifying patient of the covered entity and the drug is not subject to a duplicate discount under Medicaid.

Are 340B prices available when purchasing inpatient drugs?

View Answer

No. Section 340B pricing applies to covered outpatient drugs only.

How does the Medicare and Medicaid anti-kickback statute, 42 U.S.C. 1320a-7b(b), apply to 340B covered entities?

View Answer

Covered entities should always ensure they are adhering to all federal, state, and local laws. Covered entities contracting with pharmacies to dispense 340B drugs should be aware of the federal anti-kickback statute and the way in which such requirements could apply to their arrangements with contract pharmacies. Cases of suspected violations of the anti-kickback statute should be directly referred to the Office of the Inspector General (OIG) who oversees this provision. The OIG can be reached at:

Online, Phone: 1-800-HHS-TIPS (1-800-447-8477) Fax: 1-800-223-8164 

*Note: While you may remain anonymous, in order to accept submissions for review via facsimile, the OIG Hotline requires a complaint to include a formal cover letter or the use of the downloadable complaint submission form, available 

Hotline Complaint Submission Form (PDF - 34 KB) 

Hotline Complaint Submission Form (MS Word - 178 KB) 

TTY: 1-800-377-4950

What does HRSA consider as the 340B unique identifier?

View Answer

HRSA considers the 340B ID the unique identifier. While HRSA does not use Health Industry Numbers (HIN) as a method of identifying 340B entities, we recognize that HIN and DEA numbers may be used by certain stakeholders, in addition to the 340B ID, to operationalize the 340B Program.

340B Program Eligibility

Can the receipt of in-kind contributions through section 317 or 318 of the Public Health Service Act (PHSA) qualify an entity for participation in the 340B Drug Pricing Program?

View Answer

Yes. An entity receiving in-kind contributions through section 317 or 318 may qualify for the 340B Drug Pricing Program provided all the remaining 340B requirements are met.

Our children’s hospital is part of a larger, non-DSH eligible hospital. Both hospitals share the same cost report, however, only our children’s hospital will likely meet the criteria for 340B Program eligibility. Given these circumstances, will it be possible for our children’s hospital to still qualify, and how will this impact the status of the larger hospital?

View Answer

As a general rule, if the larger hospital does not meet the qualifications for 340B Program eligibility and they share a single Medicare cost report, then a hospital listed on that cost report may not enroll as a 340B covered entity, nor may it receive 340B drugs for its patients. If such a children’s hospital has its own 3300 series Medicare Provider number and believes that it can meet all statutory criteria, the Office of Pharmacy Affairs (OPA) will evaluate them on a case by case basis.

What if a children’s hospital does not know what its disproportionate share adjustment percentage is?

View Answer

If the children’s hospital files a full Medicare cost report, they should review the data in the report. Additional information about the disproportionate share adjustment percentage and how it is calculated can be found here. If the children’s hospital does not file a Medicare cost report, they should consult with an independent auditor familiar with the requirements for calculation of the disproportionate share adjustment percentage.

What is a “Pickle” hospital, and is it true that the "greater than 11.75% DSH Adjustment percentage" requirement is waived for them?

View Answer

The 11.75% requirement is waived for a few hospitals known as "Pickle" hospitals (named for a JJ Pickle, a former member of Congress). They are defined in the Section 1886(d)(5)(F)(i)(II) of the Social Security Act as "a hospital that serves a significantly disproportionate number of low income patients and is located in an urban area, has 100 or more beds, and can demonstrate that its net inpatient care revenues (excluding any of such revenues attributable to this title or State plans approved under title XIX) during the cost reporting period in which the discharges occur, for indigent care from state and local government sources exceed 30 percent of its total of such net inpatient care revenues during the period.

What documentation should be provided to HRSA in order to show that an outpatient facility is included on the hospital’s Medicare cost report?

View Answer

To ensure that the outpatient facility to be enrolled is an integral and reimbursable part of the most recently filed cost report of the hospital, OPA requires the submission of the following documentation: 

  • Worksheet A and C from the most recently filed cost report. Provide supplemental documentation if the clinics are bundled on the worksheet (e.g., working trial balance); 
  • Worksheet S-2 from the most recently filed cost report for sites with a different Medicare number from the main hospital; and 
  • Worksheet E, part A, from the most recently filed cost report for hospitals with a DSH adjustment percentage requirement. In addition, in cases where the name of the facility is not the same as the cost reporting listing, documentation that shows the outpatient facility was filed with the most recent cost report is required.

May an outpatient facility that is reimbursed by CMS as a provider-based facility, but not included on the most recently filed cost report, access 340B drugs under the final guidance published in 1994?

View Answer

No. Under the final guidelines, a facility must be both reimbursable and included in the hospital’s most recently filed Medicare cost report.

What outpatient facilities are hospitals required to register on the 340B database?

View Answer

In order for off-site outpatient facilities to purchase 340B drugs and/or provide 340B drugs to its patients, they must be listed on the 340B database. OPA will verify the eligibility of each off-site outpatient facility by using the hospital’s most recently filed Medicare cost report. All clinics located off-site of the parent hospital, regardless of whether those clinics are in the same building, must register with OPA as outpatient facilities of the parent 340B-eligible hospital if the covered entity purchases and/or provides 340B drugs to patients of those facilities. For example, if the off-site outpatient facility is a hospital, all clinics/departments within that off-site location that plan to purchase and-or provide 340B drugs to its patient must register with OPA. If an off-site outpatient facility is only providing referral services for a covered entity, the requirement to register that outpatient facility with OPA would not apply. However, the outpatient facility that is providing referral services cannot purchase or dispense 340B drugs.

