340B Litigation & Regulatory Compliance

With our specialized and in-depth experience in Pharmacy Law, Frier Levitt is uniquely positioned to represent Section 340B covered entities and their in-house contract pharmacies participating in the Federal 340B program.

The 340B Drug Discount Program, which is administered and monitored by the Office of Pharmacy Affairs under the Health Resources and Services Administration (HRSA), requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and covered entities at significantly reduced prices. 340B covered entities, including hospitals such as critical access and disproportionate share hospitals, rely on revenue and savings from the 340B program to fund their charitable activities including the provision of quality medical care to the indigent and uninsured. Congress intended that savings from the 340B drug program enable covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.’” H.R. Rep. 102-384, pt. 2, at 12 (1992). Put another way, a fundamental aim of 340B is to permit 340B providers to “provide direct clinical care to large numbers of uninsured Americans” regardless of their ability to pay.

340B healthcare organizations and covered entities may elect to provide outpatient drugs as a service of their own, commonly referred to as an in-house pharmacy. Additionally, many 340B eligible healthcare organizations and covered entities elect to dispense 340B drugs to patients through contract pharmacy services, an arrangement in which the 340B covered entity signs a contract with a pharmacy to provide pharmacy services. These pharmacies may include independent pharmacies, community retail pharmacies, chain-based pharmacies, and specialty pharmacies. In turn, these contract pharmacies are typically required to remit the insurance reimbursement received from payors to the covered entities. The difference between the 340B-discounted price from the manufacturer and the market-rate reimbursement from payors is the “savings” that covered entities generate from the 340B program to be used for charitable care.

However, covered entities are often in the dark due to the opaque and complicated process used by contract pharmacies and their third-party administrators (TPAs) to determine which patients and drug claims are 340B-eligible. It is thus imperative that covered entities audit their contract pharmacies and confirm that all insurance reimbursements for 340B drug claims are being properly passed along to the covered entities. Frier Levitt assists covered entities conduct comprehensive audits pursuant to their contract pharmacy services agreements to identify and recoup any underpayments.