[Federal Register Volume 75, Number 181 (Monday, September 20, 2010)]
[Proposed Rules]
[Pages 57233-57235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23460]
[[Page 57233]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
42 CFR Chapter I
340B Drug Pricing Program Administrative Dispute Resolution
Process
AGENCY: Health Resources and Services Administration, HHS.
ACTION: Advance notice of proposed rulemaking and request for comments.
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SUMMARY: Section 602 of Public Law 102-585, the ``Veterans Health Care
Act of 1992'' enacted Section 340B of the Public Health Service Act
(PHSA). Section 340B implements a drug pricing program by which
manufacturers who sell covered outpatient drugs to particular covered
entities listed in the statute must agree to charge a price that will
not exceed the amount determined under a statutory formula. Section
7102 of the Patient Protection and Affordable Care Act (Affordable Care
Act) (Pub. L. 111-148) requires the Secretary of Health and Human
Services (HHS) to promulgate regulations to establish and implement an
administrative dispute resolution process for the 340B Drug Pricing
Program (340B Program). (PHSA Section 340B(a)(5)(D) advises the
Secretary on the sanctions available should a covered entity be found
to be in violation of (a)(5)(A) or (a)(5)(B). The ANPRM does not
currently refer to HRSA's plan on how it will resolve any decision made
through the new Administrative Dispute Resolution Process and the
sanctions in current law). These regulations will address a number of
issues that have the potential to impact stakeholders. Accordingly, the
Health Resources and Services Administration is issuing an advance
notice of proposed rulemaking (ANPRM) to solicit public comment on
multiple issues regarding implementation of these regulations. These
comments will be used, as appropriate, to help draft a proposed rule
that will be published in the Federal Register for public comments.
DATES: Submit electronic or written comments by November 19, 2010.
ADDRESSES: Comments in response to this ANPRM should be marked
``Comments on Administrative Dispute Resolution Process'' and sent to
Ms. Dorcas Ann Taylor, Public Health Analyst, Office of Pharmacy
Affairs (OPA), Health Systems Bureau (HSB), Health Resources and
Services Administration (HRSA), 5600 Fishers Lane, Parklawn Building,
Room 10C-03, Rockville, MD 20857. Comments may also be e-mailed to:
[email protected]
FOR FURTHER INFORMATION CONTACT: CDR Krista Pedley, Director, Office of
Pharmacy Affairs (OPA), Healthcare Services Bureau (HSB), Health
Resources Services Administration (HRSA), 5600 Fishers Lane, Parklawn
Building, Room 10C-03, Rockville, MD 20857.
SUPPLEMENTARY INFORMATION:
I. Background
The Affordable Care Act introduces a number of changes to the 340B
Program. The Affordable Care Act creates several new categories of
eligibility for participation and provides a number of tools for
improvement in compliance by manufacturers and covered entities. Among
the tools is the creation of an administrative dispute resolution
process for the resolution of claims by covered entities and
manufacturers. Section 7102(a) of the Affordable Care Act requires the
HHS Secretary to establish and implement an administrative process
through regulations for resolution of (1) claims by covered entities
that they have been overcharged for drugs purchased through the 340B
Program; and (2) claims by manufacturers, after the conduct of audit as
authorized by section 340B(a)(5)(C) of the PHSA, of violations of the
prohibition of duplicate discounts or rebates and/or the prohibition on
resale of drugs purchased under the 340B Program. As amended by the
Affordable Care Act, section 340B(d)(3)(B) of the PHSA requires the
Secretary to promulgate regulations that shall:
(i) Designate or establish a decision making official or decision-
making body within the Department of Health and Human Services to be
responsible for reviewing and finally resolving claims by covered
entities that they have been charged prices for covered outpatient
drugs in excess of the ceiling price described in subsection (a)(1),
and claims by manufacturers that violations of subsection (a)(5)(A) or
(a)(5)(B) have occurred;
(ii) Establish such deadlines and procedures as may be necessary to
ensure that claims shall be resolved fairly, efficiently, and
expeditiously;
(iii) Establish procedures by which a covered entity may discover
and obtain such information and documents from manufacturers and third
parties as may be relevant to demonstrate the merits of a claim that
charges for a manufacturer's product have exceeded the applicable
ceiling price under this section, and may submit such documents and
information to the administrative official or body responsible for
adjudicating such claim;
(iv) Require that a manufacturer conduct an audit of a covered
entity pursuant to subsection (a)(5)(C) as a prerequisite to initiating
administrative dispute resolution proceedings against a covered entity;
(v) Permit the official or body designated under clause (i), at the
request of a manufacturer or manufacturers, to consolidate claims
brought by more than one manufacturer against the same covered entity
where, in the judgment of such official or body, consolidation is
appropriate and consistent with the goals of fairness and economy of
resources; and
(vi) Include provisions and procedures to permit multiple covered
entities to jointly assert claims of overcharges by the same
manufacturer for the same drug or drugs in one administrative
proceeding, and permit such claims to be asserted on behalf of covered
entities by associations or organizations representing the interests of
such covered entities and of which the covered entities are members.
