340B Drug Pricing Program; Administrative Dispute Resolution, 53381-53388 [2016-18969]
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Federal Register / Vol. 81, No. 156 / Friday, August 12, 2016 / Proposed Rules
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Dated: August 2, 2016.
Judith A. Enck,
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[FR Doc. 2016–19142 Filed 8–11–16; 8:45 am]
BILLING CODE 6560–50–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
42 CFR Part 10
RIN 0906–AA90
340B Drug Pricing Program;
Administrative Dispute Resolution
Health Resources and Services
Administration, HHS.
ACTION: Notice of proposed rulemaking.
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AGENCY:
The Health Resources and
Services Administration (HRSA)
implements section 340B of the Public
Health Service Act (PHSA), which is
referred to as the ‘‘340B Drug Pricing
Program’’ or the ‘‘340B Program.’’ This
proposed rule will apply to all drug
SUMMARY:
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manufacturers and covered entities that
participate in the 340B Program. The
proposed rule sets forth the
requirements and procedures for the
340B Program’s administrative dispute
resolution process.
DATES: Submit written comments on or
before October 11, 2016.
ADDRESSES: You may submit comments,
identified by the Regulatory Information
Number (RIN) 0906–AA90, by any of the
following methods. Please submit your
comments in only one of these ways to
minimize the receipt of duplicate
submissions.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow
instructions for submitting comments.
This is the preferred method for the
submission of comments.
• Email: 340BNPRMADR@hrsa.gov.
Include 0906–AA90 in the subject line
of the message.
• Regular, express, or overnight mail:
CAPT Krista Pedley, Director, Office of
Pharmacy Affairs (OPA), Healthcare
Systems Bureau (HSB), HRSA, 5600
Fishers Lane, Mail Stop 08W05A,
Rockville, MD 20857. Please allow
sufficient time for mailed comments to
be received before the close of the
comment period.
All submitted comments will be
available to the public in their entirety.
All comments received may be posted
without change to https://
www.regulations.gov, including any
personally identifiable or confidential
business information that is included in
a comment.
FOR FURTHER INFORMATION CONTACT:
CAPT Krista Pedley, Director, OPA,
HSB HRSA, 5600 Fishers Lane, Mail
Stop 08W05A, Rockville, MD 20857, or
by telephone at 301–594–4353.
SUPPLEMENTARY INFORMATION: The
President encourages Federal agencies
through Executive Order 13563 to
develop balanced regulations by
encouraging broad public participation
in the regulatory process and an open
exchange of ideas. Accordingly, the
Department of Health and Human
Services (HHS or the Department) urges
all interested parties to examine this
regulatory proposal carefully and to
share your views with us, including any
data to support your positions. If you
have questions before submitting
comments, please see the FOR FURTHER
INFORMATION CONTACT field above for the
name and contact information of the
subject-matter expert involved in the
development of this proposal. We will
consider all written comments received
during the comment period before
issuing a final rule.
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If you are a person with a disability
and/or a user of assistive technology
who has difficulty accessing this
document, please contact HRSA’s
Regulations Officer at: Room 13N82,
5600 Fishers Lane, Rockville, MD
20857; or by telephone at 301–443–
1785, to obtain this information in an
accessible format. This is not a toll free
telephone number.
Please visit https://www.HHS.gov/
regulations for more information on
HHS rulemaking and opportunities to
comment on proposed and existing
rules.
I. Background
Section 602 of Public Law 102–585,
the ‘‘Veterans Health Care Act of 1992,’’
enacted section 340B of the PHSA
entitled ‘‘Limitation on Prices of Drugs
Purchased by Covered Entities,’’ which
was codified at 42 U.S.C. 256b. The
340B Program permits covered entities
‘‘to stretch scarce Federal resources as
far as possible, reaching more eligible
patients and providing more
comprehensive services.’’ H.R. REP. No.
102–384(II), at 12 (1992). The Secretary
of the HHS delegated the authority to
operate section 340B of the PHSA to the
Administrator of HRSA. Pursuant to this
delegation of authority, HRSA
established and administers the 340B
Program. Operationally, the 340B
Program is housed within HRSA’s
Healthcare Systems Bureau (HSB),
Office of Pharmacy Affairs (OPA).
Eligible covered entity types are defined
in section 340B(a)(4) of the PHSA, as
amended. Section 340B of the PHSA
instructs HHS to enter into
pharmaceutical pricing agreements
(PPA) with manufacturers of covered
outpatient drugs. Manufacturers are
required by section 1927(a)(5)(A) of the
Social Security Act to enter into
agreements with the Secretary of HHS
that comply with section 340B of the
PHSA if they participate in the
Medicaid Drug Rebate Program. When a
drug manufacturer signs a PPA, it agrees
that the prices charged for covered
outpatient drugs to covered entities will
not exceed defined 340B ceiling prices,
which are based on quarterly pricing
data reported by manufacturers to the
Centers for Medicare & Medicaid
Services (CMS).
Section 7102 of the Patient Protection
and Affordable Care Act (Pub. L. 111–
148), as amended by section 2302 of the
Health Care and Education
Reconciliation Act (Pub. L. 111–152),
hereinafter referred to as the
‘‘Affordable Care Act,’’ added section
340B(d)(3) of the PHSA, which requires
the Secretary of HHS (or the Secretary)
to promulgate a regulation establishing
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and implementing a binding
administrative dispute resolution (ADR)
process for certain disputes arising
under the 340B Program. The purpose of
the ADR process is to resolve (1) claims
by covered entities that they have been
overcharged for covered outpatient
drugs by manufacturers; and (2) claims
by manufacturers, after a manufacturer
has conducted an audit as authorized by
section 340B(a)(5)(C) of the PHSA, that
a covered entity has violated the
prohibition on diversion to ineligible
patients or duplicate discounts. The
340B ADR process is not intended to be
a trial-like proceeding governed by
formal review of evidence and
procedure. Rather, it is an
administrative process that is designed
to assist covered entities and
manufacturers in resolving disputes
regarding overcharging, duplicate
discounts, or diversion. Historically,
HHS has encouraged manufacturers and
covered entities to work with each other
to attempt to resolve disputes in good
faith. The ADR process as proposed in
this rule is not intended to replace these
good faith efforts, but should be
considered as a last resort in the event
good faith efforts to resolve disputes
have not been successful. In addition,
covered entities and manufacturers
should carefully evaluate whether the
ADR process is appropriate for de
minimis claims given the investment of
the time and resources required of the
parties involved.
In 2010, HHS issued an advanced
notice of proposed rulemaking
(ANPRM) that requested comments on
the development of an ADR process (75
FR 57233, September 20, 2010). The
ANPRM specifically requested
comments on: (1) Administrative
procedures, (2) existing models, (3)
threshold requirements, (4) hearings, (5)
decision-making officials or bodies, (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 resolution with other 340B
requirements added by the Affordable
Care Act. HHS received 14 comments on
the ANPRM. The comments received
were considered in the development of
this proposed rule.
HHS encourages all stakeholders to
provide written comments on this
NPRM. This proposed regulation, when
finalized, will replace the 340B
Program’s guidelines on the informal
dispute resolution process developed to
resolve disputes between covered
entities and manufacturers, which was
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published on December 12, 1996 (61 FR
65406).
II. Summary of the Proposed
Regulations
The proposed revisions to 42 CFR part
10 are described according to the
applicable section of the regulations.
The United States District Court for the
District of Columbia vacated the 340B
Program Regulations at 42 CFR part 10
relating to Orphan Drugs (subpart C).
(PhRMA v. HHS, No. 13–01501 (D.D.C.
May 23, 2014). This NPRM proposes to
add new definitions to § 10.3 and retitle
and replace the language in subpart C as
set forth below.
§ 10.3
Definitions.
HHS is proposing to add the following
definitions: ‘‘Administrative Dispute
Resolution Process,’’ ‘‘Administrative
Dispute Resolution Panel (340B ADR
Panel),’’ ‘‘claim,’’ and ‘‘consolidated
claim.’’
Subpart C—Administrative Dispute
Resolution
§ 10.20 340B Administrative Dispute
Resolution Panel
(a) Members of the 340B ADR Panel.
As required by section
340B(d)(3)(B)(i), regulations
promulgated by the Secretary shall
designate or establish a decision-making
official or body within HHS to review
and make a binding decision for claims
filed by covered entities and
manufacturers. HHS proposes to
establish a decision-making body
(referred to as the ‘‘340B ADR Panel’’ or
‘‘Panel’’) to review and resolve such
claims.
