FAQs

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 http://www.hrsa.gov/opa/eligibilityandregistration/index.html for additional information and a complete list of covered entity types.

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.

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: https://oig.hhs.gov/fraud/report-fraud/
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 https://oig.hhs.gov/fraud/report-fraud/hotline_complaint_submission_form.pdf (PDF - 34 KB) or https://oig.hhs.gov/fraud/report-fraud/hotline_complaint_submission_form.docx (MS Word - 178 KB) TTY: 1-800-377-4950

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.

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.

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.

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.

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.

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.

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.

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 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 10C-03
Rockville, MD 20857

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.

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.

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).

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.

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.

The HRSA Medicaid Exclusion File is a mechanism created by HRSA which helps state Medicaid agencies comply with a specific 340B statutory provision:  that drugs purchased at 340B prices must be excluded from Medicaid rebate requests to drug manufacturers.

Covered entities can choose whether they will use 340B drugs for their Medicaid patients.  If they choose to do so, they must provide the Office of Pharmacy Affairs (OPA) with their pharmacy Medicaid Provider number, which is placed in the HRSA Medicaid Exclusion File.  OPA makes the HRSA Medicaid Exclusion File available to state Medicaid agencies and manufacturers so that the state does not request a Medicaid rebate from a manufacturer for the already discounted 340B drugs.

The 340B statute prohibits state Medicaid agencies from collecting rebates on drugs purchased at 340B prices for Medicaid patients because this practice would result in “duplicate discounts.”

The “duplicate discount” would occur if an up-front 340B discount and back-end Medicaid rebate were provided on the same drug/drug claim.