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HRSA Proposes Revised 340B Dispute Resolution Process

In a new rule, the Health Resources and Services Administration (HRSA) proposes to revise the existing 340B Drug Pricing Program administrative dispute resolution (ADR) process for covered entities and drug manufacturers.

This rule is the next step in the long-delayed implementation of an Affordable Care Act (ACA) requirement that HRSA create a binding ADR process within 180 days of the law’s enactment. HRSA first issued an advance notice of proposed rulemaking on this issue in 2010, followed by a proposed rule in 2016, and a final rule in December 2020. That final rule has been effective since Jan. 13, 2021.

Citing policy and operational challenges with implementing the 2020 final rule, HRSA proposes a less formal ADR process that the agency believes will be less burdensome for parties submitting claims. The proposed ADR process delegates the majority of decision-making authority to staff of the Office of Pharmacy Affairs (OPA), the office within HRSA that oversees the program.

HRSA provides details on the ADR process, including the composition of an ADR panel, the types of claims covered entities and manufacturers can bring before the panel, and timelines for bringing and resolving claims and submitting consolidated claims.

Using the ADR process, covered entities can bring claims against manufacturers for being overcharged for covered outpatient drugs, and manufacturers can bring claims against covered entities for violations of the prohibition against duplicate discounts or diversion. Covered entities and manufacturers would be able to bring claims within three years of an alleged violation for damages or equitable relief. Unlike the 2020 final rule, which had established a minimum $25,000 threshold in damages or equitable relief, the proposed rule has no minimum monetary threshold for claims.

Under the new process, the Department of Health and Human Services (HHS) Secretary would select at least 10 OPA staff members for the ADR roster, which will serve as the pool for selecting individual ADR panels. Claims would be reviewed by a three-member ADR panel, chosen by the OPA director from the ADR roster. Like the 2020 final rule, the proposed rule would continue to allow covered entities to file claims jointly against manufacturers. Associations and organizations also could file claims against manufacturers on behalf of their covered entity members.

HRSA proposes that pending claims still going through the process established by the 2020 final rule be evaluated under the new ADR process. Panel decisions would constitute final agency decisions that are binding on the involved parties, which means they can be appealed through the judicial process. HRSA proposes that ADR panel decisions also could be appealed administratively to the HRSA administrator through a reconsideration process.

Comments on the proposed rule are due Jan. 30, 2023. America’s Essential Hospitals is analyzing the proposed rule and will send members a detailed Action Update in the coming days.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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