Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
D 340B D
EFICIENCIES IN THE  RUG 
D P  D
ISCOUNT  ROGRAM S  ATABASE 
Inspector General 
June 2004 
OEI-05-02-00071  Office of Inspector General
 
http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs. This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and oper ations in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout the department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management 
and program evaluations (called inspections) that focus on issues of concern to the 
department, the Congress, and the public. The findings and recommendations contained 
in the inspections reports generate rapid, accurate, and up-to-date information on the 
efficiency, vulnerability, and effectiveness of departmental programs.  The OEI also 
oversees State Medicaid fraud control units, which investigate and prosecute fraud and 
patient abuse in the Medicaid program. 
Office of Investigations 
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers. The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations. The OCIG imposes program exclusions and 
civil monetary penalties on health care providers and litigates those actions within the 
department. The OCIG also represents OIG in the global settlement of cases arising 
under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops model compliance plans, renders advisory opinions on OIG sanctions to the 
health care community, and issues fraud alerts and other industry guidance.  '''''C''. 
DEPARTMENT OF HEALTH &. HUMAN SERVICES 
Office of Inspector General 
.(i' "J(J  Washington , D. C. 20201 
2004 
JUN  1 4 
TO:  Elizabeth M. Duke, Ph. 
Administrator, e Ith Res  nd  ces Administration 
FROM: 
George Grob 
Assistant Deputy Insp ctor General 
for Evaluation an nspections 
SUBJECT:  OIG Final Reports: "Appropriateness of 340B Drug Prices 
OEI -05-02-00070 
Deficiencies in the 340B Drug Discount Program s Database 
OEI -05-02-00071 
The attached final inspection reports focus on the administration of the 340B Drug
Discount Program. We conducted these inspections because of concerns about the 
appropriateness of prices that 340B covered entities are paying for outpatient drugs 
and the efficiency of the program s administration. 
Appropriateness of 340B Drug Prices  (OEI-05-02-00070) reveals that entities
participating in the 340B Drug Discount Program did not receive the correct 
discount for 31 percent of sampled drug purchases made in September 2002. Based 
on this sample, we estimate that 340B entities spent $41.1 milion more that month 
on prescription drugs. The Health 
Resources and Services Administration (HRSA)
does not have a process for ensuring that entities enrolled in the program receive the 
appropriate discount. Moreover, entities do not have information needed to verify 
that they pay the statutory price. Lastly, there is no match of HRSA' s 340B ceiling
price data to the manufacturers' data to detect and resolve discrepancies upfront. 
To improve the integrity of the 340B program, HRSA should spot check entity-level 
transactions. HRSA should also seek legislative authority to establish penalties for 
violations of the Public Health Service Act (PHS Act). We also recommend that 
HRSA provide entities with data to approximate their discount. Finally, HRSA
should verify their 340B prices against the manufacturers
' prices. 
In the agency response, HRSA agreed with the objectives of our recommendations. 
HRSA stated it is considering a number of activities in an effort to achieve 
systematic monitoring of manufacturer compliance with the pricing formula in the 
340B statute. We look forward to receiving the results of these efforts. HRSA 
does 
not support our final recommendation to develop a legislative proposal to establish 
penalties for violations of the 340B statute at this time, and prefers to evaluate the
impact ofthe ultimate action plan before taking legislative action. We understand  Page 2 - Elizabeth M. Duke , Ph. 
this approach, but believe that the abilty to impose fines and civil penalties is
essential in ensuring that entities receive the full 340B discount. 
Deficiencies in the 340B Drug Discount Program's Database  (OEI-05-02-00071)
found that the poor qualty of the Pharmacy Mfairs Branch' s database interferes 
with the successful administration of the 340B Drug Discount Program. The
database s quality is deficient in three ways. First, 38 percent of our sampled
entities were listed as enrolled in the 340B database, but reported not participating
in the program. Second, the addresses for 43 percent of sampled entities from the
340B database were incorrect. Third, the 340B database also excludes essential 
billing and shipping information needed to 
verif a shipment's destination. 
According to interviews with nine major pharmaceutical corporations, incorrect
information contained in the database undermines their efforts to prevent ilegal 
sales of discounted products to ineligible entities. 
To improve the integrity of the database, HRSA should develop a strategic plan to 
better manage the 340B program data. We suggest HRSA's plan include: (1) a
revalidation of all current information in the database; (2) an annual recertification
process for entities participating in the discount program; (3) a separate listing of 
newly added or deleted entities; (4) a standard reporting format for entities 
addresses; and (5) an additional field to designate entities with contracted pharmacy 
arrangement. 
HRSA' s comments describe the action already taken to improve the integrity of the 
340B database, but mention the impact budgetary limitations have on the agency 
ability to commit to a timetable for full implementation. We encourage HRSA to
optimize its Pharmacy Services Support Center contract as a means to 
move toward 
complete action. Concurrently, we anticipate that HRSA wil determine  Federal 
if a 
Recister notice to announce a new annual certifcation requirement is necessary. 
Please send us your final management decision, including any action plan, as
appropriate, within 60 days. If you have any questions, please do not hesitate to call
me or one of your staff may contact Elise Stein, Director, Public Health and Human 
Services Branch, at 202-619-2686 or through e-mail (Elise.stein  oig.hhs.govl To 
faciltate identification, please refer to report numbers OEI -05-02-00070 and 
OEI -05-02-00071 in all correspondence. 
2 Attachments

