Proposed Rule2022-25752
340B Drug Pricing Program; Administrative Dispute Resolution
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 30, 2022
Issuing agencies
Health and Human Services Department
Abstract
The Health Resources and Services Administration implements section 340B of the Public Health Service (PHS) Act, which is referred to as the "340B Drug Pricing Program" or the "340B Program." This notice of proposed rulemaking (NPRM) proposes to revise the current 340B administrative dispute resolution (ADR) final rule (Dec. 14, 2020) with a new process and solicits comment on the proposal.
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[Federal Register Volume 87, Number 229 (Wednesday, November 30, 2022)]
[Proposed Rules]
[Pages 73516-73527]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-25752]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
42 CFR Part 10
[Docket No. 2021-0004]
RIN 0906-AB28
340B Drug Pricing Program; Administrative Dispute Resolution
AGENCY: Health Resources and Services Administration (HRSA), Department
of Health and Human Services (HHS).
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Health Resources and Services Administration implements
section 340B of the Public Health Service (PHS) Act, which is referred
to as the ``340B Drug Pricing Program'' or the ``340B Program.'' This
notice of proposed rulemaking (NPRM) proposes to revise the current
340B administrative dispute resolution (ADR) final rule (Dec. 14, 2020)
with a new process and solicits comment on the proposal.
DATES: Written comments and related material to this proposed rule must
be received on or before January 30, 2023.
ADDRESSES: You may submit written comments electronically by the
following method: Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the instructions on the website for
submitting comments. Include the HHS Docket No. ``HRSA-2021-000X'' in
your comments. All comments received will be posted without change to
<a href="https://www.regulations.gov">https://www.regulations.gov</a>. Please do not include any personally
identifiable or confidential business information you do not want
publicly disclosed.
FOR FURTHER INFORMATION CONTACT: Michelle Herzog, Deputy Director,
Office of Pharmacy Affairs, HRSA, 5600 Fishers Lane, Mail Stop 08W12,
Rockville, MD 20857; email: <a href="/cdn-cgi/l/email-protection#83b0b7b3e1e2e7f1c3ebf1f0e2ade4ecf5"><span class="__cf_email__" data-cfemail="586b6c683a393c2a18302a2b39763f372e">[email protected]</span></a>; telephone: 301-594-4353.
SUPPLEMENTARY INFORMATION:
I. Background and Purpose
Section 340B of the PHS Act entitled ``Limitation on Prices of
Drugs Purchased by Covered Entities,'' was created under section 602 of
Public Law 102-585, the ``Veterans Health Care Act of 1992,'' and
codified at 42 U.S.C. 256b. The 340B Program is intended to enable
covered entities ``to stretch scarce Federal resources as far as
possible, reaching more eligible patients and providing more
comprehensive services.'' H.R. Rep. No. 102-384(II), at 12 (1992). The
Secretary of Health and Human Services (Secretary) delegated the
authority to establish and administer the 340B Program to the HRSA
Administrator. The Office of Pharmacy Affairs (OPA), within HRSA,
oversees the 340B Program. Eligible covered entity types are defined in
Section 340B(a)(4) of the PHS Act, as amended. Section 340B(a)(1) of
the PHS Act instructs HHS to enter into pharmaceutical pricing
agreements (PPAs) with manufacturers of covered outpatient drugs. Under
section 1927(a)(5)(A) of the Social Security Act, a manufacturer must
enter into an agreement with the Secretary that complies with section
340B of the PHS Act ``[i]n order for payment to be available under
section 1903(a) or under part B of title XVIII of the Social Security
Act for covered outpatient drugs of a manufacturer.'' When a drug
manufacturer signs a PPA, it agrees that the prices charged for covered
outpatient drugs to covered entities will not exceed statutorily
defined 340B ceiling prices. Those prices are based on quarterly
pricing reports that manufacturers must provide to the Secretary
through the Centers for Medicare & Medicaid Services (CMS).
Section 7102 of the Patient Protection and Affordable Care Act
(Pub. L. 111-148), as amended by section 2302 of the Health Care and
Education Reconciliation Act (Pub. L. 111-152), jointly referred to as
the ``Affordable Care Act,'' added section 340B(d)(3) to the PHS Act,
which requires the Secretary to promulgate regulations establishing and
implementing a binding ADR process for certain disputes arising under
the 340B Program. Under the 340B statute, the purpose of the ADR
process is to resolve (1) claims by covered entities that they have
been overcharged for covered outpatient drugs by manufacturers and (2)
claims by manufacturers, after a manufacturer has conducted an audit as
authorized by section 340B(a)(5)(C) of the PHS Act, that a covered
entity has violated the prohibition on diversion or duplicate
discounts.
The ADR process is an administrative process designed to assist
covered entities and manufacturers in resolving disputes regarding
overcharging, duplicate discounts, or diversion, as outlined in
statute. The 340B ADR process should be reserved for the above-stated
statutory areas where the 340B ADR Panel can apply 340B law and policy
to the case-specific factual circumstances at issue in a dispute.
Historically, HHS has encouraged manufacturers and covered entities
to work with each other to attempt to resolve disputes in good faith.
HHS recognizes that most disputes that occur between individual parties
are resolved in a timely manner without needing HRSA's involvement. The
ADR process is not intended to replace these good faith efforts and
should be considered only when good faith efforts to resolve disputes
have been exhausted and failed.
In 2010, HHS issued an advanced notice of proposed rulemaking that
requested comments on the development of an ADR process (75 FR 57233,
Sept. 20, 2010). HHS received 14
[[Page 73517]]
comments. In 2016, HHS issued a notice of proposed rulemaking and
received 30 non-duplicative comments. On December 14, 2020, HHS issued
a final rule (85 FR 80632, Dec. 14, 2020, herein referred to as the
2020 final rule), which was codified at 42 CFR 10.20 through 10.24.
HRSA began implementing the 2020 final rule when it became effective on
January 13, 2021, by accepting claims and establishing the ADR process.
However, as outlined in the Justification for proposing to revise the
ADR process established by the 2020 final rule section below, HRSA has
encountered policy and operational challenges with implementation of
the 2020 final rule. Therefore, HHS is proposing to revise the ADR
process set forth in the 2020 final rule and is soliciting comment on
this new approach. HHS proposes that the ADR process set forth in this
NPRM, if finalized, would revise the ADR process established by the
2020 final rule.
HHS proposes that upon finalization of this NPRM, any claims that
are in process and have been submitted pursuant to the 2020 final rule
would be automatically transferred to the new process under this
proposed rule. HHS is soliciting comment on this proposal, including
whether extensions should be granted for pending claims, or whether
pending claims should instead be resubmitted by the party that filed
the claim to OPA.
II. Discussion of Proposed Rule
Justification for Proposing To Revise the ADR Process Established by
the 2020 Final Rule
HHS is soliciting comment on its proposal to revise the current ADR
process by modifying the regulations issued under the 2020 final rule.
The 2020 final rule poses policy and operational challenges that are
described in this section. First, HHS is proposing that the 340B ADR
process be revised to be more accessible, administratively feasible and
timely. The 340B statute at section 340B(d)(3)(B)(ii) of the PHS Act,
requires the establishment of deadlines and procedures that ensure that
claims are resolved fairly, efficiently, and expeditiously. This ADR
process should be a more expeditious and less formal process for
parties to resolve disputes. An ADR process governed by the Federal
Rules of Evidence (FRE) and Civil Procedure (FRCP), as envisioned in
the 2020 final rule, does not advance these goals. For example,
potential petitioners, many of whom are safety net providers in under-
resourced communities, may lack the resources to access 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. In implementing
the 2020 final rule, HRSA received questions from stakeholders about
the formality of the ADR process and the legal requirements under the
FRCP for submitting a petition and accompanying documents, e.g.,
whether the filings submitted must conform to the FRCP, which added to
the complexity and difficulty of the ADR process.
