GPO (Group Purchasing Organization)
Definition
A Group Purchasing Organization (GPO) is an entity that aggregates the purchasing power of multiple healthcare organizations to negotiate volume-based discounts from drug manufacturers, distributors, and other suppliers. GPOs are widely used in the healthcare industry to reduce procurement costs.
In the 340B context, GPOs are subject to the GPO Prohibition, which prohibits certain hospital-type covered entities (DSHs, children’s hospitals, and free-standing cancer hospitals) from purchasing covered outpatient drugs through GPO or GPO-like arrangements. This prohibition exists to prevent these entities from receiving both GPO discounts and 340B discounts on the same drugs.
For covered entities subject to the GPO Prohibition, drug purchasing requires careful account management to ensure covered outpatient drugs are purchased through 340B accounts, not GPO accounts. Non-covered outpatient drugs (such as inpatient drugs) can still be purchased through GPO arrangements.
Frequently Asked Questions
Why GPO (Group Purchasing Organization) Matters
The GPO Prohibition is a significant compliance obligation for hospital-type covered entities. Purchasing covered outpatient drugs through GPO accounts when the entity is subject to the prohibition is a compliance violation. Proper purchasing account configuration and ongoing monitoring are essential.
How Virtue 340B Uses It
Virtue 340B evaluates GPO Prohibition compliance for hospital-type covered entity clients, reviewing purchasing account configurations and transaction data to ensure covered outpatient drugs are not being purchased through GPO arrangements.