340B Program ADR Final Regulation

In recent weeks, the Trump Administration released a long-awaited final regulation on the Alternative Dispute Resolution (ADR) process in the 340B Drug Discount Program (340B Program). The final rule is effective January 13, 2021. Under the new rule, ADR is limited to disputes between covered entities and manufacturers involving claims of $25,000 or higher. The dispute resolution board would consist of at least six members appointed by the HHS Secretary with equal numbers from the HHS’ Health Resources and Service Administration, the Centers for Medicare & Medicaid Services, and the HHS Office of the General Counsel. The HRSA administrator would then select and convene three-member panels made up from board members. The panels would include one member from HRSA, CMS, and OGC “with relevant expertise to review claims and make final agency decisions,” the rule said. Panel members would be screened for potential conflicts of interest, including financial interests, having family or a close relation involved in a dispute, or having a current or former business associate as an involved party. In the event of a conflict of interest, panel members can be removed and replaced by another member from the dispute resolution board.

The Trump Administration likely finalized the ADR final regulation in part to try to circumvent claims in a lawsuit brought earlier this year by the community health centers related to delay in implementation of the ADR final regulation since its inclusion in the Affordable Care Act in 2010. The impact of the ADR regulation on that litigation remains to be seen. However, the Alliance will continue to monitor the implementation of the ADR process in 340B and related litigation.

2020 in Review – Legal Team
2020 brought renewed attention to the 340B Program. Over the summer, manufacturers developed new policies towards contract pharmacies, attempting to restrict their use in 340B by covered entities. HTCs have been exempted from these policy changes to date, however, the Alliance has watched developments closely to ensure continued access to therapies for bleeding and clotting disorder patients. Covered entities have filed lawsuits – two against the government and one against manufacturers – opposing the changes to contract pharmacies in the 340B Program. Additionally, President-Elect Biden’s first choice for Secretary of the Department of Health & Human Services, current California Attorney General Xavier Becerra, joined with other AGs in publicly calling for urging the government to “accountable drug manufacturers that are unlawfully refusing to provide discounts to federally qualified health centers, hospitals, and other providers that serve vulnerable patient populations through the 340B Drug Pricing Program.”

2020 also brought unexpected changes to the financial situations of many health care organizations which, in turn, increased the volume of questions related to appropriate expenditures of program income, including charges from host institutions for indirect costs. We assisted member HTCs in compliantly supporting patients during an unprecedented time. We expect this trend to continue and will focus member education activities accordingly.