spending for the majority of the 340B Program’s history until Congress
appropriated funding for the Program for the first time in 2009.20 At this
time, Congress called for an assessment of the 340B Program, which resulted
in two key 2011 reports: a June 2011 Office of Inspector General (OIG)
report focused on duplicate discounts and a September 2011 U.S. General
Accounting Office (GAO) report focused on lax government oversight, both
of which will be discussed further below. 21 In 2010, under the ACA,
Congress added 340B Program requirements and opportunities. 22
Through the ACA, Congress imposed additional oversight and
transparency obligations on HRSA, specifically directing HRSA to create a
formal dispute resolution procedure, institute refund and civil penalty
systems, and perform audits of both covered entities and manufacturers. 23
The ACA added a requirement for covered entities to recertify annually. 24 In
turn, covered entities gained nondiscrimination protections under the ACA,
which specifically barred manufacturers from discriminating against covered
entities in the sale of 340B drugs. 25 Simultaneously, Congress expanded the
340B Program under the ACA by expanding the hospital sector of covered
entities to include cancer centers and other non-profit hospitals focused on
especially vulnerable patients. 26 The ACA enhanced HRSA’s enforcement
authority, and money for enforcement actions soon followed through
Congressional appropriation bills. 27 After nearly two decades of stealth
proposed covering inpatient drugs but died in committee. S. 1376, 110th Cong. § 3 (2007).
20. See Omnibus Appropriations Act of 2009, Pub. L. No. 111–008, 123 Stat. 763 (2009);
see also William von Oehsen et al., The 340B Drug Discount Program: A New Era of
Enforcement and Oversight, 5 J. OF HEALTH & LIFE SCI. L. 72, 86 (2012) [hereinafter von
Oehsen Article].
21. See DEP’T OF HEALTH AND HUMAN SERV., OFFICE OF INSPECTOR GEN., OEI-05-09-
00321, STATE MEDICAID POLICIES AND OVERSIGHT ACTIVITIES RELATED TO 340B-PURCHASED
DRUGS 14 (2011), http://oig.hhs.gov/oei/reports/oei-05-09-00321.pdf [hereinafter OIG 2011
REPORT]; GAO 2011 REPORT, supra note 8, at 21–32.
22. See The Patient Protection and Affordable Care Act, Pub. L. No. 111–148, § 7101,
124 Stat. 821 (2010).
23. See 42 U.S. C. § 256b(d) (2010).
24. § 256b(a)( 7)(E).
25. See § 256b(a)( 1) (requiring a “ceiling price” which prohibits drug manufacturers from
offering different prices to covered entities).
26. See § 7101(a), 124 Stat. at 821–22 (stating entities that became eligible for the 340B
Program through ACA include certain critical access hospitals, sole community hospitals,
rural referral centers, and freestanding cancer hospitals). To be eligible for the 340B Program,
rural referral centers and sole community hospitals must have a disproportionate share hospital
(DSH) adjustment percentage that is equal to or greater than 8 percent, and DSH, children’s,
and free-standing cancer hospitals must have a DSH adjustment percentage that is greater than
11. 75 percent. Id. Although children’s and free-standing cancer hospitals do not receive
payments under the Medicare inpatient prospective payment system, they must have a payer
mix that would result in a DSH adjustment percentage of greater than 11. 75 percent. GAO
2011 REPORT, supra note 8, at 9 n. 25.