The proposed 340B ADR Panel will
ensure an unbiased and fair review of
the claims, and reduce the individual
burden associated with having a single
decision-making official who is solely
responsible for reviewing and resolving
claims. The proposed 340B ADR Panel
will include three members, chosen
from a roster of eligible individuals
alternating from claim to claim, and one
ex-officio, non-voting member chosen
from the staff of OPA to facilitate the
review and resolution of claims within
a reasonable time frame. The proposed
roster of eligible individuals will be
comprised of Federal employees (e.g.,
employees of CMS or the U.S.
Department of Veterans Affairs) with
demonstrated expertise or familiarity
with the 340B Program. The ADR panel
will not be compensated.
HHS proposes that for each filed
claim that is reviewed, HSB will review
the qualifications of individuals on the
340B ADR Panel roster and select those
with expertise or familiarity with the
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appropriate aspects of the 340B
Program. HHS also proposes that
individuals serving on a 340B ADR
Panel may be removed for cause. For
example, if it is determined prior to or
during the course of a Panel member’s
review of a claim that there is a conflict
of interest, as described in subsection
(b), with respect to that claim, the Panel
member will be removed from the Panel
and replaced by another individual from
the 340B ADR Panel roster.
HHS is soliciting specific comments
on the proposed size and composition of
the 340B ADR Panel, in particular
whether the 340B ADR Panel should be
comprised of a set number of voting
members to maintain consistency and
transparency across each claim that is
reviewed, whether HHS should retain
the flexibility to appoint a requisite
number of voting members based on the
complexity of the claim and other
factors, and whether the 340B ADR
Panel should include at least one OPA
staff member as a voting member or
whether the inclusion of an OPA staff
member as an ex-officio, non-voting
member is sufficient to ensure
adherence to 340B policies and
procedures.
(b) Conflicts of interest.
To ensure fairness and objectiveness,
HHS proposes that each 340B ADR
Panel member be screened prior to
reviewing a claim and not allowed to
conduct a review if any conflicts of
interest exist. For example, the
individual would not review a claim if
he or she has a conflict of interest with
respect to the parties involved in the
claim or the subject matter of the claim.
HHS proposes that individuals be
screened for conflicts of interest in
accordance with U.S. Office of
Government Ethics policies and
procedures applicable to Federal
employees. Conflicts of interest may
include the following: (1) Financial
interest; (2) family or close relation to a
party involved; and (3) current or former
business or employment relation to a
party. The specific procedures for
screening members of the panel prior to
their service on the 340B ADR Panel
will be detailed in future guidance.
(c) Duties of the 340B ADR Panel.
In subsection (c), HHS proposes that
once the 340B ADR Panel receives the
claim, the 340B ADR Panel will
consider all documentation provided by
the parties and may request additional
information or clarification from any
party involved with the claim. HHS also
proposes that the 340B ADR Panel
review claims in a session closed to the
parties involved, including any
associations or organizations, or legal
counsel representing the parties.
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In this subsection, HHS also proposes
that the 340B ADR Panel may consult
with subject matter experts within OPA
regarding 340B program requirements
while reviewing a claim. The 340B ADR
Panel will provide a final decision only
with respect to the claim. HHS proposes
that the 340B ADR Panel’s final decision
must represent the decision of a
majority of the Panel members but need
not be unanimous.
§ 10.21 Claims
(a) Claims permitted.
Section 7102 of the Affordable Care
Act added section 340B(d)(3) of the
PHSA, which instructs the Secretary to
establish and implement a binding ADR
process to resolve certain 340B Program
statutory violations. Section
340B(d)(3)(A) of the PHSA specifies that
the ADR process is to be used to resolve:
(1) Claims by covered entities that they
have been overcharged by
manufacturers for drugs purchased
under this section and (2) claims by
manufacturers, after a manufacturer has
conducted an audit of a covered entity,
as authorized by section 340B(a)(5)(C) of
the PHSA, that a covered entity has
violated the prohibitions against
duplicate discounts and diversion
(sections 340B(a)(5)(A) and (B) of the
PHSA).
(b) Requirements for filing a claim.
In subsection (b), HHS proposes that
the covered entity and the manufacturer
meet certain requirements for filing a
claim. These proposed requirements
will ensure that a claim of the type
specified in section 340B(d)(3)(A) of the
PHSA is the subject of the dispute.
The Department is proposing that
covered entities and manufacturers file
a written claim, based on the facts
available, to HSB within 3 years of the
date of the sale (or payment) at issue in
the alleged violation and that any claim
not filed within 3 years shall be time
barred. The proposed requirement that a
claim be filed within 3 years is
consistent with the record retention
expectations for the 340B Program and
will ensure that covered entities and
manufacturers have access to relevant
records needed to review and respond
to claims. This proposal ensures
documents must be submitted with each
claim to verify that the alleged violation
is not time barred. This proposed
requirement will prevent a party from
asserting a claim that is stale. HHS
requests public comment concerning the
3 year limitation on claims submission.
HHS is also proposing that once a
claim is submitted and the opposing
party has been notified of the claim, any
file, document, or record associated
with a claim be maintained by the
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covered entity and/or manufacturer
until the 340B ADR Panel’s final agency
decision is issued.
Covered Entity Claims
In section 10.21(b)(2), HHS proposes
that to be eligible for the ADR process,
each claim filed by a covered entity
must include documents sufficient to
demonstrate a covered entity’s claim
that it has been overcharged by a
manufacturer, along with any such
documentation as may be requested by
HSB to evaluate the veracity of the
claim. Such documentation may
include: (1) A 340B purchasing account
invoice which shows the purchase price
by national drug code (NDC), less any
taxes and fees; (2) the 340B ceiling price
for the drug during the quarter(s)
corresponding to the time period(s) of
the claim; and (3) documentation of the
attempts made to purchase the drug via
a 340B account at the ceiling price,
which resulted in the instance of
overcharging. HHS believes that these
documents are readily available to a
covered entity through the usual course
of business and should not be overly
burdensome to produce, however HHS
requests public comment on the
feasibility or producing the
documentation as proposed. HHS may
also request that the covered entity
provide it with a written summary of
attempts to work in good faith to resolve
the instance of overcharging with the
manufacturer at issue.
Pursuant to section 340B(d)(1)(B) of
the PHSA, HHS is developing a system
to verify the ceiling price of a 340B drug
and allow covered entities to access and
verify the ceiling price. Until such
system is developed, HHS has access to
ceiling price data and will ensure that
the 340B ADR panel will also have
access as they evaluate any particular
claim. Covered entities will be able to
access ceiling price information through
this system, which may lessen the
burden in submitting the information
accompanying a claim.
Manufacturer Claims
In section 10.21(b)(3), HHS proposes
that to be eligible for the 340B ADR
process, each claim filed by a
manufacturer must include documents
sufficient to demonstrate a
manufacturer’s claim that a covered
entity has violated the prohibition on
diversion and/or duplicate discount,
along with any such documentation as
may be requested by HSB to evaluate
the veracity of the claim. Such
documentation may include: (1) A final
audit report which indicates that the
manufacturer audited the covered entity
for compliance with the prohibition on
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diversion (section 340B(a)(5)(B) of the
PHSA) and/or duplicate discounts
(section 340B(a)(5)(A) of the PHSA) and
(2) the covered entity’s written response
to the manufacturer’s audit finding(s).
HHS may also request that the
manufacturer submit a written summary
of attempts to work in good faith to
resolve the claim with the covered
entity.
(c) Consolidation of claims.
In subsection (c), HHS proposes that,
if requested, covered entities or
manufacturers may be permitted to
consolidate their individual claims.
Section 340B(d)(3)(B)(vi) of the PHSA
permits ‘‘multiple covered entities to
jointly assert claims of overcharges by
the same manufacturer for the same
drug or drugs in one administrative
proceeding. . . .’’ HHS proposes that
for consolidated claims, the claim must
list each covered entity and include
documentation and/or information from
each covered entity demonstrating that
the covered entity meets all of the
requirements for filing a claim with
HHS and that a letter requesting
consolidation of claims must also
accompany the claim and must
document that each covered entity
consents to the consolidation of the
claim.
Pursuant to section 340B(d)(3)(B)(vi)
of the PHSA, consolidated claims are
also permitted on behalf of covered
entities by associations or organizations
representing their interests. Therefore,
HHS proposes that the covered entities
must be members of the association or
the organization representing them and
that each covered entity must meet the
requirements listed in subsection (b) for
filing a claim with HSB. The proposed
consolidated claim must assert
overcharging by the same manufacturer
for the same drug(s), and the
organization or association will be
responsible for filing the claim. HHS
also proposes requiring that a letter
requesting consolidation of claims must
accompany the claim and must
document that each covered entity
consents to the organization or
association asserting a claim on its
behalf.