Final Report - "Appropriateness of 340B Drug Prices " OEI -05-02-00070

Final Report - "Deficiencies in the 340B Drug Discount Program s Database

OEI -05-02-00071   A B S T R A C T 
  
Section 340B of the Public Health Service Act (the PHS Act) created the 
340B Drug Discount Program to lower drug prices for over 10,500 
entities, including community health centers, public hospitals, and 
various Federal grantees. The Health Resources and Services 
Administrations (HRSAs) Pharmacy Affairs Branch (PAB) administers 
the program for the 10,500 enrolled entities, estimated to spend $3.4 
billion on drugs in 2003. 
The PHS Act required PAB to maintain an electronic listing of all the 
entities enrolled in the 340B discount. Pharmaceutical manufacturers 
refer to the listing to verify entities eligibility for the discount and to 
ensure that their drugs are only shipped to legitimate sites. Due to the 
importance of the database, we reviewed the quality and timeliness of 
its information. 
We found that the poor quality of the Pharmacy Affairs Branchs (PAB) 
database interferes with the successful administration of the 340B Drug 
Discount Program. Thirty-eight percent of our sampled entities were 
listed as enrolled in the 340B database, but reported not participating 
in the program. The database also had incorrect addresses for 43 
percent of sampled entities. We also found that the database does not 
provide essential information on the entities billing and shipping 
arrangements. According to interviews with nine major pharmaceutical 
corporations, the extent of incorrect addresses listed in the database 
hinders their ability to effectively identify entities eligible for the 
discount program. 
We recommend that HRSA develop a strategic plan for improved 
management of the 340B database. We suggest this plan include: 
(1) a revalidation of all current information in the database (2) an 
annual recertification process for entities participating in the 
discount program (3) a separate listing of newly added or deleted 
entities (4) a standard reporting format for entities addresses and 
(5) an additional field to designate entities with contracted 
pharmacy arrangement. 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
i   E X E C U T I V E   S U M M A R Y  
 