Since 1994, HRSA’s policy has been to use the most recently filed Medicare cost report for purposes of determining 340B eligibility for outpatient facilities (59 Fed. Reg. 47884 (Sept. 19, 1994)). In order for off-site facilities to be eligible for the 340B Program, a covered entity must show that each outpatient facility is an integral part of the hospital and included as reimbursable on the covered entity’s most recently filed Medicare cost report. OPA requires that the most recently filed Medicare cost report is submitted with the enrollment package in order to verify eligibility. Registering all off-site (from the parent) outpatient facilities with OPA will ensure that each facility has been reviewed and verified by HRSA OPA as eligible to participate in the program, therefore alleviating any potential for providing pharmaceuticals to ineligible facilities or patients.

Do clinics/departments located within the four walls of a registered 340B hospital have to be registered in the OPA database?

View Answer

Outpatient clinics/departments within the four walls of the registered 340B parent hospital do not need to also register/enroll into the 340B Program. However, the covered entity remains responsible for demonstrating that those outpatient clinics/departments within the four walls of the parent hospital are only using 340B discounted drugs for eligible outpatients, meet all 340B Program requirements, and maintain auditable records.

My covered entity has a few physician clinics, do we need to register them as child sites?

View Answer

It depends upon what is meant by physician clinic, as private physician offices themselves are not eligible to participate as part of a hospital in the 340B Program. Only hospital outpatient facilities that appear as reimbursable outpatient cost centers on the hospital’s most recently filed Medicare cost report are eligible to be listed and participate in the 340B Program.

HRSA OPA requires each hospital to register all of its off-site outpatient facilities where 340B drugs are purchased and/or provided to patients of that facility. This will ensure that each facility has been reviewed and verified by HRSA OPA as eligible to participate in the program, therefore strengthening the hospital’s compliance efforts.

I was told that we cannot list our in-house pharmacy as an outpatient facility. Is that correct?

View Answer

Pharmacies are not eligible 340B covered entities and therefore, should not be listed as outpatient facilities with a 340B ID in the database. If the site is only a pharmacy and is listed as a covered entity with a 340B ID, this pharmacy must be terminated from the database. It should then be determined whether it is appropriate for the pharmacy to be added as a “ship to” address for the actual covered entity in the database.

If the pharmacy is located within an offsite outpatient facility that also provides healthcare services and purchased and/or provides 340B drugs to its patients, the outpatient facility must be registered as an outpatient facility site with the pharmacy listed as a “ship to” of that outpatient facility. When a pharmacy is supporting multiple outpatient facilities of a parent entity, the pharmacy should be listed as a “ship to” address under the parent entity’s 340B ID.

What process does OPA use for verifying the enrollment of outpatient facilities outside of the main hospital in the 340B Program?

View Answer

Since 1994, HRSA’s policy has been to use the most recently filed Medicare cost report for purposes of determining 340B eligibility for outpatient facilities (59 Fed. Reg. 47884 (Sept. 19, 1994)). In order for the new facilities to be eligible for the 340B Program, a covered entity’s most recently filed cost report must show that each outpatient facility is an integral part of the hospital and included as reimbursable on the covered entity’s Medicare cost report. OPA requires that the most recently filed cost report is submitted with the enrollment package in order to ensure verify eligibility.

Which health care delivery sites must our 340B covered entity (a non-hospital) register on the OPA database?

View Answer

All sites that use 340B drugs must be listed on the 340B database. In order for non-hospital health care delivery sites to purchase 340B drugs or provide 340B drugs to their patients, they must first be authorized through the (non-hospital) covered entity’s grant and listed on the 340B database. Clinics located off-site of the parent covered entity, regardless of whether those clinics are in the same building, must register with OPA as outpatient facilities of the parent 340B covered entity if the covered entity purchases or provides 340B drugs to patients of those facilities.

340B Implementation

Does HRSA authorize covered entities to retroactively change previous quarters’ transactions from a non-340B transaction into a 340B price transaction, or to convert from a GPO purchase into non-GPO purchase, through credit and rebill process arranged between the covered entity and the wholesaler?

View Answer

HRSA has not authorized the use of a credit/rebill or similar process to re-characterize a transaction after the fact. Covered entities participating in the 340B Program are responsible for requesting 340B pricing at the time of the original purchase. If a covered entity wishes to reclassify a previous purchase as 340B, covered entities should notify manufacturers and ensure all processes are fully transparent with a clear audit trail that reflects the actual timing and facts underlying a transaction. The covered entity retains responsibility in ensuring full compliance and integrity of their use of the 340B Program.

Can 340B drugs be used for discharge prescriptions?

View Answer

The 340B Program is an outpatient drug program. Enrolled covered entities have the responsibility to ensure that drugs purchased under the 340B Program be limited to outpatient use and provided to patients who meet the requirements of the current patient definition.

340B drugs can be used for discharge prescriptions to the extent that the drugs are for outpatient use. Whether a drug qualifies as outpatient and the individual meets the definition of patient depends upon the factual circumstances surrounding the care of that particular individual. If a covered entity uses 340B drugs, it should be able to explain why the covered entity is responsible for the use of the drugs on an outpatient basis and have auditable records that demonstrate compliance with 340B Program requirements.