HHS is proposing an ADR process that is designed to assist covered
entities and manufacturers in resolving disputes regarding
overcharging, duplicate discounts, or diversion, as set forth in the
340B statute. HHS recognizes that many covered entities are small,
community-based organizations with limited means and for the ADR
process to be workable, it needs to be accessible. These covered
entities may not have the financial resources to hire an attorney to
navigate the complex FRCP and FRE requirements and engage in a lengthy,
trial-like process, as envisioned in the 2020 final rule. The 340B
statute does not compel such a process. The 2020 final rule also
institutes a minimum threshold of $25,000 or where the equitable relief
sought will likely have a value of more than $25,000 to be met before
the petition could be filed. HHS believes that flexibility should be
maintained with respect to the amount of damages and is therefore not
proposing a minimum threshold for accessing the ADR process. However,
covered entities and manufacturers should carefully evaluate whether
the ADR process is appropriate for minor or de minimis claims given the
time and resource investment required of the parties involved. After
deliberate consideration of these issues, HHS is proposing a more
accessible process where stakeholders have equal access to the ADR
process and can easily understand and participate in it without
expenditure of significant resources or legal expertise. HRSA is
seeking comments on whether to retain the existing minimum threshold,
eliminate the minimum threshold altogether, or set a new minimum
threshold for submitting a claim to ensure a fair, efficient, and
expeditious process.
Second, the 2020 final rule states that the Secretary of HHS shall
establish a 340B ADR Board that consists of at least six members
appointed by the Secretary with equal numbers from HRSA, CMS, and the
HHS Office of the General Counsel (OGC). It also requires the HRSA
Administrator to select three members from the ADR Board to form a 340B
ADR Panel and that each 340B ADR Panel include one ex-officio, non-
voting member (appointed by the Secretary) from OPA to assist the 340B
ADR Panel. The 2020 final rule states that HRSA and CMS ADR Board
members must have relevant expertise and experience in drug pricing or
drug distribution and that the OGC ADR Board members must have
expertise and experience in handling complex litigation.
While the 340B Program is related to drug pricing and drug
distribution, it is a distinct program that requires knowledge of the
340B statute and specific 340B Program operations. Therefore, HHS is
proposing that the 340B ADR Panel members should have specific
knowledge of the authorizing statute and the operational processes of
the 340B Program (e.g., registration and program integrity efforts).
Consequently, HHS is proposing an ADR process and Panel in which 340B
subject matter experts from OPA will resolve matters that proceed
through the ADR process. Moreover, decisions by subject matter experts
from OPA are less likely to conflict with current 340B policy. All
members on the 340B ADR Panel will undergo an additional screening
prior to reviewing a specific claim to ensure that the 340B ADR Panel
member was not involved in previous agency actions (including previous
340B ADR Panel decisions) concerning the specific issue of the ADR
claim as it relates to the specific covered entity or manufacturer
involved.
Third, this NPRM proposes that prior to initiating the ADR process,
parties must undertake good-faith efforts to resolve the disputed
issues. Historically, HRSA has encouraged parties to work in good faith
and covered entities and manufacturers have not had significant numbers
of disputes due to the success of these good-faith-resolution efforts.
Other 340B Program administrative improvements have narrowed the
areas where parties had, in the past, disagreed over 340B Program
issues. For example, HRSA released the pricing component of the 340B
Office of Pharmacy Affairs Information System (340B OPAIS) in February
2019, which, for the first time, provided 340B ceiling prices to
authorized covered entity users. Implementation of that system has
provided the necessary transparency to decrease disputes specific to
the 340B ceiling price and its calculation. Outside of an issue
involving some
[[Page 73518]]
manufacturers placing restrictions on certain covered entities use of
contract pharmacies, OPA has only received three covered entity
overcharge complaints since making 340B ceiling prices available to
covered entities through 340B OPAIS.
Of additional note, prior to the 2020 final rule, stakeholders were
able to utilize an informal dispute resolution process to resolve
disputes between covered entities and manufacturers (61 FR 65406, Dec.
12, 1996) (``1996 guidelines''). There have been only four informal
dispute resolution requests since the publication of the 1996
guidelines. Of the four informal dispute resolution requests received,
two were terminated by HRSA due to non-participation by one of the
parties, another was dismissed due to lack of sufficient evidence, and
the last was terminated because the parties disputed each other's
attempts of good faith resolution. The relatively small number may also
be attributed to the parties' successful attempts to resolve issues in
good faith. With this very small number of past informal disputes, the
increased transparency in 340B pricing data, and HRSA's encouragement
that parties work to resolve issues in good faith, HHS is proposing an
ADR process more closely aligned with the process that was established
in the 1996 guidelines, and less trial-like and resource-intensive--for
both the participants and HHS--than that established in the 2020 final
rule.
Also, in the time since Congress enacted the 340B ADR statutory
provision, HRSA implemented its extensive audit program in 2012, which
ensures that participating covered entities and manufacturers are able
to demonstrate compliance with all 340B Program requirements. On
average, HRSA conducts 200 covered entity audits each fiscal year
including child/associate sites and contract pharmacies associated with
the covered entities, and issues findings in three areas: eligibility,
diversion, and duplicate discounts. These findings vary in terms of
severity--from covered entities not having the correct information in
the 340B OPAIS to the diversion of 340B drugs to individuals who are
not patients of the covered entity. HRSA conducts approximately five
manufacturer audits each year and makes findings related to
manufacturers charging above the 340B statutorily required ceiling
price and manufacturers not reporting the required 340B pricing data to
HRSA. All audit results are posted in summary form on the 340B Program
website.\1\ Since the establishment of HRSA audits of covered entities
and manufacturers, HRSA has been able to identify 340B compliance
concerns that would have previously been disputed. In addition to the
extensive audit program, HRSA has also developed a comprehensive
program integrity strategy to ensure compliance among all stakeholders
participating in the 340B Program. These activities include quarterly
checks of 340B Program eligibility, a self-disclosure and allegation
process which involves communication between OPA and the stakeholders
regarding the compliance issue, and spot checks of supporting
eligibility documentation including contracts with state and local
governments and contract pharmacy agreements.
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\1\ See: <a href="https://www.hrsa.gov/opa/program-integrity/index.html">https://www.hrsa.gov/opa/program-integrity/index.html</a>.
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Further, manufacturers are required to audit a covered entity prior
to filing an ADR claim pursuant to section 340B(d)(3)(B)(iv) of the PHS
Act. Over the last 3 years, two manufacturers have requested to audit
covered entities. In both instances, HRSA approved the audits and
received final audit reports from the manufacturers. The historical
infrequency of manufacturer audit requests along with the requirement
that manufacturers audit covered entities prior to filing an ADR claim
suggests that the number of manufacturer ADR claims will be low, but
HHS welcomes comment on its assessment.
HRSA's impartial facilitation of good faith resolution efforts have
allowed parties to take advantage of opportunities for open
communication to better understand each other's positions and come to
an agreement, without need for formal intervention by HRSA (e.g.,
through a HRSA targeted audit).
Fourth, the ADR process should be reserved for those disputes set
forth in the statutory ADR provision (overcharge, diversion, or
duplicate discount). For example, a manufacturer that audited a covered
entity may report its findings of alleged duplicate discounts
identified by specific purchasing patterns over a period of time. The
covered entity may disagree with the audit assessment of purchases. In
this example, the matter would be best resolved through the ADR process
as it involves an alleged duplicate discount violation.
This NPRM aligns with the statutory provisions by outlining the
specific types of claims that can be brought forth through the ADR
process--claims for overcharge, diversion or duplicate discounts. HHS
is soliciting comment on whether there may be appropriate claims
limitations to ensure that ADR is limited to the specific statutory
areas (diversion, duplicate discounts and overcharges).
HHS is also proposing as part of the ADR process that if the ADR
Panel determines that a specific issue in a claim is the same as or
similar to an issue that is pending in Federal court, the ADR Panel
will suspend review of the claim until such time the issue is no longer
pending in Federal court. HHS welcomes comments on its proposal to
suspend ADR review of claims that involve issues pending in Federal
court.
Fifth, HHS believes that there should be an opportunity for
dissatisfied parties to seek reconsideration of the 340B ADR Panel's
decision by HRSA. Several comments received on the 2016 NPRM requested
an appeals process be made available to all parties. This NPRM proposes
an appeals or reconsideration process option that would be made
available to either party. Under the 2020 final rule and under this
proposal, the Secretary has the inherent authority to review and
reverse or alter the 340B ADR Panel's decision. Discretionary review by
the Secretary would similarly apply to any reconsideration decision
upon finalization of this NPRM. The final agency decision will be
binding upon the parties involved in the dispute, unless invalidated by
an order of a Federal court.
