On May 9, 2014, the Health Resources and Services Administration (HRSA) released the results of its FY 2012 audits of covered entity compliance with 340B drug discount program rules. Based on a review of 51 covered entities encompassing more than 410 outpatient facilities/sub-grantees and more than 860 contract pharmacy locations, HRSA identified “several recurring critical areas of non-compliance for hospitals and non-hospitals.” For non-hospitals, HRSA flagged the following major non-compliance areas: the covered entity’s inability to maintain accurate database information; billing contrary to the Medicaid Exclusion File (which may have resulted in duplicate discounts); and dispensing drugs to ineligible individuals (diversion) at the covered entity and contract pharmacies. For hospitals, the major area of non-compliance cited by HRSA was obtaining covered outpatient drugs through a Group Purchasing Organization (GPO) in violation of statutory restrictions. HRSA also identified best practices to minimize the risks of non-compliance by covered entities, including: development and documentation of comprehensive 340B Program policies and procedures; development of concrete methodologies for routine self-auditing; routine processes for internal corrective action; verification that contract pharmacy arrangements comply with the 340B requirements and are properly listed in the HRSA Office of Pharmacy Affairs database; and strong partnerships with state Medicaid agencies to meet state-specific requirements and prevent duplicate discounts.