If my hospital cannot track utilization of 340B-priced drugs on a drug-by-drug basis, may it rely on historical utilization data or other means for meeting 340B tracking requirements?

View Answer

Your hospital may rely on alternative tracking systems if it submits a written request to the Office of Pharmacy Affairs describing the proposed methodology. The OPA may consult with the Office of the Inspector General as necessary in evaluating a proposed alternative tracking system. The “alternative tracking system” cannot be used until it has been approved by OPA.

My hospital does not have an outpatient pharmacy. May we use the 340B Program to purchase drugs administered in hospital outpatient settings such as hospital outpatient clinics, a chemotherapy or dialysis center, and/or the hospital?

View Answer

Yes. The 340B Program covers not only drugs dispensed by outpatient pharmacies for patient self-administration, but also drugs administered by physicians in hospital outpatient settings. The hospital must develop a tracking system to ensure that drugs purchased through the 340B Program are not used for hospital inpatients. Hospital pharmacies that purchase drugs for both inpatient and outpatient use have an increased responsibility to ensure that proper safeguards are in place to protect against diversion of 340B-priced drugs to hospital inpatients.

Manual or electronic processes can be implemented to appropriately address the 340B Program requirements for mixed patient care settings.

May a hospital use 340B-priced drugs in "mixed-use" settings, such as a surgery department, where both inpatients and outpatients are treated? If so, what if the hospital cannot track which drugs are used for inpatients and which ones are used for outpatients?

View Answer

A hospital may use 340B-discounted drugs for patients treated in mixed-use settings that appear as reimbursable cost centers on the hospital’s most recently filed Medicare cost report and meet the definition of a patient under the 340B statute. The hospital must develop appropriate tracking systems to ensure that covered outpatient drugs purchased through the 340B Program are not used for hospital inpatients. It is the responsibility of the hospital to ensure appropriate safeguards are in place to protect against diversion. If a hospital is unable to implement an effective tracking system, it should not use the 340B Program in that setting.

GPO Prohibition

Can a hospital subject to the GPO prohibition use a GPO to purchase drugs that do not meet the definition of covered outpatient drug (as defined by section 1927(k) of the Social Security Act)?

View Answer

Yes. Entities should have clear documentation demonstrating how the entity applies the definition of covered outpatient drug with respect to GPO use.

Can a hospital subject to the GPO Prohibition use a GPO for drugs that are part of/incident to another service and payment is not made as direct reimbursement of the drug (“bundled drugs”)? For example, diluents for infusions, large volume parenterals used as diluents, etc.

View Answer

If the entity interprets the definition of covered outpatient drug referenced in the 340B Statute (Social Security Act 1927 (k)) and decides that bundled drugs do not meet this definition, a GPO may be used for drugs that are not covered outpatient drugs. The decision the entity makes should be defensible, consistently applied in all areas of the entity, documented in policy/procedures, and auditable.

If a DSH, children’s hospital, or freestanding cancer hospital registers with OPA to participate in the 340B Program, when does their participation become effective and the GPO prohibition apply?

View Answer

The GPO prohibition form, signed by the hospital’s authorizing official upon enrollment, states that the hospital “...will not participate in a group purchasing organization or group purchasing arrangement for covered outpatient drugs as of the date of this listing on the OPA website.”.

Our hospital isn’t subject to the GPO prohibition. Does the GPO Policy Release impact our hospital?

View Answer

The GPO prohibition applies to all disproportionate share hospitals, children’s hospitals, and freestanding cancer hospitals enrolled in the 340B Program. The GPO policy release does not apply to entities registered as any other type of covered entity.

If a critical access hospital enrolls and participates in the 340B Program, will the critical access hospital have to stop participating in our group purchasing organization (GPO)?

View Answer

No. Under section 340B(a)(4)(N) of the Public Health Service Act, as amended by the Affordable Care Act, the prohibition against participation in GPO arrangements does not apply to critical access hospitals, rural referral centers, or sole community hospitals. The GPO prohibition only applies to 340B-enrolled disproportionate share hospitals, children's hospitals, and freestanding cancer hospitals.

Can a 340B hospital subject to the group purchasing organization (GPO) prohibition (disproportionate share hospitals, children's hospitals, freestanding cancer hospitals) continue to purchase items from a GPO that are at a lower cost than 340B pricing?

View Answer

Hospitals that participate in the 340B Program for covered outpatient drugs and are subject to the GPO prohibition cannot purchase any covered outpatient drugs through a group purchasing organization or other group purchasing arrangement. This “GPO prohibition” is found in the 340B statute, at section 340B(a)(4)(L) and applies even if items are available at a lower price through the GPO. Hospitals can continue to purchase all products for inpatient operations through a GPO, even if the outpatient departments participate in the 340B Program.

How does the GPO policy release apply to hospitals currently enrolled in the 340B Program and utilizing a conventional replenishment model in a mixed-use setting? If a hospital intends to convert to a WAC first purchase model (integrated with inpatient and outpatient accruals), may that hospital utilize GPO purchased drugs remaining in inventory at the time of transition until those GPO purchased drugs are expended?

The answer to this question is important in understanding whether the hospital would need to do an initial purchase of all 340B utilized drugs at WAC to demonstrate compliance versus an alternative, and less costly, approach of allowing existing GPO inventory to be utilized until expended under the new WAC first purchase model.

View Answer

Disproportionate share hospitals (DSH), children’s hospitals, and free-standing cancer hospitals participating in the 340B Program are subject to the GPO prohibition.