OBJECTIVE 
To assess the accuracy of information contained in the Pharmacy Affairs 
Branch (PAB) 340B Drug Discount Program's database. 
BACKGROUND 
The PAB in the Health Resources and Services Administration (HRSA) 
is required to maintain a complete listing of all entities participating in 
the 340B Drug Discount Program for pharmaceutical manufacturers 
and wholesalers to use in verifying an entitys eligibility to receive the 
discount. It is crucial that the roster contain exact information on the 
identity of the entities because it is the source wholesalers and 
manufacturers consult to verify the entitys participation in the 
program, as well as its address. This inspection stems from 
complications faced while attempting to extract a sample of providers 
from the database for the inspection entitled "Appropriateness of 340B 
Prices" (OEI-05-02-00070). Given the importance of the database, we 
examined the integrity of the database and assessed the effects that 
errors had on our work, as well as other end users. 
FINDINGS 
Thirty-eight percent of sampled entities are incorrectly listed in the 
340B database as participating in the 340B Drug Discount Program. 
Despite being listed in the 340B database as participating in the 340B 
Drug Discount Program, 38 percent of our sample reported not 
participating. Manufacturers reported that the correctness of an 
entitys eligibility status in the 340B database interferes with an 
entitys ability to purchase drugs at the 340B price. 
The 340B database had incorrect address information for 43 percent 
of sampled entities. Forty-three percent of the entities sampled from 
the 340B database were listed with incorrect addresses. Incorrect 
information in the database hinders pharmaceutical manufacturers 
ability to verify entity enrollment and increases the risks for diversion. 
The 340B database does not provide essential information on 
entities billing and shipping arrangements.  Manufacturers reported 
that the absence of fields in the database that list both an entitys 
billing and a shipping address hinders their ability to verify that their 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
ii  E X E C U T I V E   S U M M A R Y  
discounted products are going to eligible sites. The current design of the 
database only lists one address, but because of complex drug delivery 
and contracted pharmacy arrangements, the address listed may not be 
where the bill is sent or where the product is shipped. 
RECOMMENDATIONS 
To ensure accurate information on entities participation and 
location status, HRSA should develop a strategic plan for managing 
340B program data that: 
  revalidates all of the current information in the database 
	  requires all enrolled entities to resubmit their 340B registration 
forms to PAB annually 
	  creates a separate listing of entities newly added or deleted from the 
roster each quarter to facilitate the efficient transmission of 
information to the manufacturers 
	  establishes a standard format for reporting entities' addresses, 
which clearly identifies the appropriate ship to/bill to 
arrangements and does not include post office boxes 
	  creates a field that designates entities with a contracted pharmacy 
arrangement 
AGENCY COMMENTS 
HRSAs comments describe the action already taken to improve the 
integrity of the 340B database, but mention the impact budgetary 
limitations have on the agencys ability to commit to a timetable for 
full implementation. We encourage HRSA to optimize its Pharmacy 
Services Support Center contract as a means to move toward complete 
action. Concurrently, we anticipate that HRSA will determine if a 
Federal Register notice to announce a new annual certification 
requirement is necessary. 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
iii    T A B L E   O F   C O N T E N T S 
  
A B S T R A C T  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .   i
 
E X E C U T I V E   S U M M A R Y  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .  ii
 
I N T R O D U C T I O N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .  1
 
F I N D I N G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .  4
 
Database contains inaccurate entity addresses.................................4
 
Database includes non-participating entities .................................... 5
 
Database does not include complete address information ............... 5
 
R E C O M M E N D A T I O N S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .   7
 
A G E N C Y   C O M M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .  8
 
A P P E N D I X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .  9
 
Appendix A: Agency Comments ........................................................ 9
 
A C K N O W L E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .  12
 
E N D   N O T E S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . .  13
    I N T R O D U C T I O N  
 