The 340B Program creates relationships between not only drug
manufacturers and covered entities, but also involves, among others,
wholesalers, group purchasing organizations, pharmacies, and state
Medicaid agencies. Any change to the 340B Program has the potential to
alter these relationships. The regulations mandated by the Affordable
Care Act will be the first regulations for the 340B Program. Prior to
enactment of the Affordable Care Act, the Health Resources and Services
Administration (HRSA) did not have a required administrative dispute
resolution process. The creation of a required administrative dispute
resolution process presents a number of issues in the context of the
340B Program that have the potential to affect a large number of
interrelated entities. Given these issues, HRSA is issuing this ANPRM
to gather comments prior to committing to a particular regulatory path.
The use of audits and dispute resolution in the 340B program has
limited precedent. On December 12, 1996, the Secretary of HHS published
the Manufacturer Audit Guidelines and Dispute Resolution Process for
the 340B Program (61 FR 65406). That notice provided auditing
guidelines to permit the manufacturer of a covered outpatient drug to
audit the records of a covered entity directly pertaining to the
covered entity's compliance with the requirements of section
340B(a)(5)(A) and (B) of the PHSA as to drugs purchased from the
manufacturer. Section 340B(a)(5)(C) of the PHSA states
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the Secretary shall establish guidelines relating to the number, scope
and duration of the audits and these audits must be conducted in
accordance with guidelines established by the Secretary. Further, the
notice provided guidelines for disputes that may arise between covered
entities and participating manufacturers regarding implementation of
the provisions of section 340B. To resolve these disputes in an
expeditious manner, HRSA developed a voluntary dispute resolution
process.
II. Request for Comments
The purpose of this document is to obtain information and public
comment on how to efficiently and effectively implement the
requirements to create an administrative dispute resolution process for
the 340B Program authorized by Section 7102 of the Affordable Care Act.
Although HRSA has identified several issues and areas where HRSA
believes comment would be particularly helpful, comments may be
submitted on any issues directly relevant to the implementation of the
specified requirements.
Areas for which HRSA is expressly seeking comment include: (1)
Administrative Procedures; (2) Existing Models; (3) Threshold
Requirements; (4) Hearings; (5) Decision-making Official or Body; (6)
Appropriate Appeals Procedures; (7) Deadlines; (8) Discovery
Procedures; (9) Manufacturer Audits; (10) Consolidation of Manufacturer
Claims; (11) Covered Entity Consolidation of Claims; (12) Claims by
Organizations Representing Covered Entities; and (13) Integration of
Dispute Resolutions with Other Provisions in the Affordable Care Act.
(1) Administrative Procedures
HRSA is seeking general comments regarding the administrative
procedures associated with alternative dispute resolution. Systems must
be put in place that address how and when to initiate the dispute
resolution process, what level of evidence must be presented, who can
be a party to a dispute, how dispute resolution requests will be
processed, timelines, what type of notice is required for proposed
determinations, and what involvement and notice should be given third
parties and the public.