The hospital may utilize GPO purchased drugs remaining in inventory at the time of transition until those GPO purchased drugs are expended. The hospital should keep auditable records to demonstrate that accumulation occurs to inpatient GPO or outpatient 340B based upon eligible patients. A non-GPO outpatient account should be available for replenishment for covered outpatient drugs in the event a 340B product is not available.

If a DSH, children’s, or freestanding cancer hospital has purchased covered outpatient drugs on a GPO account and then replenished through their 340B account, how can the hospital get back into compliance?

View Answer

The accumulation for specific accounts is based upon 340B patient eligibility status, and the hospital must maintain auditable records of its policies, procedures, and transactions. For example:

  1. 340B eligible patients generate accumulation for orders on the 340B outpatient account.
  2. Inpatients generate accumulation for orders on the inpatient GPO account.
  3. 340B ineligible outpatients (or situations where 340B is not available) generate accumulation for orders on an outpatient non-GPO (i.e., Non-340B) account. PVP participants may access the PVP’s Non 340B contract.

HRSA recognizes that the variety of patient eligibility status categories accumulate to produce corresponding virtual inventories. These accumulations will eventually produce replenishment orders that result in a physical inventory in the mixed-use area comprising drugs from a variety of contract purchases. Hospitals must maintain auditable records showing that the virtual accumulations are based upon documented 340B patient eligibility status categories.

A hospital system owns and controls many hospitals, some of which are 340B participating hospitals. The 340B participating hospitals each have their own 340B Program identification number. The hospital system would like to negotiate prices for drugs used at their hospitals, including those that participate in the 340B Program. Does the above scenario violate the 340B GPO prohibition? That is, does it constitute a group purchasing arrangement?

View Answer

The 340B participating hospitals within the hospital system in this scenario have separate 340B registrations. For the hospitals registered for the 340B Program as a disproportionate share hospital, children’s hospital, or freestanding cancer hospital, conducting price negotiations for covered outpatient drugs with any other hospital would create a prohibited group purchasing arrangement. The hospital system may negotiate prices for inpatient drugs only.

A DSH with an in-house pharmacy would like to serve 340B and non-340B eligible patients. May the DSH use a GPO to purchase drugs for our non-340B eligible patients that receive services at sites registered on the OPA database?

If a product does not have a 340B price, does that mean it is not considered a covered outpatient drug for the purposes of the 340B Program?

View Answer

The definition of covered outpatient drug is found in section 1927 (k) of the Social Security Act. The availability of a 340B price is not determinative of whether that drug meets this definition of a covered outpatient drug.

Can a hospital subject to the GPO prohibition use a GPO to purchase drugs that do not meet the definition of covered outpatient drug (as defined by section 1927(k) of the Social Security Act)?

View Answer

Yes. Entities should have clear documentation demonstrating how the entity applies the definition of covered outpatient drug with respect to GPO use.

Can our 340B hospital, subject to the GPO prohibition, use a GPO for outpatient drugs at a non-reimbursable clinic within the four walls of the parent hospital?

If one child site can not comply with the GPO prohibition as of August 7, 2013, should the parent site unregister the child site?

A mixed-use area has only inpatients or 340B eligible outpatients. There are no 340B ineligible patients. In this setting where the status of a patient (inpatient vs. outpatient) is not known until replenishment occurs by the split ordering software, and the accumulator splits orders into inpatient GPO and 340B, is it required to start with a WAC inventory?

View Answer

The hospital must keep auditable records demonstrating that accumulation occurs for inpatient GPO or outpatient 340B for eligible patients (as defined by current patient definition guidelines (61 Fed. Reg. 55156 (Oct. 24, 1996)). A non-GPO outpatient account should be available for replenishment for covered outpatient drugs in the event a 340B product is not available.

When a covered entity is unable to purchase a covered outpatient drug at a 340B price, may the covered entity subject to the GPO prohibition buy via a GPO?

View Answer

A covered entity that is subject to the GPO prohibition may not use a GPO for covered outpatient drugs at any point in time. If a covered entity is unable to purchase a covered outpatient drug at the 340B price, written notification should be sent to OPA immediately detailing the covered outpatient drug(s) involved, the manufacturer, and the process by which the entity was notified that the purchase could not be made. HRSA reviews all allegations to ensure compliance with 340B Program requirements. If you are not able to obtain the drug at a 340B price here is the suggested process: Contact the manufacturer and request 340B pricing. If they refuse, ask for their reasoning in writing. Forward a cover letter describing the situation and the collected explanations to:

Office of Pharmacy Affairs 5600 Fishers Lane Parklawn Building Mail Stop 8W03A Rockville, MD 20857

How does a hospital determine if our split billing software product is in compliance for drugs administered on site in our hospital outpatient departments or in the hospital in mixed settings?

View Answer

By August 7, 2013, hospitals subject to the GPO prohibition should be able to answer NO to all of the following: Does the hospital…

  1. Use GPO purchased covered outpatient drugs for 340B ineligible outpatients in OPA-registered participating clinics? 
  2. Have systems (or vendor systems) set up to use GPO purchased covered outpatient drugs for 340B ineligible outpatients?
  3. Obtain GPO purchased covered outpatient drugs via a contract pharmacy for 340B ineligible outpatients? 
  4. Use GPO purchased covered outpatient drugs within the four-walls of our registered parent hospital for 340B ineligible outpatients? 
  5. Use a GPO to purchase any covered outpatient drugs unavailable at a 340B price without notifying OPA in writing?