OBJECTIVE 
To assess the accuracy of information contained in the Pharmacy Affairs 
Branch 340B Drug Discount Programs database. 
BACKGROUND 
This report stems from complications faced while attempting to use the 
340B Drug Discount Program database of participants for the inspection 
entitled "Appropriateness of 340B Prices" (OEI-05-02-00070). Efforts to 
conduct a review of Health Resources and Services Administrations 
(HRSAs) management of the 340B program were compromised by the 
poor quality of the database. Because the success of the 340B program 
depends on the accuracy of the information contained in the database, we 
evaluated the overall condition of the database. This report demonstrates 
the effects that deficient data has on the ability of the 340B Drug 
Discount Program to operate efficiently. 
The 340B Drug Discount Program 
In 1992, Congress enacted Section 340B of the Public Health Service Act 
(the PHS Act), establishing the 340B Drug Discount Program. This 
Federal discount program requires pharmaceutical manufacturers to 
lower outpatient drug prices for over 10,500 qualified Federal grantees, 
including community health centers and public hospitals. To calculate 
the 340B price, manufacturers adhere to a formula stipulated in the PHS 
Act. The 340B price is a ceiling price, meaning it represents the highest 
price the entity may be charged for that product, but does not limit sales 
below the calculated price. 
HRSAs Pharmacy Affairs Branch (PAB) administers the 340B Drug 
Discount Program. The 340B participating entities are estimated to 
spend $3.4 billion for outpatient drugs in 2003. 
The 340B Participant Database 
Section 340B requires PAB to maintain accessible data on the identity of 
participating entities. In 1993, PAB created an electronic bulletin board 
representing the registration and certification of eligibility. Although an 
entity may be eligible to participate in 340B by virtue of the grant it 
receives, it must notify PAB of its intention to participate in the discount 
program by completing and submitting the 340B Program Registration 
Form for Covered Entities. Eligible entities must also commit to 
avoiding duplicate discounts or rebates, preventing drug diversion and 
providing the Health and Human Services (HHS) Secretary and 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
1  I N T R O D U C T I O N  
manufacturer access to its records related to its compliance with 340B 
requirements. 
Once PAB receives, verifies, and processes the registration form, the 
entity is listed in the electronic database and is eligible to purchase drugs 
at the 340B price. The PAB Web site stresses the importance of entities 
supplying the agency with accurate and up-to-date information, 
particularly the exact name and street address. PAB states that, It is 
the responsibility of each covered entity to contact the PAB with any 
changes. 
The 340B Drug Discount Programs database is intended to serve as a 
centralized source of contact information for those entities registered to 
participate in the discount program. The database lists the facility name, 
address, type of entity, date added to the database, and date terminated 
from participation. 
It is crucial that the roster contain exact information on the identity of 
the entities because it is the source wholesalers and manufacturers 
consult to verify the entity's participation in the program, as well as its 
address. Manufacturers need to confirm that the entity's reported 
address matches that in the 340B database before shipping the 
discounted drugs. Furthermore, an accurate database helps prevent 
potential diversion of drug products. 
Any incorrect information in the database compromises both the 
participants and the manufacturers. If the contact information on an 
eligible entity is wrong, a manufacturer may have to delay shipping the 
product until it can verify the correct information. If an entity is eligible 
for the discount, but is not listed, they could be overcharged because 
manufacturers do not have to offer the 340B discount. 
Conversely, manufacturers may face other consequences if their products 
are sold to ineligible clinics at the 340B price. The integrity of the 340B 
program is weakened if prohibited transactions occur. For example, if a 
manufacturer discovers sales to entities not eligible for the 340B discount 
or to entities that are eligible to enroll but have yet to do so, the 340B 
contract is violated, damaging the reputation of the program. 
In addition, if a manufacturer sells a drug at the 340B price to a non-
eligible entity, it may accidentally set a best price (BP), which is part of 
the formula used to calculate a manufacturer's rebate owed to the State 
Medicaid agencies. Manufacturers must report their lowest selling price, 
or BP, each quarter to the Centers for Medicare & Medicaid Services 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
2  I N T R O D U C T I O N  
(CMS) for the purpose of the Medicaid Drug Rebate Program. Sales to 
340B entities are exempt from this calculation. 
PAB estimates that participation in the 340B discount program is 
growing at an annual rate of 12 percent. The programs rapid growth is 
partially due to the HHSs pharmacy demonstration projects that allow 
entities to develop new ways to purchase drugs and serve patients. In 
addition, the President's Community Health Center expansion initiative, 
which plans to add 1,200 new and expanded health center sites eligible 
for the 340B discount, will significantly impact the number of eligible 
participants, giving added importance to the need for an accurate 
database. 
METHODOLOGY 
As part of our data collection effort in the report, Appropriateness of 340B 
Prices (OEI-05-02-00070), we selected a random sample of 75 plus 10 
spare 340B entities out of 4,246 using the information contained in the 
PAB database. To ensure the delivery of our data requests, we attempted 
to verify the addresses and participation of the selected entities through 
telephone calls and Internet searches. Ultimately, we requested data 
from 76 entities, accessing one of the spares. 
In addition, we interviewed nine pharmaceutical manufacturers about 
their role in the 340B Drug Discount Program. These manufacturers 
were selected, based on geographic convenience, but are all major, billion-
dollar corporations and comprise over 40 percent of the total prescription 
sales market. 1 During those interviews, much of the conversation focused 
on the issues that manufacturers face using the 340B database. We did 
not independently verify the nine manufacturers' reported difficulties; 
however, the comparable responses among the nine were consistent with 
our experience in attempting to use the data for our own analysis. 
Our review was conducted in accordance with the Quality Standards for 
Inspections issued by the President's Council on Integrity and Efficiency. 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
3    F I N D I N G S  
 