(2) Existing Models
HRSA is seeking comments regarding what aspects of other existing
models for administrative dispute resolution can be adapted to the 340B
Program. HRSA is aware of several examples of administrative dispute
resolution both within and outside of the Department. Certain aspects
of these other processes can provide useful insight as HRSA implements
the 340B Program administrative dispute resolution authority.
One of the most useful existing models is the current dispute
resolution guidelines for the 340B Program outlined at 61 FR 65406
(Dec. 12, 1996) (can also be found on the OPA Web site at ftp://ftp.hrsa.gov/bphc/pdf/opa/FR12121996.htm). The current dispute
resolution guidelines contain a voluntary process for the resolution of
disputes between manufacturers and covered entities concerning
compliance with the 340B Program. The current guidelines outline the
types of disputes covered; steps the parties must take before bringing
a dispute; the review process; and the assessment of penalties. While
the current process has been underutilized (because it was a voluntary
process), it does address many issues specific to creating a dispute
resolution process for the 340B Program. HRSA would be interested in
receiving comments about what aspects of the current process could be
adapted for the new administrative dispute resolution process.
(3) Threshold Requirements
HRSA is contemplating using a standard for bringing claims
analogous to that utilized under the current informal dispute
resolution guidelines (61 FR 65406). These guidelines state: ``The
party requesting the review may not rely only upon allegations but is
required to set forth specific facts showing that there is a genuine
and substantial issue of material fact in dispute that requires a
review. The request for review shall include a clear description of the
dispute, shall identify all the issues in the dispute, and shall
contain a full statement of the party's position with respect to such
issue(s) and the pertinent facts and reasons in support of the party's
position. In addition to the required statement, the party shall
provide copies of any documents supporting its claim and evidence that
a good faith effort was made to resolve the dispute.''
Generally, HRSA would expect that the party initiating the dispute
to make a showing that it has more than mere allegations and to also
demonstrate that it has made a good faith effort to settle the dispute
before involving the Department. In the case of covered entities, the
dispute must involve a claim of manufacturer overcharge. HRSA may
consider claims of overcharge to include direct and indirect evidence
of a violation, such as cases where refusal to sell at the 340B price
has led to the purchase of the covered outpatient drug outside of the
340B Program. In the case of manufacturers, the dispute must involve a
claim of a violation of subsections 340B(a)(5)(A) or (a)(5)(B) of the
PHSA. Manufacturers' claims can only be brought after the conduct of
audits as authorized by subsection (a)(5)(C). Therefore, HRSA would
expect that manufacturers would present direct evidence of a covered
entity's alleged violations of either 340B(a)(5)(A) or (a)(5)(B).
HRSA is seeking comments on the feasibility of applying this
construct to the new statutorily created administrative dispute
resolution process.
(4) Hearings
HRSA expects that the alternative dispute resolution process would
involve some type of hearing. The hearing could be either conducted
through an exchange of documents, in-person, or by web access. HRSA is
inviting comments on the manner in which such a hearing should be
structured. HRSA is considering a large number of issues involved in
creating a fair and efficient hearing process, including, but not
limited to: Ex parte contacts; rehearing conferences; subpoenas; form,
filing and service of papers; motions; sanctions; burden of proof;
evidence; and post-hearing briefs.
(5) Decision-making Official or Body
HRSA expects to designate or establish a decision-making official
or body from within the Department. HRSA welcomes comments as to
whether the same or different decision-makers should decide the
sufficiency to state a claim and to make a final determination on a
claim. HRSA also invites comments on whether the decision-making
official or body should be within HRSA, within OPA, or come from other
parts of the Department.
(6) Appropriate Appeals Procedures
HRSA expects to establish an appeals process applicable to a final
administrative determination rendered by the decision-making body or
official. In addition to comments regarding existing models and the
applicability of the Administrative Procedures Act, HRSA is requesting
public comment on the procedures related to this new 340B dispute
resolution process.