Therefore, based on these concerns with the 2020 final rule, HHS is
proposing in this NPRM to (1) establish a more accessible ADR process
that is reflective of an administrative process rather than a trial-
like proceeding; (2) revise the structure of the 340B ADR Panel so that
it is comprised of 340B Program subject-matter experts; (3) ensure that
the parties have worked in good faith before proceeding through the ADR
process; (4) more closely align the ADR process with the provisions set
forth in the 340B statute (diversion, duplicate discounts, and
overcharges); and (5) include a reconsideration process for parties
dissatisfied with a 340B ADR Panel's decision. HHS is seeking comments
on all components of the NPRM, and whether HHS should consider specific
alternatives.
III. Summary of the Proposed Regulations
The proposed revisions to 42 CFR part 10 are described according to
the applicable section of the regulations. This NPRM proposes to add
and revise the definitions of ``Administrative Dispute Resolution Panel
(340B ADR Panel),'' ``Administrative Dispute
[[Page 73519]]
Resolution Process,'' ``claim,'' ``consolidated claim,'' ``joint
claim,'' and ``Office of Pharmacy Affairs'' at Sec. 10.3 as set forth
below. HHS proposes to revise the language in subpart C as set forth
below.
Section 10.3 Definitions
HHS is proposing to add and revise the following definitions:
``Administrative Dispute Resolution Panel (340B ADR Panel),''
``Administrative Dispute Resolution Process,'' ``claim,''
``consolidated claim,'' ``joint claim,'' and ``Office of Pharmacy
Affairs.''
Subpart C--Administrative Dispute Resolution
Section 10.20 340B Administrative Dispute Resolution Panel
(a) Members of the 340B ADR Panel
As required by section 340B(d)(3)(B)(i) of the PHS Act, regulations
promulgated by the Secretary shall designate or establish a decision-
making official or body within HHS to review and make a decision for
claims filed by covered entities and manufacturers. HHS proposes to
revise the composition of the decision-making body (referred to as the
``340B ADR Panel'' or ``Panel'') that will review and resolve such
claims.
In this section, HHS is proposing that the Secretary appoint a
roster of eligible individuals (Roster), consisting of OPA staff, to
serve on the 340B ADR Panels. The Roster will include no less than 10
staff from OPA. The OPA Director, or designee, shall select at least
three members from the Roster to form a 340B ADR Panel to facilitate
the review and resolution of an ADR claim. The OPA Director would have
the authority to ensure that the Panel is operating in accordance with
this proposed rule, including through the selection of the Panel
members and the removal of Panel members for reasons including but not
limited to conflicts of interest as described in paragraph (b) or
pursuant to instructions from the Secretary in accordance with the
Secretary's authority to remove 340B ADR Panel or Roster members at
will.
Subject matter experts in the 340B Program are best suited to
resolve issues for covered entity and manufacturer claims, in a manner
similar to the process that OPA uses when it conducts program
compliance audits of covered entities and manufacturers. OPA staff are
knowledgeable of 340B Program operations and oversight. They have years
of subject matter expertise on the complex matters that may arise as
part of dispute resolution. OPA also has experience in conducting
audits and has a robust audit program of both covered entities and
manufacturers that focuses on many of the challenges facing
stakeholders in implementing 340B Program policy. OPA has already
instituted processes to help parties resolve issues (many of which are
resolved in good faith or are errors/misunderstandings). For example,
the 340B Program has existing processes and reporting when a covered
entity asserts a 340B price is unavailable. OPA has the capability and
experience to initiate a dialogue between covered entities and
manufacturers to resolve such matters and has done so successfully on
many occasions. OPA's access to appropriate stakeholder contact
information and awareness of 340B drug distribution plans have
facilitated resolutions to certain drug product access concerns. These
examples illustrate that OPA has the requisite expertise to administer
and staff the 340B ADR Panels to ensure alignment, consistency, and
transparency in ADR decisions, and understands the impact of these
decisions on the 340B Program as a whole, and the 340B Program audits,
as well as other program integrity initiatives.
HHS is soliciting specific comments on the proposed size and
composition of the 340B ADR Panel, including the proposal to maintain
the 340B ADR Panel within OPA or whether staff from other components of
HRSA or HHS more generally should serve as members of the Panel.
(b) Conflicts of Interest
The ADR process assists covered entities and manufacturers in
resolving disputes specifically related to overcharging, duplicate
discounts, or diversion as outlined in section 340B(d)(3) of the PHS
Act. Neither HHS, HRSA, nor OPA are parties to the ADR process, but
rather help facilitate the process between covered entities and
manufacturers. HHS is proposing that OPA staff serve on the 340B ADR
Panel to review and make decisions on claims that are brought forth
through the ADR process. HHS is also proposing that the OPA Director
will ensure that each 340B ADR Panel member is screened prior to
reviewing a claim and that there are no conflicts of interest between
the parties involved in the dispute and the 340B ADR Panel member. As
background, HRSA employs an ongoing, rigorous ethics clearance process
for OPA staff to ensure that there are no conflicts of interest between
staff and 340B stakeholders. OPA employees undergo an annual ethics
clearance process in accordance with the U.S. Office of Government
Ethics policies applicable to Federal employees. As part of this annual
clearance, OPA staff are assessed in the following areas: if they have
a (1) financial interest in a covered entity or a manufacturer
participating in the 340B Program; (2) family or close relation who is
either employed by or otherwise involved with a covered entity or a
manufacturer participating in the 340B Program; (3) current or former
business or employment relationship to a covered entity or manufacturer
participating in the Program. If a potential conflict arises, OPA staff
must immediately inform their supervisors and disclose any potential
issues. In this case, depending on the circumstances, the staff member
may be removed from the ADR Panel. However, to ensure fairness and
objectivity in the ADR process, this NPRM proposes that each OPA 340B
ADR Panel member also undergo additional screening prior to reviewing a
specific claim and will not be allowed to review the claim if any
conflicts of interest exist. In addition, this NPRM proposes that
dedicated OPA staff members will have specific ADR duties as part of
their job functions, including being part of the 340B ADR Panel that
makes decisions on an ADR claim.
The staff with ADR duties in their job functions will also be
screened prior to being assigned to a 340B ADR Panel to ensure that
they have not been involved in prior 340B Program oversight work
related to the parties involved, including previous 340B ADR Panel
decisions concerning the ADR claim as it relates to the specific
covered entity or manufacturer involved. For example, if an OPA staff
member were involved in reviewing or approving an audit work plan for a
specific manufacturer that is part of an ADR claim, then that staff
member would not serve on that 340B ADR Panel. This would not, however,
preclude an OPA staff member from serving on the 340B ADR Panel when
the covered entities or manufacturers were parties in a prior ADR
decision. HHS solicits comments on this aspect of the proposed process
and will consider other proposals to ensure that the 340B ADR Panel
members are fair and objective.
In addition, HHS proposes that OPA staff members serving on a 340B
ADR Panel may be removed by the OPA Director for reasons including but
not limited to conflicts of interest. For example, if it is determined
prior to or during the course of a Panel member's review of a claim
that there is a conflict of interest, as described in paragraph (b),
with respect to that claim, the Panel member would be removed from the
[[Page 73520]]
Panel and replaced by another OPA staff member from the Roster of
eligible individuals.
(c) Secretarial Removal Power
The Secretary retains the authority to remove an individual from
the Roster of persons appointed to sit on a 340B ADR Panel at any time,
such that the individual may no longer serve on any 340B ADR Panel. In
addition to the ability to remove an individual from the Roster, the
Secretary may also remove a panelist from a particular 340B ADR Panel
at any time.
(d) Duties of the 340B ADR Panel
HHS is proposing that the role of the 340B ADR Panel is to
independently review and apply 340B law and policy to the case-specific
factual circumstances at issue in an overcharge, diversion, or
duplicate discount dispute. In this proposed rule, once OPA determines
a claim meets the requirements set forth in Sec. 10.21(b) and forwards
the claim to the 340B ADR Panel, the Panel will review and evaluate all
documentation submitted by the party initiating the claim. The 340B ADR
Panel may request additional information or clarification from any
party involved in the claim during the review and evaluation process.
