would be false claims laws.123 A covered entity that diverts (or permits its
vendor to divert) 340B drugs to ineligible persons, or permits (intentionally
or unintentionally) unreasonable amounts of the revenue from the dispensing
of drugs to flow to the vendor instead of using it to further the purposes of
the 340B Program, arguably has made a false claim under federal law.124
The federal Anti-Kickback Statute may potentially be implicated by 340B
Program noncompliance.125 Under that statute, it is a criminal offense to
knowingly offer or accept anything of value in order to induce patient
referrals under a federal health care program.126 This statute almost invariably
comes into play in dealings involving health care providers. HRSA contract
pharmacy guidelines specifically warn against contract relationships that
could implicate the Anti-Kickback Statute.127
While criminal penalties are not within the scope of Section 340B, there
has been an occasion when a provider has faced criminal sanctions under
other laws for acts related to 340B drug diversion.128 In or around 2006, a
Pennsylvania physician was charged with violating the Prescription Drug
Marketing Act, which prohibits illegal wholesaling.129 He faced up to ten
years in jail, but his trial ended in a mistrial.130 The doctor entered a
settlement with the government under which he agreed to pay $565,000 in
fines while being allowed to continue his medical practice.131 This example
underscores the potential reach of the government in cases involving, but not
limited to, 340B Program violations.
In September 2011, the GAO published the results of its research into the
340B Program and found that HRSA had not been exercising appropriate
oversight.132 As a direct consequence of the GAO report, HRSA has
increased its random and targeted audits of both covered entities and drug
manufacturers.133 In Fiscal Year (FY) 2012, HRSA audited fifty-one
entities.134 Of the FY 2012 audits, forty-five were risk-based while six were
123. See, e.g., 31 U.S. C. § 3729 (2009), et seq.
125. See 42 U.S. C. § 1320a–7b (2010).
127. Notice Regarding 340B Drug Pricing Program, infra note 206, at 10279.
128. Werling Article, supra note 37, at 62.
133. HEALTH ANDRES. SERV. ADMIN., STAKEHOLDERSLETTER: PROGRAMINTEGRITY
(Feb. 10, 2012), http://www.hrsa.gov/opa/programrequirements/policyreleases/
134. HRSA Posts Some 340B Audit Results, AM. HOSP. ASS’N., (Fed. 18, 2013), http://