Similarly, at the request of two or
more manufacturers, section
340B(d)(3)(B)(v) of the PHSA permits
the consolidation of claims brought by
more than one manufacturer against the
same covered entity if consolidation is
consistent with the statutory goals of
fairness and economy of resources. This
NPRM proposes that the claim must list
each manufacturer and include
documentation and/or information from
each manufacturer demonstrating that
the manufacturer meets the
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requirements listed in subsection (b) for
filing a claim with HSB. HHS also
proposes that a letter requesting
consolidation of claims must be
submitted with the claim and must
document that each manufacturer
consents to the consolidation of the
claims. The statutory authority for
implementing the 340B ADR process
does not permit consolidated claims on
behalf of manufacturers by associations
or organizations representing their
interests. Therefore, HHS is not
proposing this option in this NPRM.
With regard to the consolidation of
claims by manufacturers against a
covered entity, HHS is seeking specific
comment on the grounds under which
consolidation would be consistent with
the statutory goals of fairness and
economy of resources, as required by
section 340B(d)(3)(B)(v) of the PHSA. In
addition, while HHS is proposing, as
required by the 340B statute, an ADR
process that allows manufacturers to
consolidate claims against a covered
entity, we recognize the operational
challenges presented by the statutory
requirement for a manufacturer to first
audit the covered entity. HHS is,
therefore, seeking comment on how
manufacturers requesting a consolidated
claim against a covered entity can
satisfy the audit requirement.
(d) Deadlines and procedures for
filing a claim.
In subsection (d), HHS proposes that
covered entities and manufacturers file
a claim with HSB demonstrating that
they satisfy the requirements described
in subsection (b) and that the party
filing a claim must send written notice
to the opposing party regarding the
claim within 3 business days of
submitting the claim and the party must
submit confirmation of the opposing
party’s receipt or acknowledgement of
receipt within 3 business days. HHS
also proposes that the written notice to
the opposing party must include a
summary of the documents submitted as
part of the claim.
HHS proposes that HSB will review
the information submitted as part of the
claim to verify that the requirements for
filing a claim have been met. HSB
would contact the initiating party once
the claim has been received and may
request additional information before
accepting a claim for review by the 340B
ADR Panel. If additional information is
requested, the party filing the claim will
have 20 business days of receipt of the
request to respond. Claims will not
move forward for review by the 340B
ADR Panel if the initiating party does
not respond to the request for additional
information or if a party files a claim for
any purpose other than those specified
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in the statute (i.e., overcharging,
duplicate discount, or diversion), or if
the alleged violation occurred more than
3 years before the date of filing the
claim.
HHS proposes that HSB will make a
determination as to whether all
requirements are met and provide
written notice to all parties within 20
business days after receiving the claim
and any subsequently requested
information, which will be transmitted
via both hard copy and email. If HSB
determines the claim includes all
necessary documentation and meets the
requirements for filing a claim, the
claim will be forwarded to the 340B
ADR Panel for review. HSB would
provide additional information on the
340B ADR process to all parties at that
time, including contact information for
requested follow-up communications
and an approximate timeframe for the
340B ADR Panel’s review.
HHS proposes that if the claim does
not move forward for review by the ADR
Panel, written notice will be sent by
HSB to the parties involved that
includes the basis for the decision and
will advise the party that they may
revise and refile the claim if the party
has new information to support the
alleged statutory violation.
(e) Responding to a submitted claim.
In subsection (e), HHS proposes that
once the parties have been notified by
HSB that the claim has met the
requirements in subsection (b) and will
move forward for review by the 340B
ADR Panel, the opposing party will
have 20 business days to submit a
written response to the allegation to the
340B ADR Panel and the party who filed
the claim. Subsequent requests for
information regarding the claim would
be made by the 340B ADR Panel as
needed, and the 340B ADR Panel will
consider any additional information that
was provided by the parties involved.
However, if an opposing party does not
respond to a request for information
from HSB or the 340B ADR Panel or
otherwise elects not to participate in the
340B ADR process, the 340B ADR Panel
will make a decision on the claim based
on the information submitted in the
claim.
§ 10.22 Covered entity information
requests.
Pursuant to section 340B(d)(3)(B)(iii)
of the PHSA, regulations promulgated
by the Secretary for the 340B ADR
process will establish procedures by
which a covered entity may discover or
obtain information and documents from
manufacturers and third parties relevant
to a claim that the covered entity has
been overcharged by the manufacturer.
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This NPRM proposes that such covered
entity information requests be facilitated
by the 340B ADR Panel. HHS proposes
that a covered entity must submit a
written request for information to the
340B ADR Panel no later than 20
business days after the entity was
notified by HSB that the claim would
move forward for the ADR Panel’s
review. The 340B ADR Panel will
review the information/document
request to ensure that it is reasonable
and within the scope of the asserted
claim. The 340B ADR Panel will notify
the covered entity in writing if any
request is deemed reasonable and
within the scope of the asserted claim
and permit the covered entity to submit
a revised information/document
request, if it is not.
In this section, HHS proposes that the
340B ADR Panel will consider relevant
factors, such as the scope of the
information/document request, whether
there are consolidated claims, or the
involvement of one or more third parties
in distributing drugs on behalf of the
manufacturer and that once reviewed,
the 340B ADR Panel will submit the
information/document request to the
manufacturer, which must respond
within 20 business days.
HHS also proposes that the
manufacturer must fully respond in
writing to the information request and
submit its response to the 340B ADR
Panel by the stated deadline and that
the manufacturer is responsible for
obtaining relevant information/
documents from wholesalers or other
third parties that may facilitate sales or
distribution of its drugs to covered
entities. HHS proposes that if a
manufacturer anticipates it will not be
able to fully respond by the deadline,
the manufacturer may request one
extension in writing within 15 business
days. The extension request that is
submitted to the 340B ADR Panel must
include any available information, the
reason why the deadline is not feasible,
and outline a proposed timeline for
fully responding to the information
request. The 340B ADR Panel will
review the extension request and notify
both the manufacturer and the covered
entity in writing as to whether the
request for an extension is granted and
the date of the new deadline. If a
manufacturer does not respond to a
request for information from HSB or the
340B ADR Panel, HHS proposes that the
340B ADR Panel will make a decision
on the claim based on the information
submitted in the claim package that
moved forward for review.
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§ 10.23
III. Regulatory Impact Analysis
Final agency decision
In § 10.23, HHS proposes that the
340B ADR Panel review the documents
submitted by the parties and determine
if there is adequate support to conclude
that a violation as described in
subsection (a)(1) or (2) of § 10.21 has
occurred. The 340B ADR Panel will
prepare a draft agency decision letter,
which includes the 340B ADR Panel’s
findings and conclusions regarding the
alleged violation. HHS is proposing a
process whereby the 340B ADR Panel’s
draft agency decision letter will be sent
to all parties, and the parties involved
will have 20 business days to respond
to the 340 ADR Panel. HHS is seeking
specific comments on this process and
whether this proposed process will
facilitate or hinder the fair, efficient,
and timely resolution of claims.
HHS also proposes that once the
parties have reviewed and submitted
comments to the draft agency decision
letter, the 340B ADR Panel will prepare
and submit its final agency decision
letter to all parties in the dispute, which
may incorporate rebuttals from the
parties that were considered by the
340B ADR Panel to help inform the final
agency decision. The final agency
decision made by 340B ADR Panel will
conclude the administrative resolution
process; however, HHS proposes that
the final agency decision letter also be
submitted to HSB to take enforcement
action or apply sanctions, as
appropriate. For example, if the 340B
ADR Panel makes a decision that a
covered entity has violated the
prohibition against diversion, HSB may
require, as a sanction, that the covered
entity repay the affected manufacturer.
If the 340B ADR Panel makes a decision
that a manufacturer overcharged a
covered entity, HSB may require, as a
sanction, that the manufacturer refund
or issue a credit to the affected covered
entity. In both cases, HSB will work
with the party in violation on any
remedy and corrective action.
HHS proposes that the 340B ADR
Panel’s final agency decision letter will
be binding upon the parties involved,
unless invalidated by an order of a court
of competent jurisdiction in accordance
with section 340B(d)(3)(C) of the PHSA.
HHS may, at its sole discretion, publish
a summary of the claims that have gone
through the 340B ADR process on the
HRSA Web site, including the names of
the parties and the nature of the 340B
ADR Panel’s findings (e.g.,
overcharging, duplicate discount, or
diversion). HHS will consider issuing
future subregulatory guidance on this
topic as necessary.
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HHS has examined the effects of this
proposed rule as required by Executive
Order 12866 on Regulatory Planning
and Review (September 30, 1993),
Executive Order 13563 on Improving
Regulation and Regulatory Review
(January 8, 2011), the Regulatory
Flexibility Act (September 19, 1980,
Pub. L. 96–354), the Unfunded
Mandates Reform Act of 1995 (Pub. L.
