Screenshot of HRSA, HHS 340B ADR document
HRSA this morning released its proposed replacement for its December 2020 340B administrative dispute resolution final rule.

BREAKING: HRSA Proposes Streamlined, Less Trial-like 340B Dispute Resolution Process

The U.S. Health Resources and Services Administration this morning proposed a replacement for its two-year-old 340B administrative dispute resolution process. Comments are due Jan. 30.

“HRSA has encountered policy and operational challenges with implementation of the

2020 final rule,” the agency said in its proposed rule, released for public inspection early on Nov. 29.

It said the Department of Health and Human Services “is proposing in this [notice of proposed rulemaking] to (1) establish a more accessible ADR process that is reflective of an administrative

process rather than a trial-like proceeding; (2) revise the structure of the 340B ADR Panel so that it is comprised of 340B Program subject-matter experts; (3) ensure that the parties have worked in good faith before proceeding through the ADR process; (4) more closely align the ADR process with the provisions set forth in the 340B statute (diversion, duplicate discounts, and overcharges); and (5) include a reconsideration process for parties dissatisfied with a 340B ADR Panel’s decision.”

HRSA said any claims that are in process and have been submitted pursuant to the 2020 final rule would be automatically transferred to the new process under the proposed rule.

HRSA also proposes that if an ADR Panel determines that a specific issue in a claim is the same as or similar to an issue that is pending in federal court, the ADR Panel will suspend review of the claim until such time the issue is no longer pending in federal court.

“HHS is seeking comments on all components of the NPRM, and whether HHS should consider specific alternatives,” HRSA said.

In March 2021, a federal district judge in Indianapolis granted drug manufacturer Eli Lilly’s motion for a preliminary injunction stopping HRSA from implementing or enforcing its current ADR regulations against the company. Drug manufacturer Sanofi and the trade group Pharmaceutical Research and Manufacturers of America are also challenging the legality and constitutionality of the existing ADR regulations, arguing, among other things, that the manufacturers were not given an opportunity to provide comments on the regulation.

The government has argued that the manufacturers had an opportunity to comment when the regulation was originally proposed in 2017 but the fact that HRSA is moving forward with a new proposal may indicate that they were not confident in their case.

In December 2021, the Biden administration announced that it wanted to replace the ADR regulation that was enacted in the last days of the Trump administration with an entirely new rule that “better aligns with the president’s priorities on drug pricing [and] better reflects the current state of the 340B program.”

We will report in greater depth about the proposed rule on Thursday.