340B Drug Pricing Disputes: New Rules

By Published On: September 2, 2016

On August 12, 2016, a Notice of Proposed Rulemaking (NPRM) titled, “340B Drug Pricing Administrative Dispute Resolution” was published in the Federal Register.The purpose of the proposed rule is to help Covered Entities and pharmaceutical drug manufacturers resolve disputes regarding overcharging for the purchase of 340B drugs, duplicate discounts, and diversion.

Drug manufacturers that participate in the Medicaid Drug Rebate Program are required by section 1927(a)(5)(A) of the Social Security Act to enter into Pharmaceutical Pricing Agreements (PPA) with the Secretary of HHS. The PPA limits the price the manufacturer can charge a 340B Covered Entity purchasing outpatient drugs. That maximum price the manufacturer can charge the Covered Entity is called the 340B ceiling price. The 340B Program also protects the manufacturer from duplicate discounts and forbids Covered Entities from dispensing 340B drugs to ineligible patients (diversion).

The Administrative Dispute Resolution (ADR) process described in the NPRM would be limited to resolving the following types of disputes:

  • Claims by Covered Entities that manufacturers are overcharging for 340B drugs; and
  • Claims by manufacturers for diversion or a duplicate discount.

HRSA still expects Covered Entities and manufacturers to work together in good faith to resolve their disputes. The proposed ADR process would be available to Covered Entities and manufacturers only in cases where they are unable to reach a resolution on their own.

To carry out the ADR process, HRSA is proposing to create a 340B ADR Panel comprised of the following individuals:

  • 3 federal employees with familiarity or expertise in the 340B Program that will be selected from a roster of qualified individuals, and
  • 1 non-voting member chosen from the Office of Pharmacy Affairs staff.

The Healthcare Systems Bureau (HSB) within HRSA would evaluate submitted claims to determine whether they are appropriate for resolution through the ADR Process. If a claim is accepted, it would next be referred to the ADR Panel and the parties would be notified. The non-filing party would then have an opportunity to respond before the ADR Panel issues its draft decision. The parties would also have an opportunity to comment on the draft decision before a final agency decision is issued. The decision of the ADR Panel would not impose sanctions or remedial action, but would be forwarded to HSB to determine any appropriate enforcement actions.

The finalized regulation “will replace the 340B Program’s guidelines on the informal dispute resolution process developed to resolve disputes between covered entities and manufacturers published on December 12, 1996.”

The NPRM is open for public comment through October 11, 2016.

For more detailed discussion of the 340B Program please contact an attorney at Feldesman Tucker Leifer Fidell LLP at (202) 466-8960 or review the following webinars available in our on-demand library: