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HRSA highlights 340B contract pharmacy arrangements

If your hospital participates in the 340B program and utilizes contract pharmacy arrangements, you may want to review your compliance measures. The Health Resources Services Administration, the agency responsible for oversight of the 340B program, recently published a program update highlighting the importance of adequately overseeing contract pharmacy arrangements.


In the program update, HRSA noted that only 20 percent of entities enrolled in the 340B program have an arrangement with a contract pharmacy. Furthermore, within that small group, the majority – 75 percent – have fewer than five of these arrangements. These figures are eye-opening since HRSA uses a risk-based audit selection strategy and use of contract pharmacies is one risk factor considered when determining whether a covered entity poses high risk to the program.


Ensuring program compliance
It is important to note, HRSA stated it will bar participation of contract pharmacy arrangements if they lack the appropriate level of oversight, as this would be a violation of the program’s requirements. Contract pharmacy arrangements require more vigilant oversight due to their complex compliance requirements despite their small population within the 340B program. HRSA’s update serves as a reminder of this fact as well as your responsibility to ensure that your contract pharmacy agreements are compliant.


If you want to mitigate the risk of non-compliance resulting in negative consequences – including fines, adverse findings or expulsion from the program – review and stick to the following five requirements for 340B contract pharmacy oversight:

  • Be sure to conduct independent annual audits and/or confirm that you have adequate oversight of your contract pharmacy arrangements;
  • Develop written 340B policies and procedures involving contract pharmacy oversight, ensure that your records are auditable and register all of your contract pharmacies on the 340B database;
  • Check that all of your 340B data is current and accurate;
  • Make certain that you’re only issuing 340B drugs to eligible patients; and
  • Carve out Medicaid patients or collaborate with the State to prevent your contract pharmacy arrangements from resulting in duplicate discounts.

LaPorte CPAs & Business Advisors’ Healthcare Advisory Services Group specializes in 340B compliance issues. If you have questions or would like to discuss an assessment of your 340B program, please contact Senior Manager Jason McNeil, Healthcare Advisory Services, at [email protected] or 504.838.4875.