United States: HHS Issues Proposed Rule To Overhaul 340B Administrative Dispute Resolution Process

Highlights

• Through its Health Resources and Services Administration, the U.S. Department of Health and Human Services on Nov. 29, 2022, issued a proposed rulemaking that would drastically overhaul the 340B Drug Pricing Program Administrative Dispute Resolution process.
• The revisions are designed to make the process more accessible by making it "more expeditious and less formal," as well as more equitable by requiring fewer resources to participate.
• Comments may be submitted through Jan. 30, 2023.

Through its Health Resources and Services Administration (HRSA), the U.S. Department of Health and Human Services (HHS) issued a proposed rulemaking on Nov. 29, 2022, that would drastically overhaul the 340B Drug Pricing Program Administrative Dispute Resolution (ADR) process. The ADR process is designed to assist covered entities and manufacturers in resolving disputes regarding overcharging or violations of prohibitions on duplicate discounts or diversion. The process is intended to be utilized only after good faith efforts by the two parties have been exhausted and failed.

Overview of Changes

In the proposed rulemaking, HHS aims to make revisions to the process that was last updated in 2020, which has since resulted in substantive operational implementation challenges. Overall, the changes proposed in this rule are designed to make the process more accessible by making it "more expeditious and less formal" and more equitable by requiring fewer resources to initiate and participate in the process.

The rule aims to do this by: 1) clarifying qualifying criteria for disputing parties and claims; 2) establishing a more accessible ADR process and reconsideration process; and 3) establishing requirements for ADR Panel members, each of which is explained in greater detail below. The Agency also proposes to redefine several terms, including "consolidated claims" and "joint claims." As proposed, any claims that are already in process would be automatically transferred to the new process pending the final rule.

Detailed Changes

1. Clarifying Qualifying Criteria for Disputing Parties and Claims

HHS proposes that the ADR process would be reserved solely for claims dealing with provisions set forth in the 340B statute. This includes diversion, duplicate discounts and overcharges. Further, the specific issue at hand in the claim may not be the same or similar to an issue that is currently pending in federal court (or it will be paused until resolved).

Claims filed by a covered entity must provide the basis for the covered entity's belief that it has been overcharged by a manufacturer, along with documentation to evaluate the accuracy of the claim, which may include, but is not limited to: 1) a 340B purchasing account invoice showing the purchase price by national drug code, less any taxes and fees; 2) the 340B ceiling price for the drug during the quarter(s) corresponding to the time period(s) of the claim; 3) documentation of attempts made to purchase the drug via a 340B account at the ceiling price that resulted in the alleged overcharging; 4) documentation and correspondence with HRSA regarding the alleged overcharge, including price unavailability forms or other correspondence; and 5) an estimate of monetary damages.

Claims filed by a manufacturer must include documents sufficient to support a manufacturer's claim that a covered entity has violated the prohibition on diversion and/or duplicate discount and documentation to evaluate the accuracy of the claim, including, but not limited to: 1) a final audit report indicating that the manufacturer audited the covered entity for compliance with the prohibition on diversion and/or duplicate discounts; 2) any communication with the State Medicaid agency indicating rebates claimed (for duplicate discount violations only); 3) the covered entity's written response to the manufacturer's audit finding(s); and 4) an estimate of monetary damages.

Parties may elect to combine individual claims for the same drug and manufacturer. The claim must list each covered entity or manufacturer and include relevant documentation and information demonstrating that each individual party meets all of the requirements for filing an ADR claim. A letter requesting the combining of claims must also accompany the claim at the time of filing documenting that each party consents to the combination of the claims, including signatures and contact information for individuals representing each respective party, along with a single point of contact for the new combined claim. In the case of covered entities, joint claims are permitted by associations or organizations representing their interests and acting on their behalf (though this would not apply to drug manufacturers).

Regarding the disputing parties, HHS proposes to require that both involved parties undertake good faith efforts to resolve the claim before proceeding with the ADR process and are both in good standing with all 340B Program requirements. At the time of filing, the covered entity or manufacturer would be required to provide a written summary of attempts to work in good faith with the other party to resolve the overcharge/dispute.

2. Establishing a More Accessible ADR Process and Formal Reconsideration Process

HHS intends to establish a more administrative process rather than a "trial-like proceeding" as a way to remove barriers to entry, particularly for smaller and less-resourced covered entities. To this end, it proposes to remove the current minimum threshold of $25,000, though the Department encourages parties to consider the time and resources involved relative to the value of the claim before proceeding with the ADR process.

All claims would have to be submitted within three years of the alleged violation through a secure electronic mechanism, additional details for which will be provided in future sub-regulatory guidance. Once a claim is filed, ADR review panels may request additional information or documentation from either party. If additional information is requested, the initiating party will have 20 business days to respond. Once the claim is deemed complete, the ADR panel will notify the opposing party, who will then have 30 business days to provide a response (unless it requests and is approved for an extension). Based on the information received, the ADR review panel will inform both parties whether the claim has moved forward for review (or if not, why).

If a covered entity wishes to request information or documents necessary to support its claim from an opposing party, it must submit a written request to the ADR panel no later than 20 business days after being notified that the claim has moved forward for review. This request will be subject to review by the panel to ensure that it is reasonable, relevant and within the scope of the asserted claim. If the request is deemed reasonable, the manufacturer will have 20 business days to respond, unless an extension is requested and approved.

The 340B ADR Panel would then consider all of the information submitted and render a decision to both involved parties, timing for which would depend on the complexity of the case and volume of supporting information submitted.

Within 20 business days of receiving the decision, either party may initiate a reconsideration request which must include the reasoning for requesting a redetermination, along with any supporting documentation. All claims would also be subject to discretionary review by the HRSA Administrator and HHS Secretary. All reconsideration reviews would be conducted by the HRSA Administrator to allow for an independent review and would be binding, unless invalidated by an order of federal court. Timing for reconsideration reviews would similarly depend on the complexity of the case and volume of information received. HHS seeks comment on potential criteria for requesting redeterminations.

Once a final decision has been made, HHS proposes that the Director of the Office of Pharmacy Affairs may consider whether to take enforcement action or ensure corrective action to the extent allowed under the 340B statute including, but not limited to, repayment.

Note: Once a claim is submitted, all files, documents or records associated with the claim under dispute must be maintained by both parties until a final decision is issued.

3. Establishing Requirements for 340B ADR Panel Members

HHS proposes to require that members of the 340B ADR Panel are 340B Program subject-matter experts and undergo an additional screening prior to ensure no conflicts of interest with the specific claim or parties involved (though being involved in a prior ADR decision with the party would not disqualify them). HHS proposes that the Secretary appoint a roster of at least 10 eligible individuals from HHS's Office of Pharmacy Affairs (OPA) to serve on 340B ADR Panels. The OPA Director or a designee would then select at least three members from that roster to form a 340B ADR Panel to review a particular IDR claim. HHS solicits comments on the proposed size and composition of the 340B ADR Panel, including whether it should be comprised entirely of OPA staff, or include staff from HRSA or other HHS departments.

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