Section 340B of the Public Health Services Act requires drug manufacturers to provide outpatient drugs to Health Resources Services Administration (HRSA) eligible healthcare organizations or covered entities at significantly reduced prices. This program enables covered entities to purchase drugs at a discounted price and use the remaining funds to provide services to more eligible patients and to provide more comprehensive services. This policy also allows insurers, including Medicaid programs, to share in the savings generated by the 340B Program.  Refer to the "340B Drug Pricing Program" at www.hrsa.gov/opa/.

1.1 Participation

To participate in the 340B Drug Pricing Program, eligible healthcare organizations/covered entities must register and be enrolled with the 340B program and comply with all 340B Program requirements.  When HRSA enrolls a covered entity, that organization is assigned a 340B identification number.  Drug manufacturers use this number to verify that organization is allowed to purchase 340B discounted drugs.  Covered entities must designate with HRSA whether 340B discounted drugs will be used to bill Medicaid.

HRSA does not specify how covered entities should implement the 340B Program. If they comply with all 340B Program requirements, they have flexibility in implementing the 340B Program.

Most covered entities choose one or more of the following options to provide outpatient drugs to their patients:

  • In-house Pharmacy, in which the covered entity owns drugs, pharmacy and license; purchases drugs; is fiscally responsible for the pharmacy; and pays pharmacy staff.
  • Contract Pharmacy Services, in which the covered entity owns drugs; purchases drugs; pays (or arranges for patients to pay) dispensing fees to one or more contract pharmacies; and contracts with pharmacy to provide pharmacy services.
  • Provider/In-House Dispensing, in which the covered entity owns drugs; employs providers licensed in the state to dispense; holds a license for dispensing for the participating providers; and is fiscally responsible for operating and dispensing costs.

1.2 Annual HRSA Recertification

HRSA requires 340B covered entities to annually recertify their eligibility to remain in the 340B Drug Pricing Program and continue purchasing covered outpatient drugs at discounted 340B prices.  When recertifying, please be sure that both the entity’s National Provider Identifier (NPI) and Texas-issued Medicaid vendor number are included in the HRSA database.  If the covered entity is sharing the 340B savings with Medicaid (both fee-for-service and managed care) please ensure that the covered entity has answered 'YES' to the Medicaid Billing question 'Will you bill Medicaid for drugs purchased at 340B prices' and verify that the entity is also listed on the HRSA quarterly 'Medicaid Exclusion' file.