104–4), and Executive Order 13132 on
Federalism (August 4, 1999).
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563 is
supplemental to and reaffirms the
principles, structures, and definitions
governing regulatory review as
established in Executive Order 12866,
emphasizing the importance of
quantifying both costs and benefits, of
reducing costs, harmonizing rules, and
promoting flexibility. Section 3(f) of
Executive Order 12866 defines a
‘‘significant regulatory action’’ as an
action that is likely to result in a rule:
(1) Having an annual effect on the
economy of $100 million or more in any
one year, or adversely and materially
affecting a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local, or tribal governments or
communities (also referred to as
‘‘economically significant’’); (2) creating
a serious inconsistency or otherwise
interfering with an action taken or
planned by another agency; (3)
materially altering the budgetary
impacts of entitlement grants, user fees,
or loan programs or the rights and
obligations of recipients thereof; or (4)
raising novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in the Executive Order. A
regulatory impact analysis must be
prepared for major rules with
economically significant effects ($100
million or more in any one year), and
a ‘‘significant’’ regulatory action is
subject to review by the Office of
Management and Budget (OMB).
This proposed rule is not likely to
have economic impacts of $100 million
or more in any one year; therefore, it has
not been designated an ‘‘economically
significant’’ rule under section 3(f)(1) of
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53385
Executive Order 12866. This proposed
rule creates a framework for the
Department to resolve certain disputed
claims regarding manufacturers
overcharging covered entities and
disputed claims of diversion and
duplicate discounts by covered entities
audited by manufacturers under the
340B Program. HHS does not anticipate
the introduction of an administrative
dispute resolution process to result in
significant economic impacts.
The Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) and the Small
Business Regulatory Enforcement and
Fairness Act of 1996, which amended
the RFA, require HHS to analyze
options for regulatory relief of small
businesses. If a rule has a significant
economic effect on a substantial number
of small entities, HHS must specifically
consider the economic effect of the rule
on small entities and analyze regulatory
options that could lessen the impact of
the rule. HHS will use an RFA threshold
of at least a 3 percent impact on at least
5 percent of small entities.
The proposed rule would affect drug
manufacturers (North American
Industry Classification System code
325412: Pharmaceutical Preparation
Manufacturing). The small business size
standard for drug manufacturers is 750
employees. Approximately 600 drug
manufacturers participate in the 340B
Program. While it is possible to estimate
the impact of the proposed rule on the
industry as a whole, the data necessary
to project changes for specific
manufacturers or groups of
manufacturers is not available, as HRSA
does not collect the information
necessary to assess the size of an
individual manufacturer that
participates in the 340B Program. The
proposed rule would also affect health
care providers. For purposes of the RFA,
HHS considers all health care providers
to be small entities either by virtue of
meeting the Small Business
Administration (SBA) size standard for
a small business, or for being a
nonprofit organization that is not
dominant in its market. The current
SBA size standard for health care
providers ranges from annual receipts of
$7 million to $35.5 million. As of July
1, 2016, over 12,000 covered entities
participate in the 340B Program, which
represent safety-net healthcare
providers across the country.
The proposed rule introduces an
administrative mechanism to review
claims by manufacturers that covered
entities have violated certain statutory
obligations and claims by covered
entities that have been overcharged for
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covered outpatient drugs by
manufacturers. The documentation
required as part of this administrative
process are documents that
manufacturers and covered entities are
already required to maintain as part of
their participation in the 340B Program.
HHS expects that this documentation
would be sufficiently available prior to
submitting a claim. Therefore, the
collection of this information would not
result in an economic impact or create
additional administrative burden on
these businesses.
HHS believes the proposed
administrative dispute resolution
process will provide a cost-efficient
option for resolving claims that would
otherwise remain unresolved or require
litigation. The proposed rule provides
an option to consolidate claims by
similar situated entities, and covered
entities may have claims asserted on
their behalf by associations or
organizations which could reduce costs.
HHS has determined, and the Secretary
certifies that this final rule will not have
a significant economic impact on a
substantial number of small health care
providers or a significant impact on the
operations of a substantial number of
small manufacturers; therefore we are
not preparing an analysis of impact for
the purposes of the RFA. HHS estimates
that the economic impact on small
entities and small manufacturers will be
minimal and less than 3 percent. HHS
welcomes comments concerning the
impact of this proposed rule on small
manufacturers and small health care
providers.
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Unfunded Mandates Reform Act
Section 202(a) of the Unfunded
Mandates Reform Act of 1995 requires
that agencies prepare a written
statement, which includes an
assessment of anticipated costs and
benefits, before proposing ‘‘any rule that
includes any Federal mandate that may
result in the expenditure by State, local,
and Tribal governments, in the
aggregate, or by the private sector, of
$100 million or more (adjusted annually
for inflation) in any one year.’’ In 2014,
that threshold level was approximately
$155 million. HHS does not expect this
proposed rule to exceed the threshold.
Executive Order 13132—Federalism
HHS has reviewed this proposed rule
in accordance with Executive Order
13132 regarding federalism, and has
determined that it does not have
‘‘federalism implications.’’ This
proposed rule would not ‘‘have
substantial direct effects on the States,
or on the relationship between the
national government and the States, or
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on the distribution of power and
responsibilities among the various
levels of government.’’ The proposals in
this notice of proposed rulemaking, if
implemented, would not adversely
affect the following family elements:
family safety, family stability, marital
commitment; parental rights in the
education, nurture, and supervision of
their children; family functioning,
disposable income, or poverty; or the
behavior and personal responsibility of
youth, as determined under section
654(c) of the Treasury and General
Government Appropriations Act of
1999. HHS invites additional comments
on the impact of this proposed rule from
affected stakeholders.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)) requires that OMB
approve all collections of information
by a Federal agency from the public
before they can be implemented. This
proposed rule will not have a significant
impact on the current reporting and
recordkeeping burden for manufacturers
or covered entities under the 340B
Program. Based on current experience
with the informal ADR process offered
by the 340B Program, there have only
been four requests for informal dispute
resolution since the inception of the
Program. Of the four dispute resolution
requests, two were terminated by HRSA
due to non-participation by one of the
parties, another was dismissed due to
lack of sufficient evidence, and the last
was terminated because the parties
disputed the existence of any attempt of
good faith resolution. The relatively
small number is attributed to the
success of parties’ attempts to resolve
issues in good faith. Due to this very
small number of informal dispute
resolution requests, there has been very
limited experience to date with dispute
resolution record keeping. Changes
proposed in this rulemaking would not
result in significant reporting or
recordkeeping burden. Comments are
welcome on the accuracy of this
statement.
For the reasons set forth in the
preamble, the Department of Health and
Human Services proposes to amend 42
CFR part 10 as follows:
PART 10—340B DRUG PRICING
PROGRAM
1. The authority citation for part 10 is
revised to read as follows:
■
Authority: Sec. 340B of the Public Health
Service Act (42 U.S.C. 256b), as amended.
2. Amend § 10.3 by adding definitions
for ‘‘Administrative Dispute Resolution
(ADR) process’’,’’ Administrative
Dispute Resolution Panel (340B ADR
Panel)’’, ‘‘Claim’’, and ‘‘Consolidated
claim’’ to read as follows:
■
§ 10.3
Definitions.
*
*
*
*
*
Administrative Dispute Resolution
(ADR) process means a process used to
resolve claims by covered entities that
may have been overcharged for 340B
drugs purchased by manufacturers, and
claims by manufacturers of 340B drugs,
after a manufacturer has conducted an
audit of a covered entity, that a covered
entity may have violated the
prohibitions against duplicate discounts
or diversion.
Administrative Dispute Resolution
Panel (340B ADR Panel) means a
decision-making body within the
Department that reviews and makes a
binding decision for claims brought
under the ADR Process.
*
*
*
*
*
Claim means an allegation made by or
on behalf of a covered entity or by a
manufacturer for purposes of the ADR
Process.
Consolidated claim means the
submittal of joint claims by covered
entities (or their membership
organization or association) or
manufacturers to the 340B ADR Panel
asserting the same allegation against the
same party.
*
*
*
*
*
■ 3. Revise subpart C to read as follows:
Subpart C—Administrative Dispute
Resolution
Dated: May 24, 2016.
James Macrae,
Acting Administrator, Health Resources and
Services Administration.
Approved: June 7, 2016.
Sylvia M. Burwell,
Secretary. Department of Health and Human
Services.
Sec.
10.20 Administrative Dispute Resolution
Panel.
10.21 Claims.
10.22 Covered entity information requests.
10.23 Final agency decision.
List of Subjects in 42 CFR Part 10
Biologics, Business and industry,
Diseases, Drugs, Health, Health care,
Health facilities, Hospitals, 340B drug
pricing program.