The 340B ADR Panel will also facilitate the review of covered entity
requests for information and documents from manufacturers and third
parties as outlined in Sec. 10.22 of this proposed rule. If the 340B
ADR Panel finds that either party does not fully respond to a request
for information or documents from OPA or the 340B ADR Panel, HHS
proposes that the 340B ADR Panel may draw an adverse inference and make
a decision on the claim based on the information submitted in the claim
package that moved forward for review.
HHS also proposes that the 340B ADR Panel would conduct a review of
the documents submitted by the parties and evaluate claims based on the
information received (including from any associations or organizations,
or legal counsel representing the parties) unless, at the 340B ADR
Panel's discretion, the nature of the claim necessitates that a meeting
with the parties be held. In addition, the 340B ADR Panel may consult
with, as appropriate or necessary, other staff within OPA, other HHS
offices, other Federal agencies, or with outside parties to the extent
additional information is needed.
The 340B ADR Panel will issue a decision on the claim in accordance
with Sec. 10.23. HHS proposes that the 340B ADR Panel's decision must
represent the decision of a majority of the Panel members.
Section 10.21 Claims
(a) Claims Permitted
Section 7102 of the Affordable Care Act added section 340B(d)(3) to
the PHS Act. It instructs the Secretary to establish and implement a
binding ADR process to resolve certain claims of 340B Program statutory
violations. Section 340B(d)(3)(A) of the PHS Act specifies that the ADR
process is to be used to resolve: (1) claims by covered entities that
they have been overcharged by manufacturers for drugs purchased under
this section and (2) claims by manufacturers, after a manufacturer has
conducted an audit of a covered entity, as authorized by section
340B(a)(5)(C) of the PHS Act, that a covered entity has violated the
prohibitions against duplicate discounts and diversion (sections
340B(a)(5)(A) and (B) of the PHS Act). This NPRM proposes aligning
claims to those outlined in the 340B statute and is also proposing that
the harm alleged (overcharge, diversion, duplicate discount) be
specific to the parties identified in the claim. HHS believes that the
role of the 340B ADR Panel is to independently review and apply 340B
law and policy to the case-specific factual circumstances at issue in
an overcharge, diversion, or duplicate discount dispute. OPA will
review each claim to ensure the claim meets the filing requirements set
forth in the rule and as outlined in Sec. 10.21(b) prior to forwarding
the claim to the 340B ADR Panel.
(b) Requirements for Filing a Claim
HHS proposes that a covered entity and a manufacturer meet certain
requirements for filing a claim. These proposed requirements will
ensure that a claim of the type specified in section 340B(d)(3)(A) of
the PHS Act is the subject of the dispute.
The claims will be submitted through a secure electronic mechanism
to safeguard confidential and proprietary information. HHS will provide
additional detail as to the mechanism for submitting claims in future
sub-regulatory guidance.
HHS is proposing that covered entities and manufacturers file a
written claim, based on the facts available, to OPA within 3 years of
the alleged specified violation and that any claim not filed within 3
years shall be time barred. The proposed requirement that a claim be
filed within 3 years is consistent with the record retention
expectations for the 340B Program and would ensure that covered
entities and manufacturers have access to relevant records needed to
review and respond to claims. This proposal would ensure that documents
are submitted with each claim to verify that the alleged violation is
not time barred. HHS requests public comment concerning the 3-year
limitation on claims submission. HHS is proposing that while there is
no minimum threshold to submit a claim through the ADR process, parties
should carefully consider whether the ADR process is appropriate for de
minimis claims given the time, resources, and investment needed to
undertake ADR.
HHS is also proposing that all files, documents, or records
associated with the specified claim that are the subject of the dispute
must be maintained by the covered entity and/or manufacturer until the
final agency decision is issued.
Covered Entity Claims
In Sec. 10.21(b)(2), HHS proposes that to be eligible for the ADR
process, each claim 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 any such documentation as may be requested by
OPA to evaluate the accuracy of the claim. Such documentation may
include, but is not limited to: (1) a 340B purchasing account invoice
which shows 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 by
the manufacturer or wholesaler of the attempts made to purchase the
drug via a 340B account at the ceiling price, which resulted in the
instance of 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. HHS believes that these documents are readily
available to a covered entity in the usual course of business and
should not be overly burdensome to produce; however, HHS requests
comment on the feasibility of producing the documentation as proposed.
HHS is also proposing to require the covered entity, at the time of
filing, to provide OPA with a written summary of attempts to work in
good faith to resolve the instance of overcharging with the
manufacturer at issue. An example of documented good faith efforts
could include attempts to enter into discussion to resolve disputes or
communication records between the covered entity and the manufacturer.
HHS is seeking comment on what other types of documentation would
indicate
[[Page 73521]]
good faith effort and whether a threshold for attempts at communication
should be established.
Manufacturer Claims
In Sec. 10.21(b)(3), HHS proposes that to be eligible for the 340B
ADR process, each claim 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, along
with any such documentation as may be requested by OPA to evaluate the
accuracy of the claim. Such documentation shall include but is not
limited to: (1) a final audit report which indicates that the
manufacturer audited the covered entity for compliance with the
prohibition on diversion (section 340B(a)(5)(B) of the PHS Act) and/or
duplicate discounts (section 340B(a)(5)(A) of the PHS Act); (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. HHS is proposing to require the
manufacturer, at the time of filing, to submit a written summary of
attempts to work in good faith to resolve the claim with the covered
entity. An example of documented good faith efforts could include
attempts to enter into discussion to resolve disputes prior to an audit
of a covered entity, along with attempts as part of the covered entity
response to any findings. It could also include evidence of
communication between the covered entity and the manufacturer. HHS is
seeking comments on what other types of evidence would constitute the
parties working in good faith and whether a threshold for attempts at
communication should be established.
(c) Combining Claims
HHS proposes that, if requested, covered entities or manufacturers
may be permitted to combine individual claims. Section
340B(d)(3)(B)(vi) of the PHS Act permits ``multiple covered entities to
jointly assert claims of overcharges by the same manufacturer for the
same drug or drugs in one administrative proceeding...'' For covered
entity joint claims, HHS proposes that the claim must list each covered
entity and its 340B IDs and include documentation as described in
paragraph (b)(2) and/or information from each individual covered entity
demonstrating that each covered entity meets all of the requirements
for filing an ADR claim. Additionally, a letter requesting the
combining of claims must also accompany the claim at the time of filing
and must document that each covered entity consents to the combination
of the claim, including signatures of the individuals representing each
covered entity.
Pursuant to section 340B(d)(3)(B)(vi) of the PHS Act, joint claims
are also permitted on behalf of covered entities by associations or
organizations representing their interests. Therefore, this NPRM
proposes that the covered entities represented in the claim must be
members of the association or the organization representing them and
that each individual covered entity listed in the claim must meet the
requirements listed in paragraph (b) for filing a claim with OPA.
The proposed joint claim must assert overcharging by a single
manufacturer for the same drug(s), and the organization or association
will be responsible for filing the claim. HHS also proposes requiring
that a letter requesting the combining of claims must accompany the
claim and must include documentation that each covered entity consents
to the organization or association asserting a claim on its behalf,
including signatures of individuals representing each covered entity
and a point of contact for the covered entity. HHS is also proposing
that covered entities will not be permitted to file claims against
multiple manufacturers in a single ADR proceeding. In other words,
covered entities are only permitted to file a claim (individual or
joint) against a single manufacturer for the same drug(s) in a single
ADR proceeding.
Section 340B(d)(3)(B)(v) of the PHS Act permits the consolidation
of claims brought by more than one manufacturer against the same
covered entity if consolidation is consistent with the statutory goals
of fairness and economy of resources. This NPRM proposes that the claim
must list each manufacturer and include documentation as described in
paragraph (b)(3), and/or information from each manufacturer
demonstrating that each individual manufacturer meets the requirements
listed in paragraph (b) for filing an ADR claim. HHS also proposes that
a letter requesting consolidation of claims must be submitted with the
claim and must document that each manufacturer consents to the
consolidation of the claims, including signatures of the individuals
representing the manufacturers and a single point of contact for the
claim being filed on behalf of the consolidated group. The statutory
authority for implementing the 340B ADR process does not permit
consolidated claims on behalf of manufacturers by associations or
organizations representing their interests. Therefore, HHS is not
proposing this option in this NPRM.
