HHS Finalizes 340B Administrative Dispute Resolution Updates

On April 18, HHS finalized updates to the 340B Program’s administrative dispute resolution (ADR) process. These updates come after the 2020 final rule was successfully challenged by drug manufacturers. The updated ADR process loosens the standards for claims, making it more likely that there will be a substantial uptick in ADR filings. The rule also opens another avenue for covered entities to challenge the 32 manufacturers that have implemented contract pharmacy restrictions.

HHS amended the rule as proposed to make two substantive changes: (1) the rule expressly permits 340B covered entities to file claims for being overcharged when a manufacturer has limited their ability to purchase covered outpatient drugs at or below the 340B ceiling price; and (2) covered entities and manufacturers may pursue an ADR claim similar to those pending in federal court.

In addition, HHS finalized as proposed changes to make the process administrative rather than trial-like, remove the $25,000 claims threshold, permit organizations to file on behalf of multiple covered entities (but only for one drug and against one manufacturer at a time), and limit claims to align with the statute more closely. Manufacturers may bring claims against covered entities for unlawful diversion or duplicate discounts, but only after completing an audit and cannot band together using an organization or association as is permitted for covered entities.

All decisions are eligible for an internal reconsideration process and final agency decisions can be challenged in federal court. HHS also added provisions to guard against potential legal challenges. The rule becomes effective June 18.