Additionally, covered entities should clearly document their operations in their policy and procedure manuals.

May a Hemophilia Treatment Center (HTC) that is part of a hospital participate in a GPO for outpatient drugs?

View Answer

The answer depends on how the HTC is registered with respect to the hospital.

  • If the HTC is within the four walls of a parent hospital subject to the GPO prohibition and not separately registered for the 340B Program with a 340B ID beginning with “HM”, the HTC may not use an outpatient GPO. 
  • If the HTC is registered as an off-site outpatient clinic of a hospital subject to the GPO prohibition, the HTC may not use an outpatient GPO. 
  • If the HTC is an off-site outpatient facility of a hospital subject to the GPO prohibition, but is not registered for the 340B Program (as a child site of the hospital) and meets all of the following, if may use a GPO for covered outpatient drugs: 
    1. is located at a different physical address than the parent; 
    2. is not registered on the OPA 340B database as participating in the 340B Program; 
    3. purchases drugs through a separate pharmacy wholesaler account than the 340B participating parent; and 
    4. The hospital maintains records demonstrating that any covered outpatient drugs purchased through the GPO at the HTC are not utilized or otherwise transferred to the parent hospital or any outpatient facilities registered on the OPA 340B database.
  • If the HTC is otherwise an eligible entity and registered as such (340B identification number beginning with “HM”), then it is not subject to the GPO prohibition with respect to its own patients. 

In no circumstances may the HTC’s permitted use of a GPO be used to circumvent the GPO prohibition for a hospital and its outpatient clinics subject to the GPO prohibition.

Can Community Health Centers participate in the Prime Vendor Program (PVP) and a group purchasing organization (GPO)?

View Answer

Yes. All covered entities may participate in the PVP, although disproportionate share hospitals, children's hospitals, and freestanding cancer centers that participate in the 340B Program are prohibited from purchasing outpatient drugs through a GPO. 340B Prime Vendor participation is voluntary, and there are no restrictions placed on covered entities electing to participate. Most alternative purchasing groups serving 330 grantees and other entities encourage participation in the 340B PVP to ensure members have access to best pricing on pharmaceuticals while offering members their own contract portfolios of medical/surgical, dental, office, and other non-pharmacy supplies, which tend to be complementary to the 340B PVP pharmacy portfolio. On occasion, there may be an alternative purchasing group that does not permit a member to simultaneously access their own contracts and 340B PVP contracts due to existing business relationships with a supply partner. In this situation, the covered entity may be required to notify the alternative purchasing group to cancel its membership before the selected pharmacy wholesaler will load the 340B PVP pricing available to the entity's pharmacy account.

When does HRSA consider covered entities in violation of the GPO prohibition?

View Answer

HRSA published Policy Release 2013-1 (PDF - 227 KB) on February 7, 2013 to clarify its policy regarding this 340B Program statutory prohibition. HRSA initially allowed covered entities 60 days after the publication of the GPO policy release (until April 7, 2013) to make certain their drug replenishment practices comply with the GPO policy release. Based on a large number of covered entities providing comments that this deadline could not be met due to the work required to implement the needed changes, HRSA is extending the deadline to August 7, 2013 for those entities that are not able to comply with the initial April 7 deadline. No additional extensions will be granted beyond the August 7 date.

During this extension, HRSA expects that covered entities will comply with the GPO Prohibition as soon as possible prior to the August 7 deadline. HRSA reviews and follows-up on all allegations regarding non-compliance and has the ability to audit a covered entity. In such cases, covered entities should be able to demonstrate that they made their best effort to be in compliance as soon as they were able to do so and should have a legitimate reason for any delay. Any evidence of deliberate delay could result in immediate removal from the 340B Program.

If a covered entity is unable to be in compliance by August 7, the covered entity must immediately notify HRSA, and will be terminated from the program. The covered entity may reapply during the next quarterly registration period (October 1 – 15) once it determines that it is in compliance with all 340B Program requirements and can attest to such during the enrollment process. If after August 7, HRSA determines that a covered entity still participating in the program is not in compliance with the GPO prohibition, HRSA will terminate such entity from the 340B Program.

In addition, HRSA will be conducting annual recertification of hospitals after the August 7 deadline as part of the regular annual recertification process. At that time, all participating 340B hospitals must attest that they are in compliance with all 340B program requirements, including compliance with the GPO prohibition as detailed in Policy Release 2013-1 (PDF - 227 KB).

What type of inventory and accumulation/replenishment process does HRSA consider compliant for a covered entity that (1) is subject to the GPO prohibition; and (2) maintains a physical inventory in a mixed use setting?

View Answer

The 340B statute and guidelines do not require separate physical inventories for 340B drugs. Covered entities can use a virtual inventory as long as it complies with all 340B Program requirements. Regardless of the type of inventory (physical or virtual), a covered entity must ensure that 340B drugs are only provided to 340B eligible patients and that a GPO is not used to purchase covered outpatient drugs in covered entity sites subject to the GPO Prohibition. If using a virtual model, accumulation should occur for specific accounts based upon patient eligibility status, and the hospital must maintain auditable records of its policies, procedures and transactions. HRSA recognizes the variety of patient eligibility status categories (i.e., inpatient, 340B eligible, and non-340B eligible outpatient) accumulate to produce corresponding virtual inventories for a covered entity. These accumulations eventually produce replenishment orders that result in a physical inventory in the mixed use area comprised of drugs originating from a variety of contract purchases.

