prescriber eligibility and patient eligibility.206 From an operational
standpoint, the pharmacy will not agree to independently verify the identity
of every prescriber and patient but needs to be able to rely on this information
that the covered entity provides.207 A covered entity must verify that it is
authorized: ( i) to purchase prescription medications at reduced cost through
the 340B Program for its patients; and ( ii) to contract with a licensed
pharmacy to managed and dispense such drugs.208 Importantly, it is the
covered entity’s responsibility to inform patients that they are free to choose
their pharmacy, while having the ability to advise patients of possible
discounts through 340B pharmacy locations.209
340B contract pharmacy agreements are typically set up as “ship to, bill
to” arrangements.210 Under these arrangements, the drug wholesaler will bill
the covered entity and ship to the pharmacy.211 These arrangements are
expressly considered and approved in the 2010 HRSA guidance.212 To
effectuate a compliant “ship to, bill to” procedure, covered entities must
establish a reliable replenishment process with the wholesaler so that the
pharmacy is not left without its proper stock, which risks leaving the covered
entity on the hook for paying the pharmacy a higher replenishment rate.213 It
is advisable to identify the approved wholesaler, or supplier, in an exhibit to
the agreement in advance of signing.214 Other exhibits to the agreement
should include an exhibit identifying prescribers and an exhibit identifying
pharmacy locations.215 The latter is required by HRSA policy. Specifically,
HRSA mandates that contract pharmacy agreements list every pharmacy site,
with specific address, that is covered by the agreement.216
In addition to the above, community health centers have added obligations
pursuant to Section 330. These include the requirement to offer eligible
206. Notice Regarding 340B Drug Pricing Program-Contract Pharmacy Services, 75 Fed.
Reg. 10272 (Mar. 5, 2010).
207. See id.
208. See id. at 10273.
209. See id.
210. See id. at 10277.
211. See id.
212. See id.:
A ‘ship to, bill to’ procedure is used in which the covered entity purchases the drug;
the manufacturer/wholesaler must bill the covered entity for the drug that it
purchased, but ships the drug directly to the contract pharmacy.  In cases where
a covered entity has more than one site, it may choose between having each site
billed individually or designating a single covered entity billing address for all
340B drug purchases.