The 340B Drug Discount Program is a U.S federal government program created in 1992 that requires drug manufacturers to provide outpatient drugs to eligible health care organizations/covered entities at significantly reduced prices. The intent of the program is to allow covered entities to "stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services." Maintaining services and lowering medication costs for patients is consistent with the purpose of the program, which is named for the section authorizing it in the Public Health Service Act (PHSA).  It was enacted by Congress as part of a larger bill signed into law by President George H. W. Bush.


Eligible health care organizations/covered entities are defined in statute and include HRSA-supported health centers and look-alikes, Ryan White clinics and State AIDS Drug Assistance programs, Medicare/Medicaid Disproportionate Share Hospitals, children’s hospitals, and other safety net providers. 

To participate in the 340B Program, eligible organizations/covered entities must register and be enrolled with the 340B program and comply with all 340B Program requirements. Once enrolled, covered entities are assigned a 340B identification number that vendors verify before allowing an organization to purchase 340B discounted drugs.

New registrations are accepted October 1-15, January 1-15, April 1-15 and July 1-15.


OVERSIGHT:


For covered entities with contract pharmacy arrangements, vigilant oversight is critical.  Covered entities are responsible for ensuring compliance of their contract pharmacy arrangement with all 340B Program requirements to prevent diversion and duplicate discounts (75 Fed. Reg. 10272 (Mar. 5, 2010)).  All covered entities are required to maintain auditable records and are expected to conduct annual audits of contract pharmacies that are performed by an independent auditor.  HRSA conducts audits to ensure covered entities are appropriately providing oversight of their contract pharmacy arrangements.  To the extent that any compliance activity or audit performed by a covered entity indicates a violation of 340B Program requirements, such finding must be disclosed to HRSA along with the covered entity's plan to address the violation.  As demonstrated in the 340B Program audits finalized to date, covered entities’ oversight of contract pharmacies did not always meet expectations outlined in 340B Program guidance specific to diversion and duplicate discounts found at a contract pharmacy.  In addition, if HRSA finds a covered entity providing no oversight of its contract pharmacy arrangement, this is a violation of program requirements and HRSA will no longer permit the participation of that contract pharmacy arrangement.

In addition to contract pharmacy oversight, per HRSA’s March 2010 contract pharmacy guidelines, contract pharmacies must carve-out Medicaid (i.e., not use 340B drugs for Medicaid patients), unless the covered entity otherwise has an arrangement with the state Medicaid agency to prevent duplicate discounts.  The covered entity must report such arrangements to HRSA.  Covered entities found carving-in Medicaid at their contract pharmacies will be cited in an audit.  HRSA also audits the ability of a covered entity and its contract pharmacy to prevent duplicate discounts, and the sanction associated with that violation is manufacturer repayment if a duplicate discount occurred.  



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