It is permissible for a covered entity in the foregoing circumstances to dispense or administer a drug from the covered entity’s physical inventory – regardless of the drug’s contract purchase origin – and subsequently accumulate that drug in the applicable accumulator (i.e., 340B, GPO, or non-GPO accounts) when the covered entity confirms the patient’s eligibility status category. Accumulation in such circumstances must occur for specific accounts based upon patient eligibility status, and covered entities must maintain auditable records showing that each of their virtual accumulations is based on the appropriate patient eligibility status category. 340B eligible patients should be accumulated on the 340B account, non-340B eligible outpatients should be accumulated on the non-GPO account, and patients determined to be inpatients should be accumulated on the inpatient GPO account.

If a covered entity is unable to be in compliance by August 7, the covered entity must immediately notify HRSA, and will be terminated from the program. The covered entity may reapply during the next quarterly registration period (October 1 – 15) once it determines that it is in compliance with all 340B Program requirements and can attest to such during the enrollment process. If after August 7, HRSA determines that a covered entity still participating in the program is not in compliance with the GPO prohibition, HRSA will terminate such entity from the 340B Program.

In addition, HRSA will be conducting annual recertification of hospitals after the August 7 deadline as part of the regular annual recertification process. At that time, all participating 340B hospitals must attest that they are in compliance with all 340B program requirements, including compliance with the GPO prohibition as detailed in Policy Release 2013-1 (PDF - 227 KB).

Patient Definition

Are employees of a covered entity eligible to receive 340B drugs?

View Answer

Covered entities may only distribute 340B drugs to their employees that meet the patient definition guidelines set forth under the 340B Program. For current patient definition guidelines, see 61 Fed. Reg. 55156 (Oct. 24, 1996). The 340B Program is limited to patients of the covered entity and has never been a general employee pharmacy benefit or self-insured organization pharmacy benefit. Evidence of an employer relationship or insurer relationship alone is insufficient to determine 340B patient eligibility.

Can non-Medicaid patients receive 340B drugs?

View Answer

Yes, as long as they are patients of the covered entity.

Are 318A grantees (STD grantees) that participate in the 340B Program permitted to purchase contraceptives and other 340B drugs for use by grantee patients?

View Answer

STD (318A grantee) clinics that participate in the 340B Program may purchase 340B drugs (including prescribed contraceptives), for grantee patients that meet the patient definition criteria (61 Fed. Reg. 55156 (Oct. 24, 1996)). If an individual meets all of the requirements of the definition of patient, including the third requirement that the individual receives a healthcare service or range of services sufficient to establish a provider-to-patient relationship under the 340B Program from the 318A grantee that are consistent with screening, preventing, or treating sexually transmitted diseases, then the covered entity may purchase and dispense any 340B drugs for which the covered entity is responsible, including contraceptives, to that patient.

Contract Pharmacy

Are 340B covered entities required to contract with a retail pharmacy?

View Answer

No. Covered entities are free to choose how they will provide 340B pharmacy services to their patients, subject to federal and state laws. Options include contracting with a retail pharmacy, providing in-house pharmacy services, or both. For more information, including tools and technical assistance in providing 340B pharmacy services, contact Apexus Answers at 888-340-2787, or ApexusAnswers@340bpvp.com.

What does OPA mean by a "ship to, bill to" arrangement?

View Answer

The "ship to, bill to" arrangement refers to an arrangement set up by the covered entity who is responsible for purchasing 340B drugs from wholesalers and/or manufacturers and directs those 340B drugs to be shipped to the contract pharmacy. In other words, the covered entity maintains title of the 340B drugs as required, but the contract pharmacy(ies) houses the drugs and provides dispensing services to patients of the covered entity.

What are the compliance elements both the covered entity and contract pharmacy are responsible for under the multiple contract pharmacy services guidelines?

View Answer

The covered entity is primarily responsible for ensuring compliance with all 340B Program requirements. Covered entities along with contract pharmacies are responsible for ensuring compliance with all 340B Program requirements in order to prevent diversion and duplicate discounts. The contract pharmacy, with the assistance of the covered entity, will establish and maintain a tracking system to prevent diversion and develop a system to verify patient eligibility. Both parties must agree that they will not resell or transfer 340B drugs to any party but the covered entity's patients. Both must also establish an arrangement with the state Medicaid agency to prevent duplicate discounts. In addition, both covered entities and contract pharmacies must adhere to all federal, state, and local laws.

Records maintained by the covered entity and contract pharmacy pertaining to compliance with the 340B Program guidelines are subject to audits by a third party including the government and participating manufacturers. The agreement between the covered entity and the contract pharmacy(ies) must specify the services that will be provided by the latter. The guidelines (75 Fed. Reg. 10272 (Mar. 5, 2010)) were effective on April 5, 2010.

Covered entities must list all the pharmacy locations eligible to dispense drugs or provide services to patients of the covered entity under the contract.

Does the covered entity need to submit an Alternative Method Demonstration Project proposal for multiple contract pharmacies?

View Answer

The multiple contract pharmacy Federal Register Notice, published March 5, 2010, permits multiple contract pharmacies and removes the need for an AMDP proposal for covered entities that wish to: 

  1. Use multiple contract pharmacy service sites, and/or 
  2. Utilize a contract pharmacy to supplement in-house pharmacy services. 

The AMDP process will continue for those covered entities wishing to develop 340B networks of covered entities.

