Is Your 340B Program Compliant?

No matter which vendor you use to manage your 340B program or the content of your policies and procedures manual, the only way to verify that your program is functioning as it should is to engage in a regular internal audit process.

The recent OIG report on contract pharmacy arrangements (Contract Pharmacy Arrangements in the 340B Program, OEI-05-13-00431 dated February 4, 2014) focuses on certain challenges introduced by contract pharmacy arrangements.  The complexities of some of these arrangements may potentially add to instances of diversion and increased duplicate discounts to manufacturers, the report stated.  Concern about a lack of effective and consistent entity oversight was also a clearly stated message.

CDR Krista Pedley, Director of the Office of Pharmacy Affairs responded to the OIG report on February 5, 2014 stating that “vigilant oversight is critical.”  Commander Pedley went on to stress that “all covered entities are expected to conduct annual audits of contract pharmacies, performed by an independent auditor.”

Hudson Headwaters recommends that entities with contract pharmacy arrangements perform internal audits on random samples of prescriptions from each of their pharmacies on a frequent cycle throughout the year.  Quarterly audits of selected pharmacies, for example, will highlight potential issues and allow for correction before an entire year of activity has accumulated.  Results of internal audit findings and corrective action plans should be included in policy and procedure manuals for review by future auditors. This will illustrate the entity’s ongoing oversight of its contract pharmacy arrangements.

Attached to Commander Pedley’s memo is a table entitled 5 Requirements for 340B Compliance in Contract Pharmacy.  The first requirement listed is “Conduct independent annual audits and/or adequate oversight mechanism.”  Though independent audits by independent auditors are “expected”, other adequate oversight mechanisms are acceptable.

A 340B management services provider can be integral to your audit process by supplying records and the tools with which you can regularly monitor, track and audit your program.  You are responsible for your own compliance.  You have the most in-depth understanding of your patient population and prescriber arrangements. Regular internal auditing is the most effective way to know that your 340B program is working properly.

If you have any questions or comments about developing an effective internal audit process, and the tools provided by Hudson Headwaters 340B Solutions, please contact us at 1-855-835-340B or

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Hudson Headwaters 340B Pharmacy Services