In April 2024, the Health Resources and Services Administration (“HRSA”) released the 340B Program Administrative Dispute Resolution (“ADR”) Regulation Final Rule (“2024 Final Rule”) which the Affordable Care Act required HRSA to finalize in 2010. The 2024 Final Rule, set to take effect on June 18, 2024, establishes an ADR process that creates an administrative avenue for 340B covered entities and manufacturers to resolve claims regarding certain 340B operational issues, such as manufacturers overcharging covered entities for 340B drugs, as well as diversion and duplicate discount issues. Ultimately, this process will allow 340B stakeholders to address program issues in a more expedient and less complex manner.
The ultimate purpose of the ADR process is to provide 340B stakeholders the opportunity to have disputes evaluated in a timely, consistent, and fair and equitable manner. The 2024 Final Rule seeks to improve the ADR process by addressing some of the following topics:
Less Formality
Prior to the 2024 Final Rule, the ADR process was governed by the Federal Rules of Evidence and Civil Procedure, which proved to be overly burdensome and added additional complexity for stakeholders submitting filing. Additionally, previous iterations of ADR proposed rules instituted a $25,000 minimum threshold for filing petitions for ADR. In response to this complexity, the 2024 Final Rule eliminates the requirements in an effort to establish a more accessible ADR process that is more reflective of an administrative process rather than a trial-like proceeding, including eliminating the minimum monetary threshold.
Limitation of ADR Process to Statutory Claims
In the 2024 Final Rule, the parties may only bring forth the following claims: (1) claims by Covered Entities that may have been overcharged for covered outpatient drugs purchased from manufacturers; (2) claims by Manufacturers that the Covered Entity has violated the 340B prohibition against duplicate discounts; and (3) claims by Manufacturers that the Covered Entity has violated the prohibition against diversion.
Moreover, a Covered Entity or Manufacturer must file a claim (limited to the three categories set forth above) within three (3) years of the date the alleged violation occurred, and must provide the basis of the claim as well as any supported and/or requested documentation. Notably, a Covered Entity claim against multiple manufacturers is not permitted, however, two or more Covered Entities may file a claim of overcharges against the same manufacturer. Manufacturers may request to consolidate claims from multiple manufacturers against a singular Covered Entity.
340B ADR Panel Requirements
The 2024 Final Rule will also change the ADR panel requirement from requiring panel members to be representatives from HRSA, CMS, and HHS Office of the General Counsel to requiring only that the 340B ADR Panels be subject matter experts from HRSA’s Office of Pharmaceutical Affairs (“OPA”) to ensure that the panel has specific knowledge of the 340B statute and operational processes. Moreover, the 2024 Final Rule has added an additional conflict-of-interest screening process for 340B ADR Board Members.
Requirement to undertake “good-faith efforts” prior to initiating the ADR Process
The 2024 Final Rule requires that prior to initiating ADR processes, the parties undertake good-faith efforts to resolve the disputed issues.
Establishment of a Reconsideration Process for Parties Dissatisfied with Panel’s Decision
The 2024 Final Rule establishes an appeal or reconsideration option for ADR decisions available to either party involved in the ADR process. The request for reconsideration must be made to the HRSA administration within thirty (30) business dates of the date of the 340B panel’s decision letter and must include documentation indicating why a reconsideration is warranted.
How Frier Levitt Can Help
In light of the newly established 2024 Final Rule, 340B Covered Entities and manufacturers should consider whether any operational issues they are currently facing within their current 340B program give rise to an ADR claim, especially where the parties have previously engaged in good faith efforts but failed to resolve the issue. Frier Levitt can assist Covered Entities and manufacturers navigate the complex web of the 340B program, including the new ADR rule, and provide guidance and assistance with 340B issues.