Twenty-nine of the 76 sampled
Thirty-eight percent of sampled entities are 
entities, or 38 percent, were listed in 
incorrectly listed in the 340B database as  the database as participants, but 
participating in the 340B Drug Discount  reported not using the 340B discount. 
Program.  These entities may have enrolled in 
the program at some point since its 
start in 1992, but reported that they no longer participate. Therefore, 
these providers are registered in the database as covered entities, but are 
not actually purchasing drugs at the 340B discount. This also indicates 
that entities are either not providing a drug benefit or purchasing their 
drugs at regular market prices. Table 1 illustrates the entities reported 
reasons for ineligibility. 
Table 1- Entities with Inaccurate 340B Participation Listing in the 
Database 
Number of  Reported Reasons for Non-participation 
Entities with 
Incorrect 
Status (29) 
16  Entities reported purchasing pharmaceuticals, but 
not through the 340B Drug Discount Program 
1  Receive drugs from a larger 340B participant, but 
do not purchase drugs themselves 
12  Entities offer no pharmacy services 
Failure to fully participate in the 340B discount program reduces the 
scope of the entities health care services and makes inefficient use of 
HRSA grant funds. According to PAB, the databases information on an 
entitys address and participation status is only as good as the 
information they receive.2 PAB enters an entitys information when it 
registers for the 340B discount, but then relies on the entity to voluntarily 
provide any changes. If the health care provider has had leadership or 
pharmacy staff turnover, it might not be aware of the benefits the 340B 
discount program offers. 
From the pharmaceutical manufacturers perspective, accurate 
information on an entitys participation status in the 340B database is 
important for two reasons. First, if the entity is eligible to purchase at 
the 340B price, but is excluded from the 340B database, the 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
4  F I N D I N G S  
manufacturer risks charging that entity more than the 340B ceiling 
price. Second, sales to ineligible entities place manufacturers in a 
vulnerable position for fraud and diversion. 
During data
The 340B database had incorrect address 
collection for our 
information for 43 percent of sampled entities.  inspection, 
Appropriateness of 
340B Prices (OEI-05-02-00070), we found that of our sample of 85 entities 
(75 plus 10 spares), 37 entities, or 43 percent, of the addresses listed in 
the 340B database were incorrect. According to interviews with 
pharmaceutical manufacturers, the databases incorrect entity contact 
and address information hinders their ability to efficiently manage 340B 
contracts. 
The 340B database needs to have correct address information to confirm 
that only participating facilities and their patients have access to drugs 
purchased at the 340B price. While manufacturers maintain their own 
listing of their 340B contracts, they use the 340B database as the official 
source to compare and update their information each quarter. If an 
entitys contact and address information does not match the 
manufacturers listing, the manufacturer has to take additional time to 
obtain accurate information. According to the manufacturers, this extra 
effort creates product delivery delays for the 340B entities. 
According to the manufacturers, because the 340B database is a 
cumulative list that does not separate those entities newly added to or 
deleted from the previous quarter, to locate new participants or detect 
deletions, they must sort through the entire list of 10,500 entities each 
quarter. 
The 340B database does not 
The 340B database does not provide essential 
include complete entity address 
information on entities billing and shipping 	 
information, which is necessary
arrangements. 
to identify the eligibility of the 
entity, as well as confirm that the address is legitimate prior to shipping 
product. 
HRSA permits entities to have arrangements with affiliated retail 
pharmacies or hospitals, as long as those arrangements are documented 
in writing to PAB. However, the complexity of the drug distribution 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
5  F I N D I N G S  
system is not reflected in the design of the 340B database and confuses 
manufacturers. 
The entity address field lists the address submitted on the entitys grant 
application, but, due to the variety of drug delivery arrangements among 
340B entities, the listed address may not be where the bill is sent or 
where the product is shipped. An eligible entity may order 
pharmaceuticals, but have them shipped to a retail pharmacy that 
distributes the drugs to the entitys patients. Alternatively, a hospital 
may order products on behalf of its affiliated entities. Frequently, the 
address listed on the Web site is actually the grantees administrative 
office or a post office box where bills are sent, but not products. 
HRSA allows for 340B qualified entities without on-site pharmacies to 
contract out their pharmacy services. In this arrangement, the entity is 
billed for the drugs, but the pharmacy receives the shipment and 
dispenses the prescriptions to the entitys patients. Covered entities 
contracting with a retail pharmacy are required to supply PAB with a 
signed self-certification, documenting their agreement so drug 
manufacturers and wholesalers recognize the arrangements. However, 
the 340B database does not include a field that clearly identifies those 
entities with a contracted pharmacy arrangement. As a result, 
manufacturers have to search PABs separate Contract Pharmacy 
database to ensure that their products are both appropriately procured by 
an eligible entity and then sent to the appropriate address. Only after 
identifying the entities with contract pharmacy arrangements can the 
manufacturer return to the entity database to verify that the 
arrangement exists. 
The database also does not define or link related entities with purchasing 
associations, such as a large public hospital and its smaller satellite 
clinics, making it difficult to discern which entity is billed and which 
receives the shipment. When a hospital orders and pays for drugs, but 
has them shipped to other eligible sites, manufacturers need to be aware 
of this arrangement so they can verify that the other sites are eligible. 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
6   R E C O M M E N D A T I O N S 
  
