The 340B Drug Discount Program is a US federal government program created in 1992 that requires drug manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at significantly reduced prices. Covered entities that participate in the 340B program may contract with pharmacies to dispense drugs purchased through the program on their behalf. Two useful resources regarding 340B as used in an outpatient pharmacy are:

The Bridge to 340B Comprehensive Pharmacy Solutions in Underserved Populations. This resource is from 2004 and there have been significant regulation changes since that time but provides information regarding the intent of the 340B program and applications to pharmacy. 

This resource is from McKesson wholesaler, 2015, and presents a business approach to utilizing 340B with a contract entity.


  • If a charity pharmacy works with a covered entity registered under the 340B program, then they should be set up as a contract pharmacy.   Inventory is virtually tracked through a split billing system and replenished with 340B drugs based on appropriate accumulations in eligible patients of the covered entity or child sites.   
  • Free or donated drugs must be kept as separate inventory (and are not part of the 340B program).
  • The Virtual Inventory is mixed between purchased medications and 340B replenished medications but can NEVER be mixed with free or donated drugs.       
  • If the charity pharmacy is part of the 340B covered entity then segregated 340B inventory could be maintained (if the covered entity chooses not set the charity pharmacy up as a contract pharmacy) but must follow the rules of the covered entity type to prevent duplicate discounts, adhere to the Group Purchase Organization (GPO) prohibition (if applicable) or adhere to the orphan drug exclusion (if applicable) and can only be used in an eligible patient based on the 340B statute.     
  • Proper auditing MUST occur to make sure 340B drugs and free or donated drugs are completely separate and are not part of the 340B records.