As required by the 340B statute, HHS is proposing an ADR process
that allows more than one manufacturer to consolidate claims against
the same covered entity. With regard to the consolidation of claims by
manufacturers against the same covered entity, HHS is proposing that
the 340B ADR Panel will determine whether such consolidation is
appropriate and consistent with the goals of fairness and economy of
resources.
(d) Deadlines and Procedures for Filing a Claim
HHS proposes that covered entities and manufacturers can file a
claim with OPA, or any successor office assigned to administer the 340B
Program, demonstrating that they satisfy the requirements described in
paragraph (b). The OPA staff conducting the initial review of a claim
will not be appointed to serve on a 340B ADR Panel reviewing that
specific claim. OPA will contact the initiating party once the claim
has been received. OPA will conduct an initial review of the claim and
may request additional information. If additional information is
requested, the initiating party filing the claim will have 20 business
days from receipt of the request to respond. If the initiating party
does not respond to the request for additional information within the
time period specified or request an extension, the claim will not move
forward to the 340B ADR Panel for review. OPA will determine whether a
claim will be forwarded to the 340B ADR Panel for review in accordance
with paragraph (b). In the event that a claim does not move forward for
review, HHS is proposing that all parties listed on the claim will
receive information from HRSA regarding the reason(s) why the claim did
not move forward.
OPA will review all information submitted as part of the claim to
verify that the requirements for filing a claim have been met and will
provide written notification to the initiating party that the claim is
complete. HHS is proposing that once the claim is deemed complete, OPA
will also provide written notification to the opposing party that the
claim was submitted to OPA and that they will have 30 business days to
provide OPA with a response. This written notification will be provided
to the opposing party before the claim moves forward to the 340B ADR
Panel. As part of this written notification, OPA will provide a copy of
the claim and additional instructions regarding the
[[Page 73522]]
ADR process, including timelines and information on how to submit their
response as described in paragraph (e). At such time, OPA will also
notify the initiating party that their claim is deemed complete and
meets the requirements of paragraph (b).
In addition, HHS proposes that the claim will be forwarded to the
340B ADR Panel for review after OPA receives the opposing party's
response. OPA would provide additional information on the 340B ADR
process to both the initiating and opposing parties at that time,
including contact information for requested follow-up communications.
HHS proposes that if the claim does not move forward for review by
the 340B ADR Panel, OPA will send written notice to both parties
briefly stating the basis for the decision and will advise the party
that they may revise and refile the claim if the party has new
information to support the alleged statutory violation.
(e) Responding to a Submitted Claim
HHS proposes that once the parties have been notified by OPA that
the claim has met the requirements in paragraph (b) and the claim does
not otherwise prevent OPA from moving it forward to the 340B ADR Panel
for review as described in paragraph (d), the opposing party will have
30 business days to submit a written response to the allegation to OPA.
The opposing party may submit a request for an extension of the initial
30 days and OPA will make a determination to approve or disapprove such
request and notify both parties. Once the opposing party's response has
been received, OPA will provide a copy to the initiating party and will
notify both parties that the claim has moved forward for review by the
340B ADR Panel. If the opposing party does not provide a response or
otherwise elects not to participate in the 340B ADR process, OPA will
forward the information included as part of the initiating party's
claim and the 340B ADR Panel will render its decision after review of
the information submitted in the initial claim. Subsequent requests for
information regarding the claim would be made by the 340B ADR Panel as
appropriate, and the 340B ADR Panel will consider the information
gathered during the ADR process and may request additional information
from the parties.
Section 10.22 Covered Entity Information and Document Requests
Pursuant to section 340B(d)(3)(B)(iii) of the PHS Act, regulations
promulgated by the Secretary for the 340B ADR process will establish
procedures by which a covered entity may discover or obtain information
and documents from manufacturers and third parties relevant to a claim
that the covered entity has been overcharged by the manufacturer. This
NPRM proposes that such covered entity information requests be
facilitated by the 340B ADR Panel. HHS proposes that, to request
information or documents necessary to support its claim from an
opposing party, a covered entity must submit a written request to the
340B ADR Panel no later than 20 business days after the entity was
notified by OPA that the claim has moved forward for the 340B ADR
Panel's review. The 340B ADR Panel will review the information/document
request to ensure that it is reasonable, relevant, and within the scope
of the asserted claim. The 340B ADR Panel will notify the covered
entity in writing if any request is deemed reasonable and within the
scope of the asserted claim and permit the covered entity to submit a
revised information/document request, if it is not.
In this section, HHS proposes that the 340B ADR Panel will consider
relevant factors, such as the scope of the information/document
request, whether there are consolidated claims, or the involvement of
one or more third parties in distributing drugs on behalf of the
manufacturer and that once reviewed, the 340B ADR Panel will submit the
information/document request to the manufacturer, which must respond
within 20 business days.
HHS also proposes that the manufacturer must fully respond in
writing to the information/document request and submit its response to
the 340B ADR Panel by the stated deadline and that the manufacturer is
responsible for obtaining relevant information/documents from
wholesalers or other third parties with which it contracts for sales or
distribution of its drugs to covered entities. HHS proposes that if a
manufacturer anticipates it will not be able to respond fully by the
deadline, the manufacturer may request one extension in writing within
15 business days. The extension request that is submitted to the 340B
ADR Panel must include any available information or documents, the
reason why the deadline is not feasible, and outline a proposed
timeline for fully responding to the information/document request. The
340B ADR Panel will review the extension request and notify both the
manufacturer and the covered entity in writing as to whether the
request for an extension is granted and the date of the new deadline,
if any.
HHS proposes that if the 340B ADR Panel finds that a manufacturer
has failed to respond or fully respond to a covered entity information/
document request, the 340B ADR Panel may draw an adverse inference, and
proceed with facts that have already been established in the
proceeding. Such adverse inference could include holding facts to have
been established in the proceeding or precluding a party from
contesting a particular issue. HHS invites specific comment on this
issue.
Section 10.23 340B ADR Panel Decision Process
In Sec. 10.23, HHS proposes that the 340B ADR Panel will conduct
an initial review of the claim to determine if the specific issue that
would be brought forth in a claim is the same as or similar to an issue
that is pending Federal court. If this determination is made, the 340B
ADR Panel will suspend review of the claim until such time the issue is
no longer pending in Federal court.
If suspending review of the claim is not appropriate, the 340B ADR
Panel would review the documents submitted by the parties and determine
if there is adequate support to conclude that an overcharge, diversion,
or a duplicate discount has occurred in the specific case at issue. In
alignment with the statute at section 340B(d)(3)(B)(ii) of the PHS Act,
the 340B ADR Panel will seek to ensure that its review and decision of
the claim is conducted in a fair, efficient and expeditious manner. The
timeline for the review is wholly dependent on the complexity of each
claim submitted through the ADR Process.
After review of the claim, the 340B ADR Panel would prepare a
decision letter, which includes the 340B ADR Panel's findings regarding
the alleged violation. HHS is proposing that the 340B ADR Panel's
decision letter be submitted to all parties in the dispute and the OPA
Director. HHS is also proposing, as described in Sec. 10.24, that
either party may, within 20 business days of the receipt of the 340B
ADR Panel's decision letter, initiate a reconsideration of the 340B ADR
Panel's decision. While the 340B ADR Panel decision would conclude the
340B ADR Panel process, either party may, at its sole discretion,
request reconsideration as described in Sec. 10.24.
If HRSA does not receive a reconsideration request from either
party within 20 business days of the issuance of the 340B ADR Panel's
decision letter, or the HRSA Administrator has not initiated a
reconsideration request as described in Sec. 10.24, the 340B ADR
Panel's decision will serve as the final agency decision
[[Page 73523]]
letter and will be binding upon the parties involved in the dispute,
unless invalidated by order of a Federal court. The 340B ADR Panel
decision would bind only the specific parties to the dispute. In
addition, in accordance with section 340B(d)(3)(C) of the PHS Act, any
dissatisfied party may also seek judicial review of the final agency
decision.
