Covered entities must first enroll in the 340B Program. HRSA assigns the covered entity an identification number upon enrolling in the program. Drug manufacturers use this number to verify the covered entity is allowed to purchase 340B purchased drugs. In addition, each covered entity must designate with HRSA whether it will use 340B discounted drugs and the 340B pricing to bill Medicaid.

HRSA does not specify how covered entities should implement 340B. If the covered entity complies with all 340B Program requirements, it can implement its 340B procedures. Most covered entities choose one or more of the following options to provide outpatient drugs to their clients:

• In-house pharmacy: the covered entity owns drugs, pharmacy, and license; purchases drugs; is fiscally responsible for the pharmacy; and pays the pharmacy provider.
• Contract pharmacy services: the covered entity owns drugs, purchases drugs, pays (or arranges for clients to pay) dispensing fees to one or more contract pharmacies, and contracts with a pharmacy to provide pharmacy services. Refer to Contracted Pharmacies for more information on this process.
• Provider/In-house dispensing: 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.