The Secretary shall establish a
decision-making body known as the
Administrative Dispute Resolution
Panel (340B ADR Panel) to review and
make a binding final agency decision
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§ 10.20
Panel.
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regarding claims filed by covered
entities and manufacturers.
(a) Members of the 340B ADR Panel.
(1) The Health Resources and Services
Administration (HRSA) shall:
(A) Select three voting members of the
340B ADR Panel from a roster of eligible
individuals and one ex-officio, nonvoting member from the staff of HRSA’s
Office of Pharmacy Affairs (OPA);
(B) Alternate the individuals on the
340B ADR Panel for each claim;
(C) Remove an individual from the
340B ADR Panel for cause; and
(D) Appoint replacement members
should an individual be unable to
complete his or her duties.
(2) No member of the 340B ADR Panel
may have a conflict of interest, as
defined in subsection (b) of this section.
(b) Conflicts of interest. All members
of the 340B ADR Panel will be screened
for conflicts of interest prior to
reviewing a claim. Conflicts of interest
may include:
(1) Financial interest in a party
involved, a subsidiary of a party
involved, or in the claim before the
340B ADR Panel;
(2) Family or close relation to a party
involved; and
(3) Current or former business or
employment relation to a party.
(c) Duties of the 340B ADR Panel. The
340B ADR Panel will:
(1) Review and evaluate documents or
information submitted by covered
entities and manufacturers;
(2) Request additional information or
clarification of an issue from any or all
parties to make a final decision;
(3) Evaluate a claim in a separate
session from the parties involved;
(4) Consult with OPA regarding any
inquiries or concerns while reviewing a
claim; and
(5) Make a final agency decision on
each claim that will be communicated
to HRSA for appropriate enforcement.
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§ 10.21
Claims.
(a) Claims permitted. The ADR
process is limited to the following:
(1) Claims by a covered entity that it
has been overcharged, as defined in
§ 10.11(b), by a manufacturer for a
covered outpatient drug; and
(2) Claims by a manufacturer, after it
has conducted an audit of a covered
entity pursuant to section 340B(a)(5)(C)
of the PHSA, that the covered entity has
violated section 340B(a)(5)(A) of the
PHSA, regarding the prohibition of
duplicate discounts, or section
340B(a)(5)(B) of the PHSA, regarding the
prohibition of the resale or transfer of
covered outpatient drugs to a person
who is not a patient of the covered
entity.
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(b) Requirements for filing a claim. (1)
A covered entity or manufacturer must
file a claim for administrative dispute
resolution in writing to HRSA within 3
years of the date of the alleged violation.
Any file, document, or record associated
with the claim that is the subject of a
dispute must be maintained by the
covered entity and manufacturer until
the final agency decision letter is issued
by the 340B ADR Panel.
(2) A covered entity filing a claim
described in paragraph (a)(1) of this
section must provide documents
sufficient to demonstrate its claim that
it has been overcharged by a
manufacturer, along with any such other
documentation as may be requested by
HRSA.
(3) A manufacturer filing a claim
under paragraph (a)(2) of this section
must provide documents sufficient to
demonstrate its claim that a covered
entity has violated the prohibition on
diversion and/or duplicate discount,
along with any such documentation as
may be requested by HRSA.
(c) Consolidation of claims. (1) Two or
more covered entities may jointly file
claims of overcharges by the same
manufacturer for the same drug or drugs
if each covered entity that could file a
claim against the manufacturer consents
to the jointly filed claim, and meets the
minimum requirements, including
submission of the required
documentation, described in paragraph
(b) of this section.
(2) An association or organization
may file claims of overcharges by the
same manufacturer for the same drug or
drugs on behalf of multiple covered
entities if each covered entity
represented could file a claim against
the manufacturer, is a member of the
association or organization, meets the
requirements described in paragraph (b)
of this section, including submission of
the required documentation, and each
covered entity has agreed to
representation by the association or
organization on its behalf.
(3) A manufacturer or manufacturers
may request to consolidate claims
brought by more than one manufacturer
against the same covered entity if each
manufacturer could individually file a
claim against the covered entity,
consents to the jointly filed claim, meets
the requirements described in paragraph
(b) of this section for that claim, and the
340B ADR Panel determines that such
consolidation is appropriate and
consistent with the goals of fairness and
economy of resources. The 340B ADR
Panel will not permit joint claims filed
on behalf of manufacturers by
associations or organizations
representing their interests.
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53387
(d) Deadlines and procedures for
filing a claim. (1) Covered entities and
manufacturers must file claims in
writing to HRSA. A claim must include
all of the requirements in paragraph (b)
of this section. Additional information
to substantiate a claim may be
submitted.
(2) The party filing the claim must
notify the opposing party in writing
within 3 business days of the date the
claim was filed and must provide
documentation of such notification to
HRSA. The written notice to the
opposing party must include a summary
of the documents submitted as part of
the claim.
(3) HRSA will review all information
submitted by the party filing the claim
and will make a determination as to
whether all requirements are met and
provide written notice to all parties
within 20 business days after receiving
the claim and any subsequently
requested information.
(A) Claims that move forward for
review. If HRSA finds that the party
filing the claim submitted all required
documentation and thereby meets the
requirements described in paragraph (b)
of this section, written notification will
be sent to both the manufacturer and
covered entity advising that the claim
will be forwarded to the 340B ADR
Panel for review.
(B) Claims that do not move forward
for review. If HRSA finds that the claim
does not meet the requirements
described in paragraph (b) of this
section, written notification will be sent
to both the manufacturer and covered
entity detailing the reasons that the
claim did not move forward. A claim
will not move forward for review by the
340B ADR Panel if the claim does not
meet the requirements in paragraph (b)
of this section. That same claim may
only be resubmitted if new information
is presented to support the alleged
statutory violation.
(e) Responding to a submitted claim.
Upon receipt of notification that a claim
will move forward to the 340B ADR
Panel for review, the party in alleged
violation will have 20 business days to
submit a written response to the 340B
ADR Panel. If an opposing party does
not respond to a request for information
from HRSA or the 340B ADR Panel, or
elects not to participate in the 340B
ADR process, the 340B ADR Panel will
make a decision on the claim based on
the information submitted in the claim.
The 340B ADR Panel will consider any
additional information that was
provided by the parties involved.
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§ 10.22 Covered entity information
requests.
(a) A covered entity must submit a
written request for additional
information necessary to support its
claim to the 340B ADR Panel within 20
business days of the claim acceptance
date. The 340B ADR Panel will review
the information request and notify the
covered entity if the information request
is beyond the scope of the claim and
will permit the covered entity to
resubmit a revised information request
if necessary.
(b) The 340B ADR Panel will submit
the covered entity’s information request
to the manufacturer who must respond
to the request within 20 business days.
(c) The manufacturer must fully
respond, in writing, to an information
request from the 340B ADR Panel by the
response deadline.
(1) A manufacturer is responsible for
obtaining relevant information from any
wholesaler or other third party that may
facilitate the sale or distribution of its
drugs to covered entities.
(2) If a manufacturer anticipates that
it will not be able to respond to the
information request by the deadline, it
can request one extension by notifying
the 340B ADR Panel in writing within
15 business days of receipt of the
request.
(3) A request to extend the deadline
must include the reason why the current
deadline is not feasible and must
outline the proposed timeline for fully
responding to the information request.
(4) The 340B ADR Panel may approve
or disapprove the request for an
extension of time and will notify all
parties in writing of its decision.
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§ 10.23
Final agency decision.
(a) The 340B ADR Panel will review
documents submitted by the parties and
determine if there is adequate support to
conclude that a violation as described in
paragraph (a)(1) or (2) of § 10.21 has
occurred.
(1) The 340B ADR Panel will prepare
a draft agency decision letter based on
its review and evaluation of all
documents submitted by the parties,
including documents provided as
required in paragraph (b) of § 10.21,
information requests in support of a
claim, and responses to a claim.
(2) The draft agency decision letter
will be sent to all parties and will
include the 340B ADR Panel’s
preliminary findings regarding the
alleged violation.
(3) All parties will have 20 business
days to respond to the 340B ADR
Panel’s draft agency decision letter.
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(b) The 340B ADR Panel will review
the responses of all parties in producing
the final agency decision letter.
(1) The final agency decision letter
will represent the decision of a majority
of the 340B ADR Panel’s findings
regarding the claim and discuss the
findings supporting the decision.
(2) The 340B ADR Panel will submit
the binding final agency decision letter
to all parties, and to HRSA, as
necessary, for appropriate enforcement
action.
