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Ask the Expert: Developing Written Guidelines for the Use of 340B Savings

November 2015 - Vol.12 No. 11 - Page #42

Why should a covered entity develop written guidelines for the use of 340B savings?

The 340B drug-pricing program requires drug manufacturers to provide outpatient drugs to eligible health care organizations/covered entities at significantly reduced prices. The program enables these organizations to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.1 The Health Resources and Services Administration (HRSA) intends that entities use the 25% to 50% savings on outpatient drug purchases realized through the 340B program to improve or expand access to pharmaceuticals and increase services that benefit patients, principally low-income, uninsured, and underinsured populations.2

Developing written guidelines for the use of 340B savings is vital to protect the integrity of the program and its intentions, to keep the program viable, and to avoid sanctions for non-compliance. The director of pharmacy, in alignment with the organization’s C-Suite, and particularly the chief financial officer, should be involved in creating these guidelines. In addition, because 340B savings is a finance issue, guidelines should be discussed and approved by the covered entity’s finance committee.

Ensuring Transparency
Appropriate 340B program management requires a high level of transparency. In 2014, the American Society of Clinical Oncology recommended that HRSA, Congress, and policymakers promote transparency and accountability in the 340B program by requiring covered entities to provide an annual comprehensive account of the amount of savings and the percentage of savings reinvested into providing services for uninsured and underinsured patients, as well as patients receiving Medicaid.3 This increasing demand for transparency necessitates that written guidelines and 340B policies and procedures are approved at the Board of Commissioners’ appointed-committee level, which demonstrates that the entity values the program, is committed to maintaining the integrity of the program, and intends to use the benefits of the program to better serve the community.

Uses for 340B Savings
Acceptable uses for 340B savings include4:

  • Meaningful charity care
  • Diabetes education
  • Assistance to indigent patients
  • Acquiring and/or upgrading technology
  • Providing assistance to programs that would not be feasible without the 340B program
  • Clinical pharmacy programs for medication adherence and medication management
  • Sliding fee discounts

Uses that are self-serving, such as monetary incentives for employees or purchases of services that do not directly benefit patients, should not be part of the 340B savings guidelines, and may be a potential compliance concern in the event of an audit.

Developing a 340B Savings Statement
There are three arms to the 340B program: the Office of Pharmacy Affairs (OPA), the Pharmacy Services Support Center (PSSC), and the 340B Prime Vendor Program.2 Apexus, the HRSA-designated prime vendor for the 340B drug-pricing program, assists 340B entities in accessing the lowest 340B prices on covered outpatient drugs. In addition, Apexus provides education and technical assistance to stakeholders, supporting their management of 340B-compliant operations. The 340B Prime Vendor Program (PVP) is managed by Apexus through a contract awarded by HRSA, the agency responsible for administering 340B.

Apexus provides 340B-covered entities with a useful tool, designed to provide a framework to help guide the written documentation of 340B savings. Entities should address several issues prior to drafting their own statement documenting the use of 340B savings.5

  • Write the mission of your organization
  • Compare it with the intent statement for the 340B program: The 340B program enables covered entities to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.
  • List the benefits (eg, products, programs, services, staff, etc) 340B enables the organization to offer. Also consider which programs likely would cease if 340B no longer existed. Determine the approximate dollar value of each benefit to the entity and the entity’s patients.
  • How much does participation in 340B save or provide to the entity and its patients each year?

Compile a list of activities undertaken as a direct result of 340B participation, and assign an approximate annual value to the entity and its patients for each activity,5 for example:

  • Subsidized prescriptions via sliding fees ($X)
  • Clinical services provided to approximately X patients ($X)
  • Administrative support provided for manufacturers’ patient-assistance programs ($X)
  • Operating expenses provided for outpatient/free clinic pharmacy ($X)
  • Administrative and clinical support provided for medication therapy management ($X).

Based on this information, Lady of the Sea General Hospital developed written documentation on the uses of 340B savings (see SIDEBAR).

The 340B drug-pricing program helps organizations save considerable resources and improve access to care for underserved patients. Although the program has proven critical to countless organizations, a high level of transparency and accountability are required to ensure an entity’s continued access. Creating a 340B savings use statement is a simple step that helps organizations demonstrate their commitment to compliance.


  1. US Department of Health and Human Services. Health Resources and Services Administration. 340B Drug Pricing Program. Accessed October 2, 2015.
  2. Scholz L. US Department of Health and Human Services. Health Resources and Services Administration. 340B Drug Pricing Program. HRSA Pharmacy Services Support Center: The 340B Access Resource. Accessed October 5, 2015.
  3. American Society of Clinical Oncology. Policy Statement on the 340B Drug Pricing Program by the American Society of Clinical Oncology. Accessed October 2, 2015.
  4. US Department of Health and Human Resources. HRSA Health Resources and Services Administration. 340B Drug Pricing Program: Contract Pharmacy Oversight. Office of Pharmacy Affairs Update. Accessed October 13, 2015.
  5. 340B Prime Vendor Program. 340B University: 340B Benefits and the Use of 340B Savings Documentation Tool. Accessed October 2, 2015.

Lloyd J. Guidry, Jr, PharmD, RPh, is the director of pharmacy and chief operations officer at Lady of the Sea General Hospital in Cut Off, Louisiana. He received a BS in pharmacy from the University of Louisiana at Monroe and a doctor of pharmacy degree from the University of Florida.


Lady of the Sea General Hospital Statement of 340B Program Intent: Use of 340B Savings
Lady of the Sea General Hospital is committed to using the savings from the 340B program to invest in maintaining, improving, or expanding access to pharmaceuticals and/or other patient care services that benefit patients, in particular low-income, uninsured, and underinsured populations.

  1. Lady of the Sea General Hospital maintains a meaningful charity care policy, under which qualifying indigent patients receive medically necessary health care services, medications, and pharmacy support services for free or at minimal cost. 340B savings will be used to expand the charity budget of gross hospital inpatient and outpatient charges.
  2. Lady of the Sea General Hospital provides diabetes education to newly diagnosed and existing diabetic patients. 340B savings will be used to expand the diabetes education program and offer this education at a nominal charge.
  3. Lady of the Sea General Hospital will establish a fund to provide medications for indigent inpatient discharges, in order to affect improved outcomes and lower readmission rates.
  4. 340B program savings shall be used to acquire new technology, upgrade current technology, and re-invest in current facilities to support patient care services.


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