What are the audit requirements under the contract pharmacy guidelines?

View Answer

Although annual independent audits are not expressly required, the covered entity must have sufficient information to meet its obligation of ensuring ongoing compliance and the timely recognition of any problem. All covered entities are required to maintain auditable records and it is the expectation of HRSA that most covered entities will utilize independent audits as part of fulfilling their ongoing obligation of ensuring 340B Program compliance. However, HRSA leaves it up to covered entities to determine how to meet their compliance responsibilities. The guidelines intentionally do not specify the precise method, personnel, or items for ensuring that sufficient information is obtained by the covered entity. To the extent that any internal compliance activity or audit performed by a covered entity indicates that there has been a violation of 340B Program requirements, it is HRSA’s expectation that such finding be disclosed to HRSA along with the covered entity’s plan to address the violation. Auditable records need to be maintained for a period of time that complies with all applicable federal, state, and local requirements.

What are the record-keeping requirements for multiple contract pharmacies?

View Answer

The covered entity must have fully auditable records that demonstrate compliance with all 340B Program requirements. The contract pharmacy will provide the covered entity with reports consistent with customary business practices (e.g., quarterly billing statements, status reports of collections and receiving, and dispensing records). The contract pharmacy, with the assistance of the covered entity, will establish and maintain a tracking system suitable to prevent diversion of 340B drugs and duplicate discounts on the drugs. Customary business records, which must be readily retrievable, may be used for this purpose. The covered entity will establish a process for a periodic comparison of its prescribing records with the contract pharmacy's dispensing records to detect potential irregularities. Such records can include: prescription files, velocity reports, and records of ordering and receipt of drugs. These records will be maintained for a period of time required by State law and regulations (75 Fed. Reg. 10272 (Mar. 5, 2010)).

Annual Recertification

Must a covered entity complete a change request form for recertification if the 340B database is correct?

View Answer

No change request form will be required if all information in the 340B database is accurate.

Once a covered entity submits a change request form, must the covered entity do anything else to recertify?

View Answer

Yes. A change request form only updates the covered entity’s 340B database information. Recertification requires the covered entity’s Authorizing Official to (1) update 340B database information if necessary and (2) certify compliance with 340B Program requirements.

HRSA strongly recommends that the covered entity review and update its 340B database entry using the change request form prior to recertification. Once recertification starts, the listed Authorizing Official will receive a user name, password, and recertification user guide to perform annual recertification and attest to the covered entity’s 340B Program compliance.

The Authorizing Official is responsible for ensuring 340B Program compliance for the covered entity. Recertification covers the parent covered entity and all registered child sites in the 340B Program database.

Medicaid and 340B

Must a covered entity submit its Medicaid provider number or NPI to HRSA for inclusion in the 340B Medicaid Exclusion File?

View Answer

Covered entities must choose whether they will use 340B drugs for their Medicaid patients. If they choose to use 340B drugs for Medicaid patients (carve-in), they must provide the HRSA Office of Pharmacy Affairs (OPA) with the Medicaid provider number and/or NPI used to bill Medicaid to be listed on the 340B Medicaid Exclusion File. The 340B Medicaid Exclusion File is available to state Medicaid agencies and manufacturers to prevent duplicate discounts, as prohibited by statute. If an outpatient facility or sub-grantee/sub-contractor bills under a different Medicaid provider number or NPI than the parent site, that information must be appropriately listed for each outpatient facility.

How does a covered entity carve out Medicaid?

View Answer

To carve out Medicaid, a covered entity chooses to forego the 340B discount drugs for Medicaid patients. In this arrangement, 340B drug inventory is dispensed only to non-Medicaid patients. The covered entity would not be included on HRSA’s 340B Medicaid Exclusion File.

Which Medicaid provider number and NPIs should a covered entity submit to HRSA Office of Pharmacy Affairs?

View Answer

The covered entity should submit Medicaid provider numbers/NPIs that are used to bill 340B drugs to Medicaid patients in any state. This is most often the pharmacy’s Medicaid provider number/NPI, but could also be the clinic Medicaid provider number/NPI or a combination of both, depending on the services at the clinic. For more information, contact the 340B Prime Vendor at 1-888-340-2787 or via email at ApexusAnswers@340BPVP.com.

May 340B drugs be used for Medicaid patients as part of a 340B contract pharmacy?

View Answer

340B drugs may not be used for Medicaid patients at a contract pharmacy, absent an arrangement between the contract pharmacy, covered entity, and state Medicaid agency to prevent duplicate discounts. Any such arrangement shall be reported to the HRSA Office of Pharmacy Affairs by the covered entity. For additional information, see the Federal Registry notice.

Orphan Drugs

How does HHS/HRSA interpret the orphan drug exclusion?

View Answer

On July 21, 2014, HHS issued an interpretive rule which describes HHS’s interpretation of section 340B(e) of the Public Health Service Act (PHSA), “Exclusion of Orphan Drugs for Certain Covered Entities.” HHS interprets section 340B(e) of the PHSA as excluding from the 340B Drug Pricing Program (“340B Program”) drugs that are transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the drug was designated under section 526 of the Federal Food, Drug, and Cosmetic Act (FFDCA). However, section 340B(e) of the PHSA does not exclude from the 340B Program drugs that are transferred, prescribed, sold, or otherwise used for conditions or diseases other than for which the drug was designated under section 526 of the FFDCA

What is orphan designation?