[FR Doc. 2016–18969 Filed 8–11–16; 8:45 am]
BILLING CODE 4165–15–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 97
[WT Docket No. 16–239; FCC 16–96]
Amateur Radio Service Rules To
Permit Greater Flexibility in Data
Communications
Federal Communications
Commission.
ACTION: Proposed rule.
AGENCY:
In this document, the Federal
Communications Commission
(Commission) seeks comment on
proposed amendments regarding
technical standards applicable to data
communications that may be
transmitted in the Amateur Radio
Service. Specifically, we propose to
remove limitations on the symbol rate
(also known as the baud rate) applicable
to data emissions in certain amateur
bands. We believe that this rule change
will allow amateur service licensees to
use modern digital emissions, thereby
better fulfilling the purposes of the
amateur service and enhancing its
usefulness.
SUMMARY:
Submit comments on or before
October 11, 2016, and reply comments
are due on or before November 10, 2016.
ADDRESSES: You may submit comments,
identified by WT Docket No. 16–239, by
any of the following methods:
• Federal Communications
Commission’s Web site: https://
apps.fcc.gov/ecfs/. Follow the
instructions for submitting comments.
• Mail: Federal Communications
Commission, 445 12th Street SW.,
Washington, DC 20554.
• People with Disabilities: Contact the
FCC to request reasonable
accommodations (accessible format
documents, sign language interpreters,
CART, etc.) by email: FCC504@fcc.gov
or phone: 202–418–0530 or TTY: 202–
418–0432.
DATES:
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Scot
Stone, Scot.Stone@fcc.gov, Wireless
Telecommunications Bureau, (202) 418–
0638, or TTY (202) 418–7233.
SUPPLEMENTARY INFORMATION: This is a
summary of the Commission’s Notice of
Proposed Rulemaking (NPRM), adopted
July 27, 2016 and released July 28, 2016.
The full text of this document is
available for public inspection and
copying during regular business hours
in the FCC Reference Center, Federal
Communications Commission, 445 12th
Street SW., Room CY–A257,
Washington, DC 20554. The complete
text may be purchased from the
Commission’s copy contractor, 445 12th
Street, SW., Room CY–B402,
Washington, DC 20554. This document
will also be available via ECFS at https://
fjallfoss.fcc.gov/ecfs/. Documents will
be available electronically in ASCII,
Microsoft Word, and/or Adobe Acrobat.
Alternative formats are available for
people with disabilities (Braille, large
print, electronic files, audio format) by
sending an email to fcc504@fcc.gov or
calling the Commission’s Consumer and
Governmental Affairs Bureau at (202)
418–0530 (voice), (202) 418–0432
(TTY).
FOR FURTHER INFORMATION CONTACT:
I. Introduction
1. In the NPRM, we propose, in
response to a petition for rulemaking
filed by the AmericanRadio Relay
League, Inc. (ARRL), to amend part 97
of the Commission’s rules regarding
technical standards applicable to data
communications that may be
transmitted in the Amateur Radio
Service. Specifically, we propose to
remove limitations on the symbol rate
(also known as baud rate)—the rate at
which the carrier waveform amplitude,
frequency, and/or phase is varied to
transmit information—applicable to
data emissions in certain amateur
bands. We believe that this rule change
will allow amateur service licensees to
use modern digital emissions, thereby
better fulfilling the purposes of the
amateur service and enhancing its
usefulness.
II. Background
2. The limitations on radioteletype
(RTTY) and data transmissions below
450 MHz vary depending on the
frequency band, and on whether the
digital code used to encode the signal
being transmitted is one of the codes
specified in section 97.309(a) of the
Commission’s rules—Baudot, AMTOR,
and ASCII (the ‘‘specified digital
codes’’). Section 97.307(f) limits the
symbol rate for the specified digital
codes, and the bandwidth for
unspecified digital codes, as follows:
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Agencies
[Federal Register Volume 81, Number 156 (Friday, August 12, 2016)]
[Proposed Rules]
[Pages 53381-53388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18969]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
42 CFR Part 10
RIN 0906-AA90
340B Drug Pricing Program; Administrative Dispute Resolution
AGENCY: Health Resources and Services Administration, HHS.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Health Resources and Services Administration (HRSA)
implements section 340B of the Public Health Service Act (PHSA), which
is referred to as the ``340B Drug Pricing Program'' or the ``340B
Program.'' This proposed rule will apply to all drug manufacturers and
covered entities that participate in the 340B Program. The proposed
rule sets forth the requirements and procedures for the 340B Program's
administrative dispute resolution process.
DATES: Submit written comments on or before October 11, 2016.
ADDRESSES: You may submit comments, identified by the Regulatory
Information Number (RIN) 0906-AA90, by any of the following methods.
Please submit your comments in only one of these ways to minimize the
receipt of duplicate submissions.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow instructions for submitting comments. This is the preferred
method for the submission of comments.
Email: 340BNPRMADR@hrsa.gov. Include 0906-AA90 in the
subject line of the message.
Regular, express, or overnight mail: CAPT Krista Pedley,
Director, Office of Pharmacy Affairs (OPA), Healthcare Systems Bureau
(HSB), HRSA, 5600 Fishers Lane, Mail Stop 08W05A, Rockville, MD 20857.
Please allow sufficient time for mailed comments to be received before
the close of the comment period.
All submitted comments will be available to the public in their
entirety. All comments received may be posted without change to https://www.regulations.gov, including any personally identifiable or
confidential business information that is included in a comment.
FOR FURTHER INFORMATION CONTACT: CAPT Krista Pedley, Director, OPA, HSB
HRSA, 5600 Fishers Lane, Mail Stop 08W05A, Rockville, MD 20857, or by
telephone at 301-594-4353.
SUPPLEMENTARY INFORMATION: The President encourages Federal agencies
through Executive Order 13563 to develop balanced regulations by
encouraging broad public participation in the regulatory process and an
open exchange of ideas. Accordingly, the Department of Health and Human
Services (HHS or the Department) urges all interested parties to
examine this regulatory proposal carefully and to share your views with
us, including any data to support your positions. If you have questions
before submitting comments, please see the FOR FURTHER INFORMATION
CONTACT field above for the name and contact information of the
subject-matter expert involved in the development of this proposal. We
will consider all written comments received during the comment period
before issuing a final rule.
If you are a person with a disability and/or a user of assistive
technology who has difficulty accessing this document, please contact
HRSA's Regulations Officer at: Room 13N82, 5600 Fishers Lane,
Rockville, MD 20857; or by telephone at 301-443-1785, to obtain this
information in an accessible format. This is not a toll free telephone
number.
Please visit https://www.HHS.gov/regulations for more information on
HHS rulemaking and opportunities to comment on proposed and existing
rules.
I. Background
Section 602 of Public Law 102-585, the ``Veterans Health Care Act
of 1992,'' enacted section 340B of the PHSA entitled ``Limitation on
Prices of Drugs Purchased by Covered Entities,'' which was codified at
42 U.S.C. 256b. The 340B Program permits covered entities ``to stretch
scarce Federal resources as far as possible, reaching more eligible
patients and providing more comprehensive services.'' H.R. REP. No.
102-384(II), at 12 (1992). The Secretary of the HHS delegated the
authority to operate section 340B of the PHSA to the Administrator of
HRSA. Pursuant to this delegation of authority, HRSA established and
administers the 340B Program. Operationally, the 340B Program is housed
within HRSA's Healthcare Systems Bureau (HSB), Office of Pharmacy
Affairs (OPA). Eligible covered entity types are defined in section
340B(a)(4) of the PHSA, as amended. Section 340B of the PHSA instructs
HHS to enter into pharmaceutical pricing agreements (PPA) with
manufacturers of covered outpatient drugs. Manufacturers are required
by section 1927(a)(5)(A) of the Social Security Act to enter into
agreements with the Secretary of HHS that comply with section 340B of
the PHSA if they participate in the Medicaid Drug Rebate Program. When
a drug manufacturer signs a PPA, it agrees that the prices charged for
covered outpatient drugs to covered entities will not exceed defined
340B ceiling prices, which are based on quarterly pricing data reported
by manufacturers to the Centers for Medicare & Medicaid Services (CMS).
Section 7102 of the Patient Protection and Affordable Care Act
(Pub. L. 111-148), as amended by section 2302 of the Health Care and
Education Reconciliation Act (Pub. L. 111-152), hereinafter referred to
as the ``Affordable Care Act,'' added section 340B(d)(3) of the PHSA,
which requires the Secretary of HHS (or the Secretary) to promulgate a
regulation establishing
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and implementing a binding administrative dispute resolution (ADR)
process for certain disputes arising under the 340B Program. The
purpose of the ADR process is to resolve (1) claims by covered entities
that they have been overcharged for covered outpatient drugs by
manufacturers; and (2) claims by manufacturers, after a manufacturer
has conducted an audit as authorized by section 340B(a)(5)(C) of the
PHSA, that a covered entity has violated the prohibition on diversion
to ineligible patients or duplicate discounts. The 340B ADR process is
not intended to be a trial-like proceeding governed by formal review of
evidence and procedure. Rather, it is an administrative process that is
designed to assist covered entities and manufacturers in resolving
disputes regarding overcharging, duplicate discounts, or diversion.
