Embattled Drug Discount Dispute Process Gets HHS Facelift (2)

The drug industry and health providers are divided over a freshly revised review process for resolving price fights after years of back-and-forth between presidential administrations and federal courts.

The Health and Human Services Department on Thursday announced a final rule (RIN 0906-AB28) that updates the administrative dispute resolution process for drugmakers and health providers participating in the federal 340B drug discount program.

Under the program, drugmakers are required to discount their products to covered medical providers such as hospitals, community health centers, and others supporting low-income populations.

The HHS positioned its effort as a way to make the 340B dispute resolution process more accessible for smaller organizations with limited means. The agency said the prior process resulted in delays and complications. Strict procedural requirements were also eliminated under the new rule.

Health-care providers had filed lawsuits to get the HHS to establish an administrative dispute resolution (ADR) panel to consider disagreements with drugmakers over prices. In its final days, the Trump administration launched an ADR process.

The Biden rule said the HHS “encountered policy and operational challenges” with the Trump plan’s implementation, which it criticized as too formal and slow.

That’s because the prior rule was governed via federal evidence and procedural rules, which would slow things down and prove burdensome to potential ADR users that were lacking the resources to “navigate the complex” requirements and “engage in a lengthy, trial-like process,” the HHS said.

Diverging Views

340B Health, a trade group representing hospitals participating in the program, voiced its support of the new rule, though President and CEO Maureen Testoni said she wished it went further.

“We are particularly encouraged by the final rule clarifying that a covered entity’s ADR claims can include accusations that a drug company has limited the ability to purchase drugs at or below the 340B ceiling price and removing a proposed amendment to block ADR consideration of a claim similar to an issue pending in federal court,” Testoni said in a statement.

The final rule removes the proposed provision that would have suspended review of “ADR claims if the issue is the same as or similar to an issue that is pending in Federal court.”

However, Testoni added that 340B Health urges the HHS “to exclude Medicaid managed care (MCO) claims from ADR review, direct panels to publish their full findings, and impose a 120-day time frame for decisions.”

The Pharmaceutical Research and Manufacturers of America said the Biden administration “rushed” with instituting the process.

The process “panders to 340B hospitals while ignoring concerns manufacturers raised,” Nicole Longo, deputy vice president of public affairs for PhRMA, said.

“The administration chose not to consider issues we raised in our comments, exacerbating ongoing program integrity issues that have been well documented by independent watchdogs,” Longo said in a statement. The rule “underscores the critical need for Congress to act on comprehensive changes to the 340B program,” she said.

PhRMA in 2021 sued the HHS in the US District Court for the District of Maryland over the 2020 final rule alleging department’s Health Resources and Services Administration rushed to clear the rule “in the final days of the Trump Administration in an effort to moot several recently-filed lawsuits filed against those agencies.”

PhRMA and the HHS have been filing joint status reports pending completion of the ADR rule. The parties anticipate they’ll be able to advise the court regarding appropriate next steps with the final rule now out.

More Accessible

In the new rule, the HHS said it would’ve have been challenging to assign people to the ADR panel who were experts in the federal rules.

“HHS is finalizing that the 340B ADR process be revised to be more accessible, administratively feasible and timely than the 2020 final rule,” the agency said.

Under the new rule, panel members “should be” experts in the 340B program and its legal requirements from HRSA’s Office of Pharmacy Affairs. Panel members are slated to undergo “additional screening” before reviewing a claim to ensure they were “not involved in previous agency actions related to the claim,” the rule says.

The HHS historically has encouraged manufacturers and covered entities to resolve disputes in good faith since most are resolved in a timely manner without HRSA’s involvement.

HRSA clarified in the rule that the 340B ADR process is not intended to replace good faith efforts and the process should be considered only when those efforts to resolve disputes independently have been exhausted and failed.

The American Hospital Association said it was pleased the final rule “makes clear that an overcharge claim includes instances where a drug company has limited a hospital’s ability to purchase 340B drugs at or below the 340B ceiling price.”

“This rule will help hold drug companies accountable for their rampant abuses of the 340B program and the patients it serves,” Chad Golder, general counsel for the AHA, said in a statement.

The AHA represents close to 5,000 hospitals and health-care systems, with nearly 2,000 of them participating in the 340B program.