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340B and Managing Waste


Waste-Not, Want Not: How 340B Relates to “Topper Takes a Trip” (1938)

Welcome to the 340B Blog!  Today’s blog will detail how to incorporate expired or wasted drugs into your 340B purchases in a manner that maintains 340B compliance.  Moreover, the term ‘Waste-Not, Want-Not’ relates to the Topper Movie series, which I will explain for our Curmudgeon Coalition members at the end of the factual portion of this blog.

For now, though, saving money by using 340B to replenish wasted or expired drugs, when appropriate, is more important.

Although most of this applies more to DSH, CAN and PED facilities, some of these procedures may prove fiscally beneficial for other CE’s as well.

Some Creative Visualization

Either you’ve been there, or you can easily visualize it: 

Your infusion center is clear across campus.  You just started dispensing the latest and greatest (insert name here) therapy to your infusion center patients.  It takes about two hours from the time your staff gets the call to make the dose to delivery of the dose to the patient. 

Your facility is working on improving customer satisfaction.  Patients waiting two hours give low satisfaction scores.  So the infusion nurse calls your staff to make the dose before lab values are back.  Heck, this is better than last week, when they called before the patient arrived!  He isn’t supposed to do this, but his manager is eager to keep the patient happy. 

Your staff rushes to make the dose, courier services race it over, and a few minutes after it gets there, lab values come back and the patient can’t get the dose this week.  No one else can use the dose, and down the drain it goes, so to speak.  You just lost $15,674.32. 

Now let us add insult to injury.  Since the dose went undocumented in your split billing system, your buyer replaces it using the WAC account. This costs an additional $5,623.13.  All that work you did to reduce cost by $20,000 this month just went by the wayside.  And this happened three times in the last month, albeit with different drugs and situations. Ouch.

There are other examples as well.  The staff contaminates the dose, the dose gets lost for a day in the tube system, and this list could go on for hours.  Anyone working in hospitals more than a few years has a wealth of stories about waste.  Many are intensely frustrating, such as new and seemingly arbitrary short expiration dating on rebranded products.  I had better stop here before this blog takes on a completely new direction...


HRSA does not provide specific guidance on managing waste or expired drugs with 340B.  However, HRSA will accept 340B waste management procedures so long as they are defensible, consistent with your entities’ procedures, and part of your approved policies and procedures.  Implementing one or more of these processes will save your facility money.  We do not need to go into detail again about the causes for waste.  Here is how you can account for them and use 340B to replenish as appropriate, and maintain compliance.

Managing Wasted and Expired Medications

Patient Specific Doses

Many electronic medical record (EMR) systems allow documentation of waste or unused aliquots. These pass through the charge system as no-charge items, and a split appropriately in the accumulator. As you implement your procedures, be cautious to not ‘double dip’ and manually manage a drug already accumulated by your split billing system.

If your EMR does not track returned doses in this manner, you can record these returned drugs in a spreadsheet, then manually document this in your split billing software.  Key documentation elements are listed below in this article.

Note that manual processes have a higher risk of error than automated processes.  For this reason, be certain you document procedure clearly, that your staff is well trained, and that the procedure is audited regularly to ensure compliance.  

Although this procedure can save a substantial amount of money, it is time-intensive.  As such, some entities may choose to use this process on expensive medications, and not all medications.  So long as your Policies define the procedure, you will remain compliant.

Expired Medications

Expired drugs require more care in management, as they cannot be tracked to an eligible patients’ use. These require extra effort and expense.  For this reason, you may choose to apply this to specific products, or classes of products.  So long as this is spelled out in your Policies and Procedures, you are compliant.


Physically label the drug with the account.  If your staff consistently places the invoice labels on the product, you can replenish using this as your documentation methodology. Alternatively, your staff could use colored labels at the time of receipt, perhaps red for WAC, blue for GPO and green for 340B.  The downside to this method is that it is difficult to audit, and may be more risky than other methods.

Estimating purchases based on History.  You can tally the purchases of a product using Wholesaler reports and determine the relative percent of use by account.  You can then use this as a guide to manually split (and document) replenishment of expired drugs.  If this method is used, be careful to document the process and maintain a file with the documentation as per your P&P guidelines for record retention.

Physical inventory for selected areas. If you have ‘Pure’ areas, locations where all dispensing is exclusively outpatient, you can replenish using your 340B account.  You can also increase inventory in these areas without resorting to WAC.  Contact your CPS consultant for more information on this if needed.  Note that CE’s that Carve-OUT cannot consider these areas ‘Pure’, as WAC is required for all Medicaid Carve-Out dispenses.


We mentioned Documentation repeatedly.  Here is what is required:

Patient Specific Waste – maintain records of Date, Patient, Drug, Dose as well as any physical manipulation of the split billing software.  AUDIT this process no less than quarterly.

Physical labeling – maintain records of auditing the procedure and validation that it is being performed as defined by your P&P.

Purchase History Estimations – maintain copies of any document(s) used to estimate your calculated split between WAC/GPO/340B, as well as any manipulation of your split billing software.

Physical Inventory – I know of a situation where a CE went from carve-IN to carve-OUT.  They were using a physical inventory for their cancer center across town from the facility.  On audit they found duplicate discounts as they were using 340B on ineligible Medicaid patients.  Be certain your Carve-In/Carve-OUT status matches your ‘Pure’ definition.

Is it worth it?

Some CE’s consider that the effort reduces actual savings to the point this is not fiscally prudent.  Others consider that the risk makes this unfeasible.  This is likely an inappropriate view.

Although a comprehensive implementation to maximize 340B purchases for waste and expiration may be manpower intensive, more limited approaches for specific areas or specific drugs may be more financially feasible. 

It all depends on your own circumstances.  Take the time for a careful review.  If you need assistance in this review or in implementing a 340B Waste-Reduction Program, contact your Comprehensive Pharmacy 340B consultant.

And now for the Curmudgeons

Although phrases about Waste go back centuries, the phrase ‘Waste-Not, Want-Not’ is attributed to a character in the 1938 Movie ‘Topper Takes a Trip’.   I know: this is a weak link from 340B to the movie -- but it’s a link!

I cannot say all the ‘Topper’ movies are worth watching, but I suggest you watch the original ‘Topper’ to see Cary Grant in arguably his best role (outside of Gunga Din).  TCM plays the ‘Topper’ movies regularly.

As always, please contact your Comprehensive Pharmacy Services Compliance team for any questions or support.


Posted: Friday, December 20, 2019

Tags: 340B, CPS Blog Posts, 340B Waste, Managing Hospital Pharmacy Waste