Once the parties involved have been notified of the final agency
decision, the OPA Director will consider whether to take enforcement
action or ensure corrective action, to the extent allowed under the
340B statute. For example, if the 340B ADR Panel finds that a covered
entity has violated the prohibition against diversion, the OPA Director
may require, as a sanction, that the covered entity repay the affected
manufacturer. If the 340B ADR Panel finds that a manufacturer
overcharged a covered entity, the OPA Director may require as a
sanction that the manufacturer refund or issue a credit to the affected
covered entity.
Section 10.24 340B ADR Panel Decision Reconsideration Process
HHS is proposing that after a decision has been issued by a 340B
ADR Panel, if either the initiating party or the opposing party is
dissatisfied with the decision, they may request administrative
reconsideration of the claim if the requirements for obtaining a
reconsideration are met. The HRSA Administrator also has the discretion
to initiate a reconsideration if no request is received by the parties.
HHS is proposing that the reconsideration be conducted by the HRSA
Administrator, or designee, as their review will be independent of the
340B ADR Panel's decision.
HHS is proposing that the party requesting a reconsideration must
submit its request in writing to both the other party involved in the
claim and to the HRSA Administrator within 20 business days of
receiving the 340B ADR Panel's decision. The request for
reconsideration must include a copy of the 340B ADR Panel's decision
letter, and the burden lies with the party filing the reconsideration
to submit written documentation indicating why a reconsideration is
warranted. New information may not be submitted as part of the
reconsideration process in order to remain consistent with the facts
that were reviewed by the 340B ADR Panel in determining the final
agency decision. HHS proposes that parties be entitled to
reconsideration of their claim upon demonstration that the 340B ADR
Panel decision may have been inaccurate or flawed. HHS invites comments
on its proposal regarding the scope of the reconsideration process.
HHS is proposing that the HRSA Administrator review the 340B ADR
Panel decision, consult with HHS personnel, as necessary, and review
any information indicating that a reconsideration is warranted based on
inaccurate or flawed information.
Under the NPRM, the HRSA Administrator makes a determination of a
reconsideration by issuing a decision that provides the basis for the
new determination or dismissing the reconsideration. The HRSA
Administrator will review the reconsideration in a fair, efficient, and
expeditious manner; however, the timeline for making a decision can
vary due to the complexity of each case. HRSA will work with the
parties involved to ensure that they are updated about the process. The
HRSA Administrator's reconsideration decision would be considered the
final agency decision.
IV. Statutory and Regulatory Requirements
A. Regulatory Impact Analysis
HHS has examined the effects of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 8, 2011), the Regulatory Flexibility Act (September 19,
1980, Pub. L. 96-354), the Unfunded Mandates Reform Act of 1995 (Pub.
L. 104-4), and Executive Order 13132 on Federalism (August 4, 1999).
B. Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 is supplemental to and reaffirms the principles,
structures, and definitions governing regulatory review as established
in Executive Order 12866, emphasizing the importance of quantifying
both costs and benefits, of reducing costs, harmonizing rules, and
promoting flexibility. Section 3(f) of Executive Order 12866 defines a
``significant regulatory action'' as an action that is likely to result
in a rule: (1) having an annual effect on the economy of $100 million
or more in any one year, or adversely and materially affecting a sector
of the economy, productivity, competition, jobs, the environment,
public health or safety, or state, local, or tribal governments or
communities (also referred to as ``economically significant''); (2)
creating a serious inconsistency or otherwise interfering with an
action taken or planned by another agency; (3) materially altering the
budgetary impacts of entitlement grants, user fees, or loan programs or
the rights and obligations of recipients thereof; or (4) raising novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive order. A
regulatory impact analysis must be prepared for major rules with
economically significant effects ($100 million or more in any one
year), and a ``significant'' regulatory action is subject to review by
the Office of Management and Budget (OMB).
This NPRM is not likely to have an economic impact of $100 million
or more in any one year; therefore, it has not been designated an
``economically significant'' rule under section 3(f)(1) of Executive
Order 12866. This NPRM would modify the framework for HHS to resolve
certain disputed claims regarding manufacturers overcharging covered
entities and disputed claims of diversion and duplicate discounts by
covered entities audited by manufacturers under the 340B Program. HHS
does not anticipate the modification of the ADR process to result in
significant economic impact. This is consistent with a similar
determination in the 2020 final rule that ``HHS does not anticipate the
introduction of an ADR process to result in significant economic
impacts.''
C. The Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) and the
Small Business Regulatory Enforcement and Fairness Act of 1996, which
amended the RFA, require HHS to analyze options for regulatory relief
of small businesses. If a rule has a significant economic effect on a
substantial number of small entities, HHS must specifically consider
the economic effect of the rule on small entities and analyze
regulatory options that could lessen the impact of the rule. HHS will
use a RFA threshold of at least a three percent impact on at least five
percent of small entities.
This NPRM proposes requirements that would affect drug
manufacturers (North American Industry Classification System code
325412: Pharmaceutical Preparation Manufacturing). The small business
size standard for drug manufacturers is 750 employees.
[[Page 73524]]
Approximately 700 drug manufacturers participate in the 340B Program.
While it is possible to estimate the impact of this NPRM on the
industry as a whole, the data necessary to project changes for specific
manufacturers or groups of manufacturers is not available, as HRSA does
not collect the information necessary to assess the size of an
individual manufacturer that participates in the 340B Program. This
NPRM would also affect health care providers. For purposes of the RFA,
HHS considers all health care providers to be small entities either by
virtue of meeting the Small Business Administration (SBA) size standard
for a small business, or for being a nonprofit organization that is not
dominant in its market. The current SBA size standard for health care
providers ranges from annual receipts of $7 million to $35.5 million.
As of April 1, 2022, 13,730 covered entities participate in the 340B
Program.
This NPRM would modify the administrative mechanism to review
claims by manufacturers that covered entities have violated certain
statutory obligations and claims by covered entities alleging
overcharges for 340B covered outpatient drugs by manufacturers. This
proposed ADR process would require submission of documents that
manufacturers and covered entities are already required to maintain as
part of their participation in the 340B Program. HHS expects that this
documentation would be readily available prior to submitting a claim.
Therefore, the collection of this information would not result in an
economic impact or create additional administrative burden on these
businesses.
HHS believes the proposed ADR process would provide a less
burdensome option for resolving claims that would be more streamlined
and less trial-like in nature than the 2020 final rule. This NPRM
provides an option to join or consolidate claims by similar situated
entities, and covered entities may have claims asserted on their behalf
by associations or organizations which could reduce costs. HHS has
determined, and the Secretary certifies, that this NPRM would not have
a significant economic impact on a substantial number of small health
care providers or a significant impact on the operations of a
substantial number of small manufacturers; therefore, HHS is not
preparing an analysis of impact for the purposes of the RFA. HHS
estimates that the economic impact on the less than 5 percent of small
entities and small manufacturers participating in the 340B Program
would be minimal and less than a 3 percent economic burden and
therefore does not meet the RFA threshold of 3 percent. HHS welcomes
comments concerning the impact of this proposed rule on small
manufacturers and small health care providers.
D. Unfunded Mandates Reform Act of 1995
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires
that agencies prepare a written statement, which includes an assessment
of anticipated costs and benefits, before proposing ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and Tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year.'' In 2021, that threshold is approximately
$158 million. HHS does not expect this NPRM to exceed the threshold.
E. Executive Order 13132--Federalism
HHS has reviewed this NPRM in accordance with Executive Order 13132
regarding federalism and has determined that it does not have
``federalism implications.'' This proposed rule would not ``have
substantial direct effects on the States, or on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government.''
This NPRM, if implemented, would not adversely affect the following
family elements: family safety, family stability, marital commitment;
parental rights in the education, nurture, and supervision of their
children; family functioning, disposable income, or poverty; or the
behavior and personal responsibility of youth, as determined under
section 654(c) of the Treasury and General Government Appropriations
Act of 1999. HHS invites additional comments on the impact of this
proposed rule in this area.
