A pharmacy under contract with a 340B covered entity to dispense drugs on behalf of the 340B covered entity. The use of an individual contract pharmacy or multiple contract pharmacies is voluntary, and a covered entity should first determine its needs for pharmacy services and the appropriate distribution mechanism for those services when deciding whether or not to utilize a contract pharmacy. Information on contract pharmacies can be found here: HRSA.gov- Contract Pharmacy

Eligible 340B covered entities are defined in statute and include health centers designated by Health Resources and Services Administration (HRSA), an agency within the Public Health Service (PHS) of the U.S. Department of Health and Human Services (HHS), as well as Ryan White clinics and State AIDS Drug Assistance programs, Medicare/Medicaid Disproportionate Share Hospitals, children’s hospitals, and other safety net providers. A full listing can be found here: HRSA.gov

This program was established with the intent of helping certain hospitals and federal grantees—known as covered entities—acquire drugs at discounted prices from manufacturers to stretch scarce federal resources to reach more eligible patients and provide more comprehensive services. The program was created through the Veterans Health Care Act of 1992, which added Section 340B to the Public Health Service Act (PHSA) and is administered by HRSA. Manufacturers’ Medicaid eligibility and 340B participation are linked, but the programs are separate, and federal law prohibits duplicate discounts (i.e., mandated Medicaid rebates do not apply to drugs obtained at 340B pricing).