Covered entities (CEs) and manufacturers in the federal 340B Drug Pricing Program now have a new process for resolving disputes regarding overcharging, duplicate discounts or diversion, thanks to a new rule issued on Friday, April 19, by the Health Resources and Services Administration (HRSA).
HRSA detailed some of the reasons why it issued the new rule, focusing on a key component—the program’s administrative dispute resolution process (ADR).
The ADR, originally outlined in a 2020 rule governed by the Federal Rules of Evidence (FRE) and Civil Procedure (FRCP), did not meet the program’s goal of resolving disputes “fairly, efficiently, and expeditiously,” according to HRSA officials. “For example, potential petitioners, many of whom are safety net providers in under-resourced communities, may lack the resources to undertake ADR even if it would be in their best interest to do so. In addition, reliance on the FRE and FRCP could create unnecessary delays in what is intended to be a timely decision-making process. Finally, it is challenging to assign ADR Panel members with expertise in the FRE or FRCP.”
The new process, developed by 340B program subject matter experts from HRSA’s Office of Pharmacy Affairs, allows CEs to make claims of being overcharged by a drug company, including denials of access to 340B pricing. Claims must be resolved within one year of submission and are allowed even if the issue is also subject to concurrent federal court review (something that was blocked in the previous rule). The new rule also includes a reconsideration process for any party dissatisfied with the panel’s decision.
Both 340B Health, which represents 340B CEs, and the American Hospital Association (AHA) praised the new rule, although 340B Health president Maureen Testoni contended that it should have gone farther to protect CEs’ right to challenge manufacturers.
“We are particularly encouraged by the final rule clarifying that a covered entity’s ADR claims can include accusations that a drug company has limited the ability to purchase drugs at or below the 340B ceiling price," Ms. Testoni said in a statement. She also applauded the rule for "removing a proposed amendment to block ADR consideration of a claim similar to an issue pending in federal court."
"While we appreciate these improvements," Ms.Testoni said, "we urge HRSA to reconsider our calls to exclude Medicaid managed care claims from ADR review, direct panels to publish their full findings, and impose a 120-day time frame for decisions.”
AHA called the rule an important step in ensuring the integrity of the 340B program. “The final rule contains several important process improvements, including a clear timeline for when ADR decisions must be made and an opportunity for reconsideration when parties are dissatisfied with the initial ADR decision,” said AHA General Counsel Chad Golder in a public statement. “The AHA is particularly pleased that the final rule makes clear that an overcharge claim includes instances where a drug company has limited a hospital’s ability to purchase 340B drugs at or below the 340B ceiling price. This rule will help hold drug companies accountable for their rampant abuses of the 340B program and the patients it serves.”
But the Pharmaceutical Research and Manufacturers of America (PhrMA) which represents manufacturers, expressed dissatisfaction, calling the process rushed and saying that it “panders to 340B hospitals while ignoring concerns manufacturers raised.”
Moreover, “the administration chose not to consider issues we raised in our comments, exacerbating ongoing program integrity issues that have been well documented by independent watchdogs,” PhrMA deputy vice president of public affairs Nicole Longo said, according to a Bloomberg Law report. The rule “underscores the critical need for Congress to act on comprehensive changes to the 340B program.”