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Bad Mouthing 340B by PhRMA, Proving Them Wrong

Quasi-intellectual quote of the week:

Good Intentions never change anything. They only become a deeper and deeper rut.  Joyce Meyer.

Big Money

Healthcare represents BIG Dollars in a BIG way.  Just look at this website which is shown in the graphic below.

Over $13,000,000,000, really almost $14,000,000,000 in our tax money is spent JUST on active grants for healthcare.  There is more money spent on healthcare in this country than most of us can visualize.  Total dollars spent on prescription drugs in the US accounts for over $425,000,000,000 (2016).  Consider that 340B impacts a fair percentage at an estimated $12,000,000,000 in discounts. This represents about 2.8% of the total drug spend in the U.S.

2.8%? So Why is PhRMA so upset about 340B?

2.8% is a significant amount of money for PhRMA ($12,000,000,000).  Translate that to bonuses...

So PhRMA actively works to discredit not only 340B, but hospitals in general for what they call misuse of 340B discounts.  How do they do it? 

  1. Misinformation – a substantial number of articles speak to use of 340B for fully insured patients, or for charging patients full price for 340B prescriptions.
    1. The original intent of 340B was to provide $$ to facilities to expand indigent/charity care. It’s not intended to directly save patient $$, but it can be used that way.
    2. Hospitals with high disproportionate care for unpaid (indigent) patients use the savings to fund charity programs and expand their scope of care.
  2. Undermine and demonize hospitals with financial reserves. “Why do they need 340B?” PhRMA queries.
  3. Convince Congress that 340B needs ‘Reform’, which is another word for ‘eliminated’, as PhRMA shows hospitals ‘Game the System’.
  4. Go back to NO discount and regain the desperately needed $12,000,000,000 for the poor, under funded American Pharmaceutical companies.


I apologize in advance for the soapbox approach to this week’s Blog.  It’s just that sometimes I get frustrated when I visit a Critical Access Hospital trying to make any profit to keep the doors open, and reconcile that to a pharmaceutical company working to find ways to mask excess revenue for tax purposes.

What does this mean to me?

So what should you do at the hospital level?

  1. AVOID VIOLATIONS (more below)
  2. Be sure that at a minimum your legislators know how you use 340B savings.
  3. Work with your Public Relations department on
    1. Developing stories about individual patients who were treated free, and likely used savings from 340B for the free care.
    2. Visit with your Congressmen and Senators and explain how important 340B is to your community.
  4. Publicize the positive benefits of 340B savings.
  5. Be ABSOLUTELY POSITIVELY CERTAIN that you adhere to all 340B rules, and avoid violating the rules.

Top Ten 340B Violations

  1. Incorrect 340B Record – CE did not have the Child Site properly documented.
  2. Duplicate Discount – CE did not have the NPI listed properly.
  3. Diversion – ineligible child site
  4. Diversion – unlisted child site
  5. Diversion – child site improperly listed
  6. Diversion – accumulator error
  7. Failure to provide Contract Pharmacy Oversight
  8. Incorrect OPA record – wrong child site listing
  9. Contract Rx written at ineligible site
  10. Wrong address of child site

How to avoid a Violation

So what can you do to avoid one of these violations?

  1. Internal Audits (can I print this BIG ENOUGH?)
    1. Validate
      1. Provider
      2. OP Status
  • Location where the Rx was written
  1. Payer not Medicaid if Carved-Out or Contract Rx
  1. OPA Website data is accurate
    1. Quarterly, please.
  2. Oversight Committee
    1. Review all 340B activities at least quarterly.
    2. Explore opportunities for 340B
  3. Maintain the Split billing software
    1. Are all drugs matched at the 11 digit NDC level?
    2. Are providers updated?
    3. Do the locations link properly to OP or IP, or WAC/GPO/340B?
    4. Are there unmatched records? (fix them)
  4. Review the OPA website Quarterly

I started off with a QUOTE. . .

I started this blog with a quote about good intentions.  I did that for a reason.  I earned my pharmacist license in 1975, and practiced pharmacy for 42 years now.  I worked as a Director of Pharmacy for about 28 of those years, and I fully understand the pressures and time restraints a DOP endures.  I sat in the DOP chair and intended to do my internal audits, etc., but found sufficient reason to postpone them due to crisis that can tie up the bulk of your week: Next budget cycle, a patient complaint/issue, a nursing problem, a physician angry about a formulary decision.

I also remember sitting across from a conference table from HRSA auditors and realizing that our failure to properly audit contract pharmacies was as big of a crisis as that angry physician.  But I realized it too late.


Don’t let unrealized good intentions about 340B compliance put you into a corner.  Make the time to be sure your program is compliant.  Think of it the same way you think of the Pharmacy Board, CMS and Joint Commission.  It may not be in your face demanding attention every day, but when it does, it will generate immediate and instant regret if you’ve not paid it the attention it deserves.

Good Intentions

Consider Joyce Meyer’s quote. Don’t let your good intentions become a rut!


Posted: Saturday, August 29, 2020

Tags: CPS Blog Posts