(7) Deadlines
HRSA invites comments on whether claims should be time barred and
the standards applicable for maximum
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timeframes to bring a claim. HRSA invites comments on deadlines for
responses to submissions by the participants, the government and
deciding body or official and the consequences of failure to meet a
particular deadline.
(8) Discovery Procedures
HRSA is requesting input on the process used for discovery of
information from participating manufacturers and covered entities. HRSA
will need to determine the scope of documents (information, reports,
answers, records, accounts, papers, documentary evidence, etc.) and
interrogatories eligible for discovery. HRSA will also need to
determine under what circumstances (irrelevancy, privileged
information, unduly burdensome, etc.) protective orders should be
utilized. Procedures to ensure the confidentiality of information
discovered will also need to be developed. Finally, a determination
will need to be made as to the power to compel discovery from third
parties given that OPA has limited direct regulatory authority through
the 340B Program over entities and individuals outside of 340B
participating drug manufacturers and covered entities.
(9) Manufacturer Audits
The administrative dispute resolution requirements of the
Affordable Care Act set forth that manufacturers must conduct an audit
of a covered entity prior to bringing a claim. HRSA currently has
guidelines regarding the requirements for initiating an audit (61 FR
65406). However, over the history of the 340B Program manufacturers
have rarely utilized the process in the guidelines to conduct an audit.
HRSA invites comments on whether it is appropriate or necessary to
modify the guidelines concerning audits prior to implementing the
administrative dispute resolution regulation or whether the current
final guidelines are sufficient.
(10) Consolidation of Manufacturer Claims
HRSA is required to create a process for consideration of whether
requests by a manufacturer or manufacturers to consolidate claims by
more than one manufacturer against the same covered entity are
``appropriate and consistent with the goals of fairness and economy of
resources.'' HRSA seeks comments on how to create this process, the
evidence to be considered, timing of requests to join in a consolidated
claim, and the interests to be weighed.
(11) Covered Entity Consolidation of Claims
Similar to the consolidation of manufacturer claims, HRSA is
required to create a process for consideration of requests for
consolidation of particular covered entity claims. HRSA invites comment
on whether the standard for manufacturers and covered entities should
differ and whether there should be a presumption of allowing such
consolidation of claims absent a finding that consolidation would be
inconsistent with the goals of fairness and economy of resources.
(12) Claims by Organizations Representing Covered Entities
The legislation provides for claims by organizations representing
entities. HRSA is interested in input on when a third party can bring
claims on behalf of member covered entities in the context of a binding
formal dispute resolution process and how to ensure that the group in
fact represents the interests of the covered entities. In order to
ensure that such organizations actually represent the interests of
covered entities, HRSA is contemplating that prior to seeking to file a
claim on behalf of covered entities, such groups must have a signed
agreement with the covered entities. The agreement would indicate that
the organization is authorized to bring a claim on behalf of the
covered entities; the precise nature of the claim; that the covered
entities agree to participate in good faith and abide by discovery
procedures; and that the covered entities agree to be bound by any
decision of the decision-making official or body. HRSA contemplates a
decision-making official or body having the authority to not allow
claims that would result in unfairness or a substantial waste of
resources.
(13) Integration of Dispute Resolutions With Other Provisions in the
Affordable Care Act
In addition to the compliance tools already available to HRSA, such
as audits and alternative dispute resolution, the Affordable Care Act
provides HRSA with many additional tools to monitor compliance. These
additional tools include establishing procedures to verify the accuracy
of ceiling prices; creating processes for manufacturers to refund
overcharges; selective auditing of manufacturers; annual
recertification of covered entities; and providing access to ceiling
price information. The use of the new administrative dispute resolution
authority must be used in conjunction with these other compliance tools
to ensure its most effective use. HRSA invites comments concerning the
relationship between administrative dispute resolution and other
oversight mechanisms.
While these thirteen areas were identified for comment, we welcome
comments on any other issues that stakeholders believe are key to
implementing an effective alternate dispute resolution process.
Dated: September 14, 2010.
Mary K. Wakefield,
Administrator.
[FR Doc. 2010-23460 Filed 9-17-10; 8:45 am]
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