View Answer

A drug is designated by the FDA as "a drug for a rare disease or condition" pursuant to section 526 of the FFDCA at the request of the sponsor, if FDA finds that the drug is being or will be investigated for a rare disease or condition and, if approved by FDA, the approval will be for that disease or condition. 21 U.S.C. 360bb(a)(1). This designation is referred to as orphan-drug designation. 21 CFR 316.24.

Which orphan drugs are exempt from the 340B Program under HRSA's interpretation?

View Answer

A drug with an orphan designation is excluded from the 340B Drug Pricing Program when used for the indication for which it has received an orphan designation but not when the drug is used for an indication other than for which the drug received the orphan designation. HRSA will publish on its public website FDA’s section 526 list of drugs on the first day of the month prior to the end of the calendar quarter to assist in the identification of the following quarter’s purchases that may be subject to the orphan drug exclusion. HRSA’s published orphan drug list will assist manufacturers and covered entities to determine whether a drug is designated under section 526 of the FFDCA and, if so, the rare indication for which it is designated.

Who does the orphan drug exclusion apply to?

View Answer

The exclusion of drugs with orphan indications applies to free-standing cancer hospitals, rural referral centers, sole community hospitals, and critical access hospitals. The exclusion does not apply to covered entities that meet the 340B Program eligibility requirements and are enrolled under sections 340B(a)(4)(A) through 340B(a)(4)(L) of the PHSA or to a children’s hospital described in section 340B(a)(4)(M). Furthermore, if a hospital potentially qualifies under more than one section, such as a 340B(a)(4)(L) disproportionate share hospital and 340B(a)(4)(O) sole community hospital, the hospital selects under which enrollment type it chooses to qualify. During the registration and annual recertification processes, a covered entity certifies that it meets the requirements for such an enrollment type.

How does the HRSA’s interpretation change the definition of covered outpatient drug?

View Answer

The interpretive rule interprets but does not change the statutory definition of “covered outpatient drug.” HRSA interprets section 340B(e) of the PHSA to exclude those orphan drugs which are transferred, prescribed, sold, or otherwise used for the rare condition or disease for which that drug was designated under section 526 of the FFDCA from the definition of covered outpatient drug only for the covered entity types to which the exclusion applies.

There have been press reports that HRSA considers the July 21, 2014 Interpretive Rule binding in the same manner as the 2013 Orphan Drug Regulation. Does HRSA consider the Interpretive Rule binding on manufacturers and covered entities?

View Answer

The Orphan Drug Interpretive Rule issued by HRSA is not binding on manufacturers and covered entities. An interpretive rule does not create or establish any binding norms. However, the statute is binding on manufacturers and covered entities and does establish binding norms and requirements. A manufacturer’s or covered entity’s failure to comply with the statutory requirements could subject a manufacturer or covered entity to an enforcement action by HRSA, which could include refunds to covered entities in the case of overcharges, as well as termination of a manufacturer’s Pharmaceutical Pricing Agreement (PPA). In deciding whether and in what circumstances to take enforcement action, HRSA will necessarily be required to interpret the statute. In accordance with the Administrative Procedure Act, HRSA has provided its interpretation of the statute to stakeholders in the 340B community by issuing the Orphan Drug Interpretive Rule. If a manufacturer or covered entity with a different interpretation of the statute is ever subject to such an enforcement action, it would have the opportunity to advocate for a different interpretation of the statute in defending against the enforcement action.

What if I cannot track a drug by indication?

View Answer

HRSA will maintain a list of all covered entities for which the exclusion of drugs with an orphan indication applies that cannot or do not wish to maintain auditable records sufficient to track the use of drugs by orphan indication. These covered entities would purchase all orphan drugs outside of the 340B Program because they are unable to demonstrate compliance with statutory requirements, as interpreted by HRSA. Once a hospital is enrolled in 340B, it may change its decision to purchase all orphan drugs outside of the 340B Program on a quarterly basis by notifying HRSA. This documentation will be made public. This information will also be verified during the annual recertification process.

Can a free-standing cancer hospital use a GPO for orphan drugs when they are used for a rare disease or condition?

View Answer

The 340B statute prohibits a free-standing cancer hospital from using a GPO for covered outpatient drugs. When an orphan drug is used for the rare condition or disease for which that orphan drug was designated under section 526 of the FFDCA, it is not considered a covered outpatient drug for purposes of the 340B Program. Therefore, under the 340B statutory GPO prohibition, a free-standing cancer hospital may use a GPO when an orphan drug is used for a rare disease or condition if the free-standing cancer hospital is able to track drug use by indication. When an orphan drug is used for a non-rare condition or disease, it is considered a covered outpatient drug and a free-standing cancer hospital may not use a GPO. If the free-standing cancer hospital is unable track by indication, it would not be able to demonstrate compliance with statutory requirements, as interpreted by HRSA. Therefore, if it does not have this capability, a free-standing cancer hospital would be unable to ensure that drugs purchased would not violate the GPO prohibition unless all drugs, regardless of the indication for which they were used, were purchased outside of a GPO.

An enrolled critical access hospital, rural referral center, or sole community hospital is not subject to the GPO prohibition and is therefore able to use a GPO for covered outpatient drugs. Thus, these types of covered entities may use a GPO to purchase a drug whether or not it is used for an orphan rare disease or condition.

Questions, contact ApexusAnswers@340BPVP.com or call 1-888-340-2787 Monday through Friday 8:30am to 6:30pm