Health Reform WK-EDGE ‘Last-resort’ ADR process proposed for 340B participants
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Monday, August 22, 2016

‘Last-resort’ ADR process proposed for 340B participants

An administrative mechanism to review claims by drug manufacturers and covered entities that certain statutory obligations have been violated would be established under an HHS proposal. The purpose of the proposed administrative dispute resolution (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, that a covered entity has violated the prohibition on diversion to ineligible patients or duplicate discounts. The ADR process is not intended to be a trial-like proceeding governed by formal review of evidence and procedure. The date for submission of written comments is on or before October 11, 2016 (Proposed rule, 81 FR 53381, August 12, 2016).

Background. HHS enters into pharmaceutical pricing agreements (PPA) under Section 340B of the Public Health Service Act (PHSA) (42 U.S.C. §256b) with manufacturers of covered outpatient drugs. The prices charged to covered entities cannot exceed defined ceiling prices, which are based on quarterly pricing data reported by manufacturers to CMS. Section 7102 of the Patient Protection and Affordable Care Act (ACA) (P. L. 111–148), added section 340B(d)(3) of the PHSA, requiring HHS to promulgate a regulation establishing and implementing a binding ADR process for certain disputes arising under the 340B Program.

340B ADR Panel. HHS would establish a panel for making make a binding decision for claims filed by covered entities and drug makers. The panel will include three members, chosen from a roster of eligible individuals alternating from claim to claim, and one ex-officio, non-voting member chosen from the staff of Office of Pharmacy Affairs to facilitate the review and resolution of claims within a reasonable time frame. The panel members will be selected from those with expertise or familiarity with the appropriate aspects of the 340B Program. To ensure fairness and objectiveness, HHS proposes that each 340B ADR Panel member be screened prior to reviewing a claim and not allowed to conduct a review if any conflicts of interest exist.

Claims. Each claim filed by a covered entity must include documents sufficient to demonstrate a covered entity’s claim that it has been overcharged by a drug manufacturer. Procedures by which a covered entity may discover or obtain information and documents from drug manufacturers and third parties relevant to a claim that the covered entity has been overcharged by the manufacturer would also be established. Documents should be available to a covered entity through the usual course of business and not be overly burdensome to produce. In addition, each claim filed by a drug manufacturer must include documents sufficient to demonstrate a claim that a covered entity has violated the prohibition on diversion or duplicate discount. If requested, covered entities or drug manufacturers would be permitted to consolidate their individual claims.

Final agency decisions. The 340B ADR process is not intended to be a trial-like proceeding, instead it should be considered as a last resort in the event that good faith efforts by drug manufacturers to resolve disputes. The ADR panel would prepare a draft agency decision letter, which includes the findings and conclusions regarding the alleged violation, and the parties involved in the ADR would have 20 days to respond. The final agency decision made by 340B ADR Panel would conclude the administrative resolution process and sanctions could be imposed if violations were found. As such, the ADR process would provide a cost-efficient option for resolving claims that would otherwise remain unresolved or require litigation.

FederalRegisterIssuances: ProposedRules 340BNews DrugNews MedicarePartDNews

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