United States: 340B Federal Drug Pricing Program September Update: Self-Disclosures

As part of its ongoing series of monthly 340B Federal Drug Pricing Program (340B Program) integrity updates, the Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) released an update on September 8, 2014, covering self-disclosures (September Update).  As set forth in the annual recertification statements, a covered entity participating in the 340B Program must contact OPA as soon as reasonably possible following any material breach (emphasis added) by the covered entity of any 340B Program requirement.  Notably, this release does not define "material," nor does it provide guidance as to which breaches are considered "material."

According to the September Update, when self-disclosing a violation to OPA, a covered entity should describe the nature and scope of the breach and the covered entity's corrective action plan (CAP).  In the September Update, OPA recommends that a CAP include an immediate remedy for the breach, a process to address the issue causing the breach and a plan for periodic assessment and continuous monitoring going forward.  In addition to developing a CAP, a self-disclosing covered entity must inform affected manufacturers of the violation, and must work with such manufacturers to determine whether any repayment to the manufacturers is required.

The September Update emphasizes that submission of self-disclosures is not limited to the annual recertification period and should occur as soon as reasonably possible after a breach.  Covered entities that have not done so already should implement routine internal auditing of 340B Program compliance and processes for development of self-disclosures, where necessary.  Due to the lack of clarity regarding the definition of a "material breach," determination of whether an instance of non-compliance is a material breach requiring disclosure to OPA should be done in consultation with legal counsel.

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