The Government Accountability Office (GAO) has issued an ACA-mandated report entitled “Drug Pricing: Manufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight Needs Improvement.”  By way of background, the 340B program limits the prices that participating manufacturers may charge for outpatient drugs purchased by certain “covered entities” that act as “safety net” providers of services to low-income individuals (e.g., community health centers, critical access hospitals, and children’s hospitals). The program is administered at the federal level by the Health Resources and Services Administration (HRSA). Of the 29 covered entities the GAO interviewed for this study, 13 reported that they generated 340B program revenue that exceeded drug-related costs (including costs of purchasing and dispensing drugs), which enabled the entities to serve more patients and provide additional services (all entities interviewed by the GAO reported using the program in ways consistent with its purpose). The GAO report observes that the 340B program has increasingly been used in settings, such as hospitals, where the risk of improper purchase of 340B drugs is greater, in part because they serve both 340B and non-340B eligible patients. With the number of hospitals in the 340B program increasing significantly in recent years, some stakeholders, including drug manufacturers, have questioned whether all of these hospitals need a discount drug program. In fact, according to the GAO, the number of covered entity sites has nearly doubled over the last 10 years to over 16,500, and now includes almost one-third of all U.S. hospitals. The GAO also discussed a variety of ways that manufacturers’ distribution of drugs at 340B prices could affect access to drugs. The GAO concluded that “HRSA’s oversight of the 340B program is inadequate because it primarily relies on participants’ self-policing to ensure compliance” with program requirements. The GAO recommends that HRSA take steps to strengthen oversight, including: conducting selective audits of 340B covered entities to deter potential diversion; providing more specific guidance on the definition of a 340B patient and eligibility criteria for hospitals that are not publicly owned or operated; and requiring reviews of manufacturers’ plans to restrict distribution of drugs at 340B prices.