Virtue 340B Covered Entities

340B Covered Entities and Eligibility for the 340B Drug Pricing Program

340B covered entities are hospitals, health centers, and federal grantees that meet the eligibility categories set by the 340B Drug Pricing Program. The program, administered by HRSA, allows eligible organizations to purchase covered outpatient drugs at a discount. We help covered entities understand the compliance work that follows participation and find the support that fits their program.

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Which Organizations Qualify as Covered Entities

The 340B program does not use a broad definition of “healthcare organization.” Under the 340B statute, your entity must fall within an eligible category and maintain the information HRSA requires.

Eligible covered entities include:

HRSA’s Office of Pharmacy Affairs manages the program through OPAIS, the Office of Pharmacy Affairs Information System, where covered entities handle registration and eligibility information.

Responsibilities After You Enroll

A 340B account lets an eligible organization buy 340B drugs, but it does not remove the need for controls. Covered entities must be able to support their drug purchases, patient eligibility, and dispensing records when questions arise.

Under the 340B statute, the two core risks are diversion and duplicate discounts.

Diversion

Diversion means dispensing a 340B drug to someone who is not a patient of the covered entity.

Duplicate Discounts

A duplicate discount happens when a manufacturer discount and a Medicaid rebate apply to the same drug purchase.

Manufacturers have also placed restrictions on contract pharmacy arrangements in recent years, which adds another layer covered entities have to track.

How the 340B Discount Is Set

The 340B ceiling price, sometimes called the federal ceiling price, is the maximum statutory price manufacturers may charge for covered outpatient drugs. It is tied to the average manufacturer price and the unit rebate amount under the Medicaid Drug Rebate Program.

The program exists so eligible organizations can stretch scarce federal resources and reach more patients. The discount only works as intended when the entity can show that its participation meets 340B program requirements.

Prime Vendor Program

The Prime Vendor Program, administered by Apexus, is separate from our work. It supports program participants with negotiated pricing and other resources. It does not replace a covered entity’s responsibility for its own 340B program.

Size and Setting Change What You’re Managing

Health systems and large hospitals

For multi-site programs coordinating more data sources, pharmacy relationships, and internal stakeholders

Learn How We Help Health Systems and Large Hospitals

Rural hospitals

For pharmacy leaders balancing 340B oversight with other operational responsibilities

Learn How We Help Rural Hospitals

Federally qualified health centers and grantees

For FQHCs, Ryan White providers, and other grantees managing both 340B requirements and federal grant accountability

Learn How We Help Federally Qualified Health Centers and Grantees

How Virtue 340B Helps

We provide independent audits, continuous program monitoring, and consulting for organizations operating in the 340B Drug Pricing Program. Our audits are performed independently of your existing vendors and TPAs. Continuous monitoring runs on a quarterly cycle, with each review rotating through a different focus area of your program.

Our work is led by founder Edward Vargas, a Certified Internal Auditor.

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If you are deciding what kind of help your program needs, learn about all of our 340B services here. If you already know your program needs an independent review or ongoing support, book a consult to discuss the right next step.

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Frequently Asked Questions

What do we manage in OPAIS once we're eligible?

What happens if HRSA finds a problem during our audit?

How does the 340B program prevent double-dipping with Medicaid rebates?

Under the 340B statute, a manufacturer can’t apply both a 340B discount and a Medicaid rebate to the same drug purchase, since that would let the discount happen twice. This is why covered entities have to track which purchases are 340B and which are billed through Medicaid under the Medicaid Drug Rebate Program. Getting that separation wrong is what creates a duplicate discount finding.

What are 340B manufacturer restrictions on contract pharmacies?

340B manufacturer restrictions are limits some drug manufacturers place on which contract pharmacies a covered entity can use for 340B dispensing. Manufacturers have added these restrictions in recent years, and they change, so a restriction that applies today may not be the one that applied last year. Tracking which manufacturers are participating and what restrictions apply is part of keeping your covered entity’s program current.

Is an independent audit a one-time review, or does it continue afterward?

An independent audit is a point-in-time review of your program’s utilization records, patient eligibility, dispensing practices, and adherence to HRSA requirements. If you want ongoing coverage after that, we also offer continuous program monitoring, which runs on a quarterly cycle and reviews a different focus area of your program each quarter. The two are structured differently: one gives you a snapshot, the other keeps checking.

Is the 340B discount the same thing as a rebate?

No. The 340B discount lowers the price a covered entity pays at the point of purchase, up to the statutory ceiling price set from the average manufacturer price and unit rebate amount. A Medicaid rebate works differently: it’s paid back to Medicaid after the fact, on drugs billed through Medicaid rather than 340B. Mixing the two up is exactly what creates a duplicate discount problem.

What are 340B covered entities?

Can a hospital participate in the 340B program because it serves low-income patients?

Who is a 340B patient?

Patient status under a covered entity is something the organization has to support with records, not something that applies automatically to everyone who receives care. Under the 340B statute, dispensing a 340B drug to someone who isn’t a patient of the covered entity is what creates a diversion finding. The organization must be able to show its dispensing meets the program’s patient requirements when questions arise.