340B Audits and Compliance 101

Covered entities participating in the 340B Drug Pricing Program must ensure program integrity and maintain accurate records documenting compliance with all program requirements. They are subject to audit by the manufacturer or the federal government. Failure to comply may make the 340B covered entity liable to manufacturers for refunds of discounts or cause the covered entity to be removed from the 340B program.

It is the responsibility of the covered entity to provide accurate policies and procedures specifically related to 340B and operations.  Internal audits of on-site and/or contract pharmacies must be conducted according to the policy. HRSA also recommends an annual external audit to ensure program compliance.  An experienced audit firm/company will follow HRSA guidelines to provide feedback.

Audit Scope

HRSA’s 340B Program audits review covered entity compliance with respect to eligibility status, including compliance with the Group Purchasing Organization (GPO) prohibition as applicable (see 42 USC 256b(a)(4)(L)(iii)), duplicate discounts, and diversion as defined by42 USC 256b(a)(5)(A) and (B).

Audit Process

HRSA regional auditors conduct audit field work for the HRSA Office of Pharmacy Affairs (OPA).


  • Covered entities selected for audit receive an engagement letter explaining what to expect and how to appropriately prepare.
  • HRSA regional auditors conduct an introductory teleconference with the entity to request and obtain specified documents, including policies, procedures, and internal controls.
  • HRSA regional auditors work with the entity to schedule an entrance conference with key entity management to discuss expectations for the onsite audit.

Onsite Audit

  • HRSA regional auditors obtain and review select program data and internal controls.
  • Audit procedures include, at a minimum:
    • review of relevant policies and procedures and how they are operationalized;
    • verification of eligibility, including GPO and outpatient clinic eligibility;
    • verification of internal controls to prevent diversion and duplicate discounts, including appropriateness of inpatient/outpatient designations and Medicaid exclusion file designations;
    • review of contract pharmacy compliance; and
    • test 340B drug transaction records on a sample basis.
  • HRSA regional auditors conduct an exit interview, sharing areas of concern and preliminary findings.

Post Audit

  • HRSA regional auditors forward preliminary findings to OPA for review.
  • OPA reviews the preliminary findings, drafts a Final Report and issues the report to covered entity, with a request for a corrective action plan (if applicable).

Colleen DiClaudio is the Vice President of 340Basics.  

340Basics was built by industry experts well versed in the drawbacks of other software systems, generating auditable reports and records in a user friendly environment to ensure compliance with all federal regulations. 

340B can be managed effectively with the assistance of a comprehensive and robust management software system.  A virtual inventory solution can provide an audit trail of all 340B medications dispensed, history of purchase orders, and essential financial reports. The added benefit of working with a company that has direct knowledge of FQHC operations and compliance issues will increase your capability to manage the program.  

Click here to learn more about 340Basics.