F. Collection of Information
The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires
that OMB approve all collections of information by a Federal agency
from the public before they can be implemented. This proposed rule
would not impact the current reporting and recordkeeping burden for
manufacturers or covered entities under the 340B Program. HHS believes
that the 340B ADR process is exempt from Paperwork Reduction Act
requirements as it provides the mechanism and procedures for an
administrative action or investigation involving an agency against
specific individuals or entities, pursuant to 44 U.S.C. 3518(c). In
addition, participants in the 340B Program are already required to
maintain the necessary records to submit an ADR claim. Comments are
welcome on the accuracy of this statement.
Dated: November 21, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
List of Subjects in 42 CFR Part 10
Biologics, Business and industry, Diseases, Drugs, Health, Health
care, Health facilities, Hospitals, 340B Drug Pricing Program.
For the reasons set forth in the preamble, the Department of Health
and Human Services proposes to amend 42 CFR part 10 as follows:
PART 10--340B DRUG PRICING PROGRAM
0
1. The authority citation for part 10 continues to read as follows:
Authority: Sec. 340B of the Public Health Service Act (42
U.S.C. 256b) (PHSA), as amended.
0
2. Amend Sec. 10.3 by revising the definitions for Administrative
Dispute Resolution (ADR) Process, Administrative Dispute Resolution
Panel (340B ADR Panel), Claim, Consolidated claim, and Joint claim and
adding the definition for Office of Pharmacy Affairs (OPA), in
alphabetical order, to read as follows:
Sec. 10.3 Definitions.
* * * * *
Administrative Dispute Resolution (ADR) Process means a process
used to resolve the following types of claims, including any issues
that assist the 340B ADR Panel in resolving such claims:
(1) Claims by covered entities that may have been overcharged for
covered outpatient drugs purchased from manufacturers; and
(2) Claims by manufacturers of 340B drugs, after a manufacturer has
conducted an audit of a covered entity (pursuant to section
340B(a)(5)(C) of the Public Health Service Act (PHS Act)), that a
covered entity may have violated the prohibitions against duplicate
discounts or diversion.
Administrative Dispute Resolution Panel (340B ADR Panel) means a
decision-making body within the Health Resources and Services
Administration's Office of Pharmacy Affairs that reviews and makes
decisions for claims brought under the ADR Process.
* * * * *
[[Page 73525]]
Claim means a written allegation filed by or on behalf of a covered
entity or by a manufacturer for resolution under the ADR Process.
* * * * *
Consolidated claim means a claim resulting from combining multiple
manufacturers' claims against the same covered entity.
* * * * *
Joint claim means a claim resulting from combining multiple covered
entities' claims (or claims from their membership organizations' or
associations') against the same manufacturer for the same drug or
drugs.
* * * * *
Office of Pharmacy Affairs (OPA) means the office, or any successor
office, assigned to administer the 340B Program within the Health
Resources and Services Administration that oversees the 340B Program.
* * * * *
0
3. Revise subpart C to read as follows:
Subpart C--Administrative Dispute Resolution
Sec.
10.20 Administrative Dispute Resolution Panel.
10.21 Claims.
10.22 Covered entity information and document requests.
10.23 340B ADR Panel decision process.
10.24 340B ADR Panel decision reconsideration process.
Authority: Sec. 340B of the Public Health Service Act (42
U.S.C. 256b) (PHSA), as amended.
Sec. 10.20 340B Administrative Dispute Resolution Panel.
The Secretary shall appoint a roster of eligible individuals
(Roster) consisting of staff within OPA, to serve on a 340B ADR Panel,
as defined in Sec. 10.3. The OPA Director, or the OPA Director's
designee, shall select at least three members from the Roster to form a
340B ADR Panel to review and make decisions regarding one or more
claims filed by covered entities or manufacturers.
(a) Members of the 340B ADR Panel. (1) The OPA Director shall:
(i) Select at least three members for each 340B ADR Panel from the
Roster of appointed staff;
(ii) Have the authority to remove an individual from the 340B ADR
Panel and replace such individual; and
(iii) Select replacement 340B ADR Panel members should an
individual resign from the panel or otherwise be unable to complete
their duties.
(2) No member of the 340B ADR Panel may have a conflict of
interest, as defined in paragraph (b) of this section.
(b) Conflicts of interest. (1) All members appointed by the
Secretary to the Roster of individuals eligible to be appointed to a
340B ADR Panel will be screened for conflicts of interest prior to
reviewing a claim. In determining whether a conflict exists, the
Department of Health and Human Services (HHS) will consider financial
interest(s), current or former business or employment relationship(s),
or other involvement of a prospective panel member or close family
member who is either employed by or otherwise has a business
relationship with an involved party, subsidiary of an involved party,
or particular claim(s) expected to be presented to the prospective
panel member. HHS has sole discretion to determine whether a conflict
of interest exists.
(2) All members on the 340B ADR Panel will undergo an additional
screening prior to reviewing a specific claim to ensure that the 340B
ADR Panel member was not involved in previous agency actions, including
previous 340B ADR Panel decisions, concerning the specific issue of the
ADR claim as it relates to the specific covered entity or manufacturer
involved.
(c) Secretarial removal power. The Secretary may remove any
individual from the Roster of 340B ADR Panelists for any reason,
including from any 340B ADR Panel to which the individual has already
been assigned.
(d) Duties of the 340B ADR Panel. The 340B ADR Panel will:
(1) Review and evaluate claims, including consolidated and joint
claims, and documents and information submitted by covered entities and
manufacturers;
(2) Review and may request additional documentation, information,
or clarification of an issue from any or all parties to make a decision
(if the 340B ADR Panel finds that a party has failed to respond or
fully respond to an information request, the 340B ADR Panel may draw an
adverse inference, and proceed with facts that the 340B ADR Panel
determines have been established in the proceeding);
(3) Evaluate claims based on information received, unless, at the
340B ADR Panel's discretion, the nature of the claim necessitates that
a meeting with the parties be held;
(4) At its discretion, consult with others, including staff within
OPA, other HHS offices, and other Federal agencies while reviewing a
claim; and
(5) Make decisions on each claim.
Sec. 10.21 Claims.
(a) Claims permitted. All claims must be specific to the parties
identified in the claims and are limited to the following:
(1) Claims by a covered entity that it has been overcharged by a
manufacturer for a covered outpatient drug; and
(2) Claims by a manufacturer, after it has conducted an audit of a
covered entity pursuant to section 340B(a)(5)(C) of the PHS Act, that
the covered entity has violated section 340B(a)(5)(A) of the PHS Act,
regarding the prohibition of duplicate discounts, or section
340B(a)(5)(B) of the PHS Act, regarding the prohibition of the resale
or transfer of covered outpatient drugs to a person who is not a
patient of the covered entity.
(b) Requirements for filing a claim. (1) A covered entity or
manufacturer must file a claim under this section in writing to OPA
within 3 years of the date of the alleged violation. Any file,
document, or record associated with the claim that is the subject of a
dispute must be maintained by the covered entity and manufacturer until
the date of the final agency decision.
(2) A covered entity filing a claim described in paragraph (a)(1)
of this section must provide the basis, including all available
supporting documentation, for its belief that it has been overcharged
by a manufacturer, in addition to any other documentation as may be
requested by OPA. A covered entity claim against multiple manufacturers
is not permitted.
(3) A manufacturer filing a claim under paragraph (a)(2) of this
section must provide documents sufficient to support its claim that a
covered entity has violated the prohibition on diversion and/or
duplicate discounts, in addition to any other documentation as may be
requested by OPA.
(4) A covered entity or manufacturer filing a claim must provide
documentation of good faith efforts, including evidence of
communication with the opposing party to resolve the matter in good
faith prior to filing a claim.
(c) Combining claims. (1) Two or more covered entities may jointly
file claims of overcharges by the same manufacturer for the same drug
or drugs if each covered entity consents to the jointly filed claim and
meets the filing requirements.
(i) For covered entity joint claims, the claim must list each
covered entity, its 340B ID and include documentation as described in
paragraph (b) of this section, which demonstrates that each covered
entity meets all of the requirements for filing the ADR claim.
[[Page 73526]]
(ii) For covered entity joint claims, a letter requesting the
combining of claims must accompany the claim at the time of filing and
must document that each covered entity consents to the combining of the
claims, including signatures of individuals representing each covered
entity and a point of contact for each covered entity.
