HHS Proposes Changes to 340B Administrative Dispute Resolution

HHS has proposed revisions to the 2020 final rule on the 340B Administrative Dispute Resolution (ADR) process to modify policy and operational challenges.

The ADR process in the 340B Drug Pricing Program was established to help covered entities and manufacturers resolve disputes regarding overcharging, duplicate discounts, or diversion.

HHS issued a final rule surrounding the ADR process in December 2020. The regulation went into effect on January 13, 2021. However, the Health Resources and Services Administration (HRSA) encountered policy and operational difficulties with its implementation.

In the proposed rule, HHS has included potential revisions to the ADR process and has requested stakeholder comments on the changes. If finalized, any claims that are in process and have been submitted under the 2020 final rule would be transferred to the new process under the proposed rule.

HHS has proposed making the ADR process more accessible, conventional, timely, and less formal. The ADR process under the final rule is governed by the Federal Rules of Evidence (FRE) and Civil Procedure (FRCP), which can create unnecessary delays, according to HHS. In addition, safety-net providers may not be able to afford attorneys to help them navigate the FRE and FRCP requirements in the ADR process.

HHS proposed a more accessible process where stakeholders have equal access to the ADR process and can easily understand and participate without legal expertise or significant spending.

The proposed rule also suggests creating a 340B ADR Board that consists of at least six members from HRSA, CMS, and the HHS Office of the General Counsel (OGC). The HRSA and CMS board members must have experience in drug pricing or distribution, while the OGC members must have experience handling complex litigation.

Next, HHS proposed that parties must engage in good faith efforts to resolve issues before initiating the ADR process. HRSA has historically encouraged parties to work in good faith with one another, which has helped reduce the number of disputes.

The rule proposed that the ADR process be reserved for disputes relating to the statutory provisions on overcharges, duplicate discounts, and diversion. HHS also proposed that the ADR Panel can suspend the review of a claim if it is similar to an issue pending in federal court.

Finally, the rule proposed creating an opportunity for aggrieved parties to seek reconsideration of an ADR Panel’s decision. The appeals or reconsideration process would be available to either party in a dispute, and the HHS Secretary would review the decision.

HHS is accepting comments on the proposed revisions until January 30, 2023.