Historically, HHS has encouraged manufacturers and covered entities to
work with each other to attempt to resolve disputes in good faith. The
ADR process as proposed in this rule is not intended to replace these
good faith efforts, but should be considered as a last resort in the
event good faith efforts to resolve disputes have not been successful.
In addition, covered entities and manufacturers should carefully
evaluate whether the ADR process is appropriate for de minimis claims
given the investment of the time and resources required of the parties
involved.
In 2010, HHS issued an advanced notice of proposed rulemaking
(ANPRM) that requested comments on the development of an ADR process
(75 FR 57233, September 20, 2010). The ANPRM specifically requested
comments on: (1) Administrative procedures, (2) existing models, (3)
threshold requirements, (4) hearings, (5) decision-making officials or
bodies, (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 resolution with other 340B requirements added by
the Affordable Care Act. HHS received 14 comments on the ANPRM. The
comments received were considered in the development of this proposed
rule.
HHS encourages all stakeholders to provide written comments on this
NPRM. This proposed regulation, when finalized, will replace the 340B
Program's guidelines on the informal dispute resolution process
developed to resolve disputes between covered entities and
manufacturers, which was published on December 12, 1996 (61 FR 65406).
II. Summary of the Proposed Regulations
The proposed revisions to 42 CFR part 10 are described according to
the applicable section of the regulations. The United States District
Court for the District of Columbia vacated the 340B Program Regulations
at 42 CFR part 10 relating to Orphan Drugs (subpart C). (PhRMA v. HHS,
No. 13-01501 (D.D.C. May 23, 2014). This NPRM proposes to add new
definitions to Sec. 10.3 and retitle and replace the language in
subpart C as set forth below.
Sec. 10.3 Definitions.
HHS is proposing to add the following definitions: ``Administrative
Dispute Resolution Process,'' ``Administrative Dispute Resolution Panel
(340B ADR Panel),'' ``claim,'' and ``consolidated claim.''
Subpart C--Administrative Dispute Resolution
Sec. 10.20 340B Administrative Dispute Resolution Panel
(a) Members of the 340B ADR Panel.
As required by section 340B(d)(3)(B)(i), regulations promulgated by
the Secretary shall designate or establish a decision-making official
or body within HHS to review and make a binding decision for claims
filed by covered entities and manufacturers. HHS proposes to establish
a decision-making body (referred to as the ``340B ADR Panel'' or
``Panel'') to review and resolve such claims.
The proposed 340B ADR Panel will ensure an unbiased and fair review
of the claims, and reduce the individual burden associated with having
a single decision-making official who is solely responsible for
reviewing and resolving claims. The proposed 340B ADR Panel will
include three members, chosen from a roster of eligible individuals
alternating from claim to claim, and one ex-officio, non-voting member
chosen from the staff of OPA to facilitate the review and resolution of
claims within a reasonable time frame. The proposed roster of eligible
individuals will be comprised of Federal employees (e.g., employees of
CMS or the U.S. Department of Veterans Affairs) with demonstrated
expertise or familiarity with the 340B Program. The ADR panel will not
be compensated.
HHS proposes that for each filed claim that is reviewed, HSB will
review the qualifications of individuals on the 340B ADR Panel roster
and select those with expertise or familiarity with the appropriate
aspects of the 340B Program. HHS also proposes that individuals serving
on a 340B ADR Panel may be removed for cause. For example, if it is
determined prior to or during the course of a Panel member's review of
a claim that there is a conflict of interest, as described in
subsection (b), with respect to that claim, the Panel member will be
removed from the Panel and replaced by another individual from the 340B
ADR Panel roster.
HHS is soliciting specific comments on the proposed size and
composition of the 340B ADR Panel, in particular whether the 340B ADR
Panel should be comprised of a set number of voting members to maintain
consistency and transparency across each claim that is reviewed,
whether HHS should retain the flexibility to appoint a requisite number
of voting members based on the complexity of the claim and other
factors, and whether the 340B ADR Panel should include at least one OPA
staff member as a voting member or whether the inclusion of an OPA
staff member as an ex-officio, non-voting member is sufficient to
ensure adherence to 340B policies and procedures.
(b) Conflicts of interest.
To ensure fairness and objectiveness, HHS proposes that each 340B
ADR Panel member be screened prior to reviewing a claim and not allowed
to conduct a review if any conflicts of interest exist. For example,
the individual would not review a claim if he or she has a conflict of
interest with respect to the parties involved in the claim or the
subject matter of the claim. HHS proposes that individuals be screened
for conflicts of interest in accordance with U.S. Office of Government
Ethics policies and procedures applicable to Federal employees.
Conflicts of interest may include the following: (1) Financial
interest; (2) family or close relation to a party involved; and (3)
current or former business or employment relation to a party. The
specific procedures for screening members of the panel prior to their
service on the 340B ADR Panel will be detailed in future guidance.
(c) Duties of the 340B ADR Panel.
In subsection (c), HHS proposes that once the 340B ADR Panel
receives the claim, the 340B ADR Panel will consider all documentation
provided by the parties and may request additional information or
clarification from any party involved with the claim. HHS also proposes
that the 340B ADR Panel review claims in a session closed to the
parties involved, including any associations or organizations, or legal
counsel representing the parties.
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In this subsection, HHS also proposes that the 340B ADR Panel may
consult with subject matter experts within OPA regarding 340B program
requirements while reviewing a claim. The 340B ADR Panel will provide a
final decision only with respect to the claim. HHS proposes that the
340B ADR Panel's final decision must represent the decision of a
majority of the Panel members but need not be unanimous.
Sec. 10.21 Claims
(a) Claims permitted.
Section 7102 of the Affordable Care Act added section 340B(d)(3) of
the PHSA, which instructs the Secretary to establish and implement a
binding ADR process to resolve certain 340B Program statutory
violations. Section 340B(d)(3)(A) of the PHSA specifies that the ADR
process is to be used to resolve: (1) Claims by covered entities that
they have been overcharged by manufacturers for drugs purchased under
this section and (2) claims by manufacturers, after a manufacturer has
conducted an audit of a covered entity, as authorized by section
340B(a)(5)(C) of the PHSA, that a covered entity has violated the
prohibitions against duplicate discounts and diversion (sections
340B(a)(5)(A) and (B) of the PHSA).
(b) Requirements for filing a claim.
In subsection (b), HHS proposes that the covered entity and the
manufacturer meet certain requirements for filing a claim. These
proposed requirements will ensure that a claim of the type specified in
section 340B(d)(3)(A) of the PHSA is the subject of the dispute.
The Department is proposing that covered entities and manufacturers
file a written claim, based on the facts available, to HSB within 3
years of the date of the sale (or payment) at issue in the alleged
violation and that any claim not filed within 3 years shall be time
barred. The proposed requirement that a claim be filed within 3 years
is consistent with the record retention expectations for the 340B
Program and will ensure that covered entities and manufacturers have
access to relevant records needed to review and respond to claims. This
proposal ensures documents must be submitted with each claim to verify
that the alleged violation is not time barred. This proposed
requirement will prevent a party from asserting a claim that is stale.
HHS requests public comment concerning the 3 year limitation on claims
submission.
HHS is also proposing that once a claim is submitted and the
opposing party has been notified of the claim, any file, document, or
record associated with a claim be maintained by the covered entity and/
or manufacturer until the 340B ADR Panel's final agency decision is
issued.
Covered Entity Claims
In section 10.21(b)(2), HHS proposes that to be eligible for the
ADR process, each claim filed by a covered entity must include
documents sufficient to demonstrate a covered entity's claim that it
has been overcharged by a manufacturer, along with any such
documentation as may be requested by HSB to evaluate the veracity of
the claim. Such documentation may include: (1) A 340B purchasing
account invoice which shows the purchase price by national drug code
(NDC), less any taxes and fees; (2) the 340B ceiling price for the drug
during the quarter(s) corresponding to the time period(s) of the claim;
and (3) documentation of the attempts made to purchase the drug via a
340B account at the ceiling price, which resulted in the instance of
overcharging. HHS believes that these documents are readily available
to a covered entity through the usual course of business and should not
be overly burdensome to produce, however HHS requests public comment on
the feasibility or producing the documentation as proposed. HHS may
also request that the covered entity provide it with a written summary
of attempts to work in good faith to resolve the instance of
overcharging with the manufacturer at issue.
