operation, the 340B Program now has its share of the limelight, and whether
that is a benefit or a detriment to various stakeholders remains to be seen.
B. Who are Covered Entities?
Section 340B identifies covered entities as disproportionate share
hospitals, community health centers, and various other safety net providers,
under a detailed list. 28 These providers include twelve categories of state,
local, and private nonprofit entities that receive government funding to
provide health care to the underserved. 29 Covered entities generally fall into
one of two types of providers – clinics that receive federal grants, known as
“grantees,” and select hospitals. 30 Grantees include community health
centers, Ryan White Act31 grantees that provide HIV/AIDS services, state-operated AIDS drug assistance programs (ADAPs), urban Indian clinics,
homeless clinics, and hemophilia diagnostic treatment centers, among
others. 32 Hospitals include disproportionate share hospitals, children’s
hospitals, and cancer hospitals, among others. 33
In order to participate in the 340B Program, a covered entity must not just
qualify but also must register with OPA. Upon enrollment, OPA requires
covered entities and manufacturers to certify that they will comply with 340B
requirements and associated agency guidance. 34 Additionally, as noted
above, covered entities must now recertify annually. 35
The number of 340B covered entity sites has grown steadily since the
beginning of the Program. A GAO report noted that in 2001 there were 8,605
covered entity sites. 36 According to one study, the 340B Program stood at
over 12,000 covered entities in 2007.37 In 2011, the GAO reports there were
16,572 covered entity sites. 38 By 2013, over 1,100 covered entities were
community health centers. 39 The GAO study reports hospitals’ participation
28. § 256b(a)( 4).
31. Ryan White Comprehensive AIDS Resources Emergency Act, Pub. L. 101-381, 104
Stat. 576 (1990).
33. Id.; § 7101, 124 Stat. at 821.
34. GAO 2011 REPORT, supra note 8, at 21.
35. 42 U.S. C. § 256b(a)( 7)(E) (2010).
36. GAO 2011 REPORT, supra note 8, at 8.
37. Krista Werling et al., The 340B Drug Pricing Program: An Opportunity for Savings,
if Covered Entities Such as Disproportionate Share Hospitals and Federally Qualified Health
Centers Know How to Interpret the Regulations, 34 J. HEALTH CARE FIN. 57, 57 (2007)
[hereinafter Werling Article].
38. GAO 2011 REPORT, supra note 8, at 8.
39. MARY K. WAKEFIELD, DEP’T OF HEALTH AND HUMAN SERVS., OFFICE OF INSPECTOR
GEN., OEI-05-13-00431, MEMORANDUM REPORT: CONTRACT PHARMACY ARRANGEMENT IN