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340B Program FAQs

What is the 340B Drug Pricing Program?
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.
How can 340B help my organization?
340B can provide a qualified health care entity with a solid financial foundation to support existing patient services and help expand their scope of care. In some areas, the program can help providers offer patients convenient access to local medical services. It is designed to eliminate any barriers to care for patients who otherwise could not afford necessary medication.
What is the Prime Vendor Program?

As part of the original 340B legislation, the government was required to establish a Prime Vendor Program (PVP). The PVP serves participants in three primary roles:

  • negotiating sub-340B pricing on pharmaceuticals
  • establishing distribution solutions and networks that improve access to affordable medications
  • providing other value-added products and services

The PVP is a voluntary program. All covered entities may participate, including hospitals that are prohibited from purchasing in a group arrangement. The PVP negotiates discounts for all participating providers.

Can 340B drugs be used for inpatient care?
No – 340B drugs should only be used for outpatients of the covered entity.
Can Medicaid patients receive 340B drugs?
Yes, if and only if their state has a process in place to prevent these transactions from going through the state Medicaid rebate process. All entities should check with their state and be familiar with its process before making any decisions. If an entity chooses to carve in Medicaid, they need to register accordingly with HRSA. If an entity chooses to carve out Medicaid, they must forego 340B discounts for these patients. Carving out is often the easiest way to prevent duplicate discounts.
Are employees of a covered entity eligible to receive 340B drugs?
Covered entities may only distribute 340B drugs to their employees if the employees meet the patient definition set forth under the 340B program (see 61 Fed. Reg. 55156). HRSA has never approved arrangements that have sought to expand the patient definition guidelines to include individuals other than actual patients of the covered entity.
What does the Office of Pharmacy Affairs mean by a “ship to, bill to” arrangement?
This refers to an arrangement between the wholesaler and the covered entity. The 340B drugs are shipped to the pharmacy (“ship to”) and the covered entity is responsible for purchasing those drugs (“bill to”). In other words, the covered entity maintains ownership of the 340B drugs as required, but the partner pharmacies house the drugs and provide dispensing services to patients of the covered entity.
How many pharmacies can be contracted with by a single entity?
There is no limit to the number of contracted pharmacies. However, an entity should determine whether a potential pharmacy partner would offer improved access for patients.
How many locations can an entity have registered with the OPA?
There is no limit to the number of locations that can be registered with the OPA. It is important to register all relevant child sites – required for compliance with the 340B program.
What is an average transaction fee for a contracted pharmacy?
There is no set transaction fee schedule. Fees should be determined on an individual basis. The transaction fee should be based on the patient population and pharmacy drug mix, taking into consideration the steady increase of specialty drugs in the market. It should mirror the pharmacy’s average retail margin plus a small add-on for their services and can be a flat fee or percentage based. It is up to the pharmacy to substantiate their fee.