The 340B Drug Pricing Program allows eligible healthcare organizations and covered entities to access outpatient drugs at significantly reduced prices. It provides discounted medications to safety-net providers, such as hospitals, clinics, and health centers, which serve uninsured and low-income patients. The 340B Administrative Dispute Resolution (ADR) process is designed to assist 340B covered entities and 340B drug manufacturers in resolving disputes regarding 340B covered drug pricing. In a recent ruling issued by Health and Human Services (HHS) and Health Resources and Services Administration (HRSA), the ADR process is set to change in an attempt to expedite the process and address concerns coming from 340B stakeholders. The key changes address concerns from both covered entities and drug manufacturers.
Covered entities such as hospitals or clinics can bring claims if they believe that manufacturers have made an error in pricing covered outpatient drugs. These claims relate to overcharges, which occur when the price paid by the covered entity to the drug manufacturer exceeds the appropriate 340B discounted price.
After a manufacturer has conducted an audit of a covered entity, they may file claims alleging that the covered entity violated compliance with the program rules. Manufacturers may now use the ADR process to address situations where they suspect non-compliance regarding duplicate discounts as well as diversion. A duplicate discount is when a covered entity receives both a 340B discount and a Medicaid rebate for the same drug. Diversion is when 340B-purchased drugs are used outside the eligible patient population or are resold to non-eligible entities. The new ADR process now gives manufacturers recourse when a covered entity is found to be in violation of either of these two scenarios.
The changes aim to make the ADR process more accessible, administratively feasible, and timely for stakeholders. They also address concerns around timing and inefficiency since its mandate in 2012. Additionally, the ADR panel members are now limited to 340B subject matter experts from the HRSA Office of Pharmacy Affairs. Limiting subject matter experts ensures that disputes are resolved by individuals with specialized knowledge of the 340B Program. Furthermore, before initiating the ADR process, all parties are required to engage in good-faith dispute resolution efforts. This encourages collaboration and attempts to resolve issues before formal proceedings. Lastly, the changes establish a reconsideration process for ADR panel decisions. This allows parties to seek review if they disagree with the initial decision.
The new changes benefit all parties because both covered entities and manufacturers can now engage in a more efficient and accessible process to resolve disputes with manufacturers. This should hopefully lead to fewer resources allocated to legal fees and other administrative expenses related to the disputes. Furthermore, the involvement of panel members who are subject matter experts in 340B drug pricing will result in more accurate and informed decisions, giving all parties confidence that an accurate decision has been determined. Lastly, the new reconsideration process allows covered entities to seek review if they disagree with the initial ADR panel decision. This provides an additional layer of accountability and fairness.
The goal of the ADR process is to make it more accessible and efficient for stakeholders and ensure fair dispute resolution. The final rule, effective June 18, 2024, provides new requirements and procedures for this purpose. The new procedure streamlines the ADR process, enhances transparency, and ensures fair dispute resolution related to the 340B Program.
Author: Dakota Nelson | [email protected]
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