Groups that represent 340B covered entities said they looked forward to studying the federal government’s proposal Tuesday to revamp the 340B administrative dispute process. But they expressed concern that drug manufacturers still are not being punished for denying 340B pricing when entities ship drugs to contract pharmacies to be dispensed.
The brand drug industry said it is still reviewing the proposal and that 340B remains “plagued with abuse.”
Provider Group Reactions
The National Association of Community Health Centers said Tuesday that in light of the proposal it would dismiss its October 2020 lawsuit that helped force the government in December 2021 to issue a final rule establishing the dispute resolution process that the government now seeks to replace. NACHC formally dismissed the suit yesterday. A related case filed the same month by Ryan White Clinics for 340B Access continues.
“Since 2020, NACHC has fought for [the U.S. Health Resources and Services Administration] to implement an effective and efficient alternative dispute resolution process,” NACHC Interim President and CEO Rachel Gonzales-Hanson said. “We have decided to dismiss our lawsuit against HHS, as we recognize HRSA is taking steps in the right direction to strengthen the ADR rule. However, we are concerned that there is still no resolution process to provide relief for the current manufacturer contract pharmacy restrictions and we look for HRSA to use their full enforcement authority to hold manufacturers accountable for violating the 340B statute.”
RWC-340B told 340B Report yesterday morning it was still analyzing HRSA’s Nov. 29 proposed rule. Yesterday afternoon it sent its members an email describing the proposal’s chief components and the history leading up to its release. It said drug industry legal challenges to the current ADR rule and related court rulings in those cases “may have been the primary reason why HHS decided to issue the Proposed Rule in the first place.”
“The [dispute resolution] process that Congress called for in 2010 has not resulted in any meaningful opportunities for covered entities to vindicate their rights to 340B pricing,” RWC-340B said. “The Proposed Rule, which would exclude or suspend any claims that are similar to claims in federal court, is obviously flawed in that, despite the revised regulations, it still would not provide a workable process for covered entities to obtain damages against manufacturers for overcharges at contract pharmacies.”
American Hospital Association General Counsel Melinda Hatton said, “The Administration’s administrative dispute resolution process proposal for the 340B drug pricing program is an important step in ensuring the integrity of the 340B program. We look forward to reviewing the proposal in detail and submitting comments to further improve the final rule. In addition, we continue to urge the Department of Health and Human Services to aggressively use all tools available to stop the harmful tactics from drug companies that are impacting 340B hospitals’ ability to deliver care as Congress intended.”
A spokesperson for hospital group 340B Health said, “We are pleased HRSA has proposed some additional clarity to the ADR process by reducing the legal hoops hospitals and other covered entities would need to go through before filing complaints against drugmakers. The proposed rule also includes an important new provision that would prevent potential financial conflicts of interest by excluding CMS officials who set Medicare payment rates from serving on the panels. We will continue to review the details and submit comments to HRSA.”
Drug Industry Reactions
Pharmaceutical Research and Manufacturers of America said, “While we are still reviewing the proposed rule, our hope is that it addresses the numerous concerns raised in connection with the previously finalized rule. The 340B program is plagued with abuse, including instances of diversion of medicines by covered entities and duplicate discounts. A functioning administrative dispute resolution process is key to reining in this abuse but only if it is a fair process that reflects the realities of the 340B program of today.”
Biotechnology industry group BIO said it was still reviewing the proposed rule.
Eli Lilly, Sanofi, and AstraZeneca, the three drug manufacturers defending their 340B contract pharmacy restrictions in proceedings under the current ADR system, each declined to comment on the proposed rule.