(2) An association or organization may file on behalf of one or
more covered entities representing their interests if:
(i) Each covered entity is a member of the association or the
organization representing it and each covered entity meets the
requirements for filing a claim;
(ii) The joint claim filed by the association or organization must
assert overcharging by a single manufacturer for the same drug(s); and
(iii) A letter requesting the combining of claims must accompany
the claim and must include documentation evidencing that each covered
entity consents to the organization or association asserting a claim on
its behalf, including signatures of individuals representing each
covered entity and a point of contact for each covered entity.
(3) A manufacturer or manufacturers may request to consolidate
claims brought by more than one manufacturer against the same covered
entity if each manufacturer could individually file a claim against the
covered entity, consents to the consolidated claim, meets the
requirements for filing a claim, and the 340B ADR Panel determines that
such consolidation is appropriate and consistent with the goals of
fairness and economy of resources. Consolidated claims filed on behalf
of manufacturers by associations or organizations representing their
interests are not permitted.
(d) Deadlines and procedures for filing a claim. (1) Covered
entities and manufacturers must file claims in writing with OPA, in the
manner set forth by OPA.
(2) OPA will conduct an initial review of all information submitted
by the party filing the claim and will make a determination as to
whether the requirements in paragraph (b) of this section are met. The
OPA staff conducting the initial review of a claim may not be appointed
to serve on the 340B ADR Panel reviewing that specific claim.
(3) Additional information to substantiate a claim may be submitted
by the initiating party and may be requested by OPA. If additional
information is requested, the initiating party will have 20 business
days from the receipt of the request to respond. If the initiating
party does not respond to a request for additional information within
the specified time frame or request and receive an extension, the claim
will not move forward to the 340B ADR Panel for review.
(4) OPA will provide written notification to the initiating party
that the claim is complete. Once the claim is complete, OPA will also
provide written notification to the opposing party that the claim was
submitted. This written notification will provide a copy of the
initiating party's claim, and additional instructions regarding the ADR
process, including timelines and information on how to submit their
response in accordance with the procedures for responding to a claim as
outlined in paragraph (e) of this section.
(5) If OPA finds that the claim meets the requirements described in
paragraph (b) of this section, and once OPA receives the opposing
party's response in accordance with the procedures outlined in
paragraph (e) of this section, additional written notification will be
sent to both parties advising that the claim will be forwarded to the
340B ADR Panel for review.
(6) If OPA finds that the claim does not meet the requirements
described in paragraph (b) of this section, written notification will
be sent to both parties stating the reasons that the claim did not move
forward.
(7) For any claim that does not move forward for review by the 340B
ADR Panel, the claim may be revised and refiled if there is new
information to support the alleged statutory violation and the claim
meets the criteria set forth in this section.
(e) Responding to a submitted claim. (1) Upon receipt of
notification that a claim is deemed complete and has met the
requirements in paragraph (b) of this section, the opposing party in
alleged violation will have 30 business days to submit a written
response to OPA.
(2) A party may submit a request for an extension of the initial 30
days response period and OPA will make a determination to approve or
disapprove such request and notify both parties.
(3) OPA will provide a copy of the opposing party's response to the
initiating party and will notify both parties that the claim has moved
forward for review by the 340B ADR Panel.
(4) If an opposing party does not respond or elects not to
participate in the 340B ADR process, OPA will notify both parties that
the claim has moved forward for review by the 340B ADR Panel and the
340B ADR Panel will render its decision after review of the information
submitted in the claim.
Sec. 10.22 Covered entity information and document requests.
(a) To request information necessary to support its claim from an
opposing party, a covered entity must submit a written request for
additional information or documents to the 340B ADR Panel within 20
business days of the receipt from OPA that the claim was forwarded to
the 340B ADR Panel for review. The 340B ADR Panel will review the
information/document request and notify the covered entity if the
request is not reasonable, not relevant or beyond the scope of the
claim, and will permit the covered entity to resubmit a revised request
if necessary.
(b) The 340B ADR Panel will transmit the covered entity's
information/document request to the manufacturer who must respond to
the request within 20 business days.
(c) The manufacturer must fully respond, in writing, to an
information/document request from the 340B ADR Panel by the response
deadline.
(1) A manufacturer is responsible for obtaining relevant
information or documents from any wholesaler or other third party that
may facilitate the sale or distribution of its drugs to covered
entities.
(2) If a manufacturer anticipates that it will not be able to
respond to the information/document request by the deadline, it can
request one extension by notifying the 340B ADR Panel in writing within
15 business days of receipt of the request.
(3) A request to extend the deadline must include the reason why
the specific deadline is not feasible and must outline the proposed
timeline for fully responding to the information/document request.
(4) The 340B ADR Panel may approve or disapprove the request for an
extension of time and will notify all parties in writing of its
decision.
(5) If the 340B ADR Panel finds that a manufacturer has failed to
respond or fully respond to an information/document request, the 340B
ADR Panel may draw an adverse inference and proceed with the facts that
the 340B ADR Panel has determined have been established in the
proceeding.
Sec. 10.23 340B ADR Panel decision process.
(a) The 340B ADR Panel will conduct an initial review of the
claims. If the 340B ADR Panel determines the specific issue that would
be brought forth in a claim is the same as or similar to an issue that
is pending in Federal court,
[[Page 73527]]
it will suspend review of the claim until such time the issue is no
longer pending in Federal court.
(b) If no issues are identified in the initial review of the claim
under paragraph (a) of this section, the 340B ADR Panel will review all
documents gathered during the ADR Process to determine if a violation
as described in Sec. 10.21(a)(1) or (2) has occurred.
(c) The 340B ADR Panel will prepare a decision letter based on its
review. The 340B ADR Panel decision letter will represent the
determination of a majority of the 340B ADR Panel members' findings
regarding the claim and include an explanation regarding each finding.
The 340B ADR Panel will transmit its decision letter to all parties and
to the OPA Director.
(d) Either party may request reconsideration of the 340B ADR Panel
decision or the Health Resources and Service Administration (HRSA)
Administrator may decide to initiate a reconsideration without such a
request as described in Sec. 10.24. If the HRSA Administrator does not
initiate the reconsideration process without a request from the
parties, or if HRSA does not receive a reconsideration request from
either party within 20 business days of the issuance of the 340B ADR
Panel's decision letter, as described in Sec. 10.24, the 340B ADR
Panel's decision letter will serve as the final agency decision and
will be binding upon the parties involved in the dispute, unless
invalidated by an order of a Federal court.
(e) The OPA Director will determine any necessary corrective action
or consider whether to take enforcement action, and the form of any
such action, based on the final agency decision.
Sec. 10.24 340B ADR Panel decision reconsideration process.
(a) Either party may initiate a reconsideration request, or the
HRSA Administrator may decide to initiate the process without such a
request.
(b) The request for a reconsideration of the 340B ADR Panel's
decision must be made to the HRSA Administrator within 20 business days
of the date of the 340B ADR Panel's decision letter.
(1) The request for reconsideration must include a copy of the 340B
ADR Panel decision letter, and documentation indicating why a
reconsideration is warranted.
(2) New information may not be submitted as part of the
reconsideration process in order to remain consistent with the facts
that were reviewed by the 340B ADR Panel in determining their decision.
(3) In the case of joint or consolidated claims, the requester must
submit documentation showing consent to the reconsideration process,
including signatures of the individuals representing each covered
entity or manufacturer as described in Sec. 10.21(c).
(c) The reconsideration process may be granted when a party
demonstrates that the 340B ADR Panel decision may have been inaccurate
or flawed.
(d) The HRSA Administrator, or their designee, will review the
record, including the 340B ADR Panel decision, and consult with HHS
officials, as necessary.
(e) The HRSA Administrator will make a determination based on the
reconsideration request by either issuing a revised decision to be
effective 20 business days from issuance or declining to issue a
revised decision.
(f) Such reconsideration decision or the 340B ADR Panel decision
(in the event of a declination) will serve as the final agency decision
and will be binding upon the parties involved in the dispute, unless
invalidated by an order of a Federal court.
(g) The OPA Director will determine any necessary corrective
action, or consider whether to take enforcement action, and the form of
any such action, based on the final agency decision.
[FR Doc. 2022-25752 Filed 11-29-22; 8:45 am]
BILLING CODE 4165-15-P
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