BREAKING: A Decade Overdue, HRSA Puts 340B Dispute Resolution Final Rule in Motion

Your 340B Report for Wednesday Nov. 18, 2020

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A Decade Overdue, HRSA Puts 340B Dispute Resolution Final Rule in Motion

The U.S. Health Resources and Services Administration (HRSA) yesterday sent the White House for approval a final rule to create a binding administrative dispute resolution (ADR) process for the 340B program.

Congress, more than 10 years ago in the Affordable Care Act, required the U.S. Health and Human Services (HHS) secretary to publish a regulation establishing a binding 340B ADR system, to replace 340B’s then 14 year old, informal dispute resolution process. Congress wanted the job done in 180 days.

HRSA published an advanced notice of proposed rulemaking in September 2010 and a proposed rule in August 2016. The Trump administration withdrew the proposed rule, written by the Obama administration, in August 2017.

HRSA never advanced a final rule, until now.

The final rule’s contents remain unknown for now. It is unclear whether or how much the final rule differs from the proposed version HRSA sought comment on more than four years ago.

In March, HRSA told 340B Report it did not plan to publish a 340B ADR regulation “until such time that HRSA receives regulatory authority for the issues that would be addressed” in such a process.

“It would be challenging to put forth rulemaking on a dispute resolution process when many of the issues that would arise for dispute are only outlined in guidance,” HRSA told us. “HRSA does not plan to move forward on issuing a regulation due to the challenges with enforcement of guidance.”

Since HRSA made those remarks, Eli Lilly and Co. and AstraZeneca have stopped providing 340B pricing on their drugs shipped to contract pharmacies, on the grounds that HRSA’s 340B contract pharmacy guidance is unlawful and/or unenforceable. Sanofi has similarly cut off covered entities’ 340B pricing for contract pharmacies if entities fail to give a Sanofi vendor their contract pharmacy claims data. Novartis has decided to honor hospitals’ 340B contract pharmacy arrangements only for contract pharmacies located within a 40 mile radius of the hospital.

HRSA says it is considering whether the manufacturers’ actions violate the 340B statute. But so far, it has done nothing to stop them.

The National Association of Community Health Centers (NACHC) last month sued HHS over its failure to do anything about the manufacturers’ actions. NACHC asked the federal district court in Washington, D.C., to declare that HHS Secretary Azar and HHS violated the 340B statute and the federal Administrative Procedure Act by failing to promulgate 340B ADR regulations and implement a 340B ADR process. NACHC also asked the court to require Azar and HHS to publish and implement final 340B ADR regulations no later than 60 days from its order.

NACHC says HHS’s failure to establish the 340B ADR process deprived health centers of the means to protect themselves against the manufacturers’ denials of 340B pricing.

Ryan White Clinics for 340B Access (RWC-340B) last month also sued Azar and HHS over the manufacturers’ denials of 340B pricing, and it too seeks an order giving Azar and HHS 60 days to promulgate the long-delayed 340B ADR regulations, among other relief.

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