RECOMMENDATION 
To ensure accurate and timely information on the entities' locations and 
participation status, HRSA should develop a strategic plan for managing 
the 340B program's data that: 
  revalidates all of the information currently in the 340B database 
	  requires all participating entities to resubmit their 340B registration 
forms to PAB annually to ensure continued accuracy 
	  creates a separate listing of entities newly added or deleted from the 
roster each quarter to facilitate the efficient transition of information 
to the manufacturers 
	  establishes a standard format for reporting entities' addresses, which 
clearly identifies the appropriate ship to/bill to arrangements and 
does not include post office boxes 
	  creates a field that designates entities with a contracted pharmacy 
arrangement 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
7   A G E N C Y   C O M M E N T S  
 
AGENCY COMMENTS 
HRSAs comments on the draft report concur with all but one of the 
findings and all of the recommendations. The complete text of the 
comments is in Appendix A. HRSA also provided technical comments 
on the reports. 
HRSA has already taken action in response to two of our 
recommendations. First, HRSA is updating the Web sites entity 
contact information and participation status in real time as opposed to 
the former, once-quarterly update. Second, HRSA linked the covered 
entities and contract pharmacy databases to clearly delineate the 
contractual relationships. We commend HRSA for its actions to 
strengthen the integrity of the database, as well as the administration 
of the 340B Drug Discount Program. 
HRSA expressed the desire to implement our recommendation to 
annually recertify entities enrolled in the discount program, but cited 
the need to first identify resources and protocol required to achieve this. 
During this consideration, we propose that HRSA consider its 
Pharmacy Support Services Contract that HRSA awarded to the 
American Pharmacists Association in September 2002 as a potential 
resource for accomplishing this task. Since HRSA also stated that it 
might be necessary to publish a Federal Register notice to announce a 
new annual certification requirement, we hope they will concurrently 
determine whether this action is necessary. 
HRSA disagreed with part of one finding that states manufacturers 
could inadvertently set a lower than intended price if they offered a 
340B discount to an excluded entity. According to HRSA, as long as the 
entity received a grant or met other eligibility criteria the manufacturer 
would not set a new best price. We agreed with this clarification and 
made the appropriate changes to the report. 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
8   A P P E N D I X   ~   A  
 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
9
  A P P E N D I X ~ A  
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
10
  A P P E N D I X ~ A  
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
11
  A P  PA EC NK DN I OX W~ AL E D G M E N T S  
This report was prepared under the direction of William C. Moran, 
Regional Inspector General for Evaluation and Inspections in the Chicago 
Regional Office, and Natalie Coen, Deputy Regional Inspector General. 
Other principal Office of Evaluation and Inspections staff who contributed 
include: 
Thomas Komaniecki, Team Leader 
Madeline Francescatti, Project Leader 
Anna Fleming, Program Analyst 
Rupal Patel, Program Analyst 
Genevieve Nowolinski, Program Specialist 
Ayana Everett, Program Specialist 
Barbara Tedesco, Mathematical Statistician 
OEI-05-02-00071  DEFICIENCIES IN THE 340B DRUG DATABASE 
12   E N D   N O T E S 
  
1Prescription Drug Trends-A Chartbook Update, Kaiser Family 
Foundation, November 2001 
2 OIG interview with Pharmacy Affairs Branch, June 2003 
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