Pursuant to section 340B(d)(1)(B) of the PHSA, HHS is developing a
system to verify the ceiling price of a 340B drug and allow covered
entities to access and verify the ceiling price. Until such system is
developed, HHS has access to ceiling price data and will ensure that
the 340B ADR panel will also have access as they evaluate any
particular claim. Covered entities will be able to access ceiling price
information through this system, which may lessen the burden in
submitting the information accompanying a claim.
Manufacturer Claims
In section 10.21(b)(3), HHS proposes that to be eligible for the
340B ADR process, each claim filed by a manufacturer must include
documents sufficient to demonstrate a manufacturer's claim that a
covered entity has violated the prohibition on diversion and/or
duplicate discount, along with any such documentation as may be
requested by HSB to evaluate the veracity of the claim. Such
documentation may include: (1) A final audit report which indicates
that the manufacturer audited the covered entity for compliance with
the prohibition on diversion (section 340B(a)(5)(B) of the PHSA) and/or
duplicate discounts (section 340B(a)(5)(A) of the PHSA) and (2) the
covered entity's written response to the manufacturer's audit
finding(s). HHS may also request that the manufacturer submit a written
summary of attempts to work in good faith to resolve the claim with the
covered entity.
(c) Consolidation of claims.
In subsection (c), HHS proposes that, if requested, covered
entities or manufacturers may be permitted to consolidate their
individual claims. Section 340B(d)(3)(B)(vi) of the PHSA permits
``multiple covered entities to jointly assert claims of overcharges by
the same manufacturer for the same drug or drugs in one administrative
proceeding. . . .'' HHS proposes that for consolidated claims, the
claim must list each covered entity and include documentation and/or
information from each covered entity demonstrating that the covered
entity meets all of the requirements for filing a claim with HHS and
that a letter requesting consolidation of claims must also accompany
the claim and must document that each covered entity consents to the
consolidation of the claim.
Pursuant to section 340B(d)(3)(B)(vi) of the PHSA, consolidated
claims are also permitted on behalf of covered entities by associations
or organizations representing their interests. Therefore, HHS proposes
that the covered entities must be members of the association or the
organization representing them and that each covered entity must meet
the requirements listed in subsection (b) for filing a claim with HSB.
The proposed consolidated claim must assert overcharging by the same
manufacturer for the same drug(s), and the organization or association
will be responsible for filing the claim. HHS also proposes requiring
that a letter requesting consolidation of claims must accompany the
claim and must document that each covered entity consents to the
organization or association asserting a claim on its behalf.
Similarly, at the request of two or more manufacturers, section
340B(d)(3)(B)(v) of the PHSA permits the consolidation of claims
brought by more than one manufacturer against the same covered entity
if consolidation is consistent with the statutory goals of fairness and
economy of resources. This NPRM proposes that the claim must list each
manufacturer and include documentation and/or information from each
manufacturer demonstrating that the manufacturer meets the
[[Page 53384]]
requirements listed in subsection (b) for filing a claim with HSB. HHS
also proposes that a letter requesting consolidation of claims must be
submitted with the claim and must document that each manufacturer
consents to the consolidation of the claims. The statutory authority
for implementing the 340B ADR process does not permit consolidated
claims on behalf of manufacturers by associations or organizations
representing their interests. Therefore, HHS is not proposing this
option in this NPRM.
With regard to the consolidation of claims by manufacturers against
a covered entity, HHS is seeking specific comment on the grounds under
which consolidation would be consistent with the statutory goals of
fairness and economy of resources, as required by section
340B(d)(3)(B)(v) of the PHSA. In addition, while HHS is proposing, as
required by the 340B statute, an ADR process that allows manufacturers
to consolidate claims against a covered entity, we recognize the
operational challenges presented by the statutory requirement for a
manufacturer to first audit the covered entity. HHS is, therefore,
seeking comment on how manufacturers requesting a consolidated claim
against a covered entity can satisfy the audit requirement.
(d) Deadlines and procedures for filing a claim.
In subsection (d), HHS proposes that covered entities and
manufacturers file a claim with HSB demonstrating that they satisfy the
requirements described in subsection (b) and that the party filing a
claim must send written notice to the opposing party regarding the
claim within 3 business days of submitting the claim and the party must
submit confirmation of the opposing party's receipt or acknowledgement
of receipt within 3 business days. HHS also proposes that the written
notice to the opposing party must include a summary of the documents
submitted as part of the claim.
HHS proposes that HSB will review the information submitted as part
of the claim to verify that the requirements for filing a claim have
been met. HSB would contact the initiating party once the claim has
been received and may request additional information before accepting a
claim for review by the 340B ADR Panel. If additional information is
requested, the party filing the claim will have 20 business days of
receipt of the request to respond. Claims will not move forward for
review by the 340B ADR Panel if the initiating party does not respond
to the request for additional information or if a party files a claim
for any purpose other than those specified in the statute (i.e.,
overcharging, duplicate discount, or diversion), or if the alleged
violation occurred more than 3 years before the date of filing the
claim.
HHS proposes that HSB will make a determination as to whether all
requirements are met and provide written notice to all parties within
20 business days after receiving the claim and any subsequently
requested information, which will be transmitted via both hard copy and
email. If HSB determines the claim includes all necessary documentation
and meets the requirements for filing a claim, the claim will be
forwarded to the 340B ADR Panel for review. HSB would provide
additional information on the 340B ADR process to all parties at that
time, including contact information for requested follow-up
communications and an approximate timeframe for the 340B ADR Panel's
review.
HHS proposes that if the claim does not move forward for review by
the ADR Panel, written notice will be sent by HSB to the parties
involved that includes the basis for the decision and will advise the
party that they may revise and refile the claim if the party has new
information to support the alleged statutory violation.
(e) Responding to a submitted claim.
In subsection (e), HHS proposes that once the parties have been
notified by HSB that the claim has met the requirements in subsection
(b) and will move forward for review by the 340B ADR Panel, the
opposing party will have 20 business days to submit a written response
to the allegation to the 340B ADR Panel and the party who filed the
claim. Subsequent requests for information regarding the claim would be
made by the 340B ADR Panel as needed, and the 340B ADR Panel will
consider any additional information that was provided by the parties
involved. However, if an opposing party does not respond to a request
for information from HSB or the 340B ADR Panel or otherwise elects not
to participate in the 340B ADR process, the 340B ADR Panel will make a
decision on the claim based on the information submitted in the claim.
Sec. 10.22 Covered entity information requests.
Pursuant to section 340B(d)(3)(B)(iii) of the PHSA, regulations
promulgated by the Secretary for the 340B ADR process will establish
procedures by which a covered entity may discover or obtain information
and documents from manufacturers and third parties relevant to a claim
that the covered entity has been overcharged by the manufacturer. This
NPRM proposes that such covered entity information requests be
facilitated by the 340B ADR Panel. HHS proposes that a covered entity
must submit a written request for information to the 340B ADR Panel no
later than 20 business days after the entity was notified by HSB that
the claim would move forward for the ADR Panel's review. The 340B ADR
Panel will review the information/document request to ensure that it is
reasonable and within the scope of the asserted claim. The 340B ADR
Panel will notify the covered entity in writing if any request is
deemed reasonable and within the scope of the asserted claim and permit
the covered entity to submit a revised information/document request, if
it is not.
In this section, HHS proposes that the 340B ADR Panel will consider
relevant factors, such as the scope of the information/document
request, whether there are consolidated claims, or the involvement of
one or more third parties in distributing drugs on behalf of the
manufacturer and that once reviewed, the 340B ADR Panel will submit the
information/document request to the manufacturer, which must respond
within 20 business days.
HHS also proposes that the manufacturer must fully respond in
writing to the information request and submit its response to the 340B
ADR Panel by the stated deadline and that the manufacturer is
responsible for obtaining relevant information/documents from
wholesalers or other third parties that may facilitate sales or
distribution of its drugs to covered entities. HHS proposes that if a
manufacturer anticipates it will not be able to fully respond by the
deadline, the manufacturer may request one extension in writing within
15 business days. The extension request that is submitted to the 340B
ADR Panel must include any available information, the reason why the
deadline is not feasible, and outline a proposed timeline for fully
responding to the information request. The 340B ADR Panel will review
the extension request and notify both the manufacturer and the covered
entity in writing as to whether the request for an extension is granted
and the date of the new deadline. If a manufacturer does not respond to
a request for information from HSB or the 340B ADR Panel, HHS proposes
that the 340B ADR Panel will make a decision on the claim based on the
information submitted in the claim package that moved forward for
review.
[[Page 53385]]
Sec. 10.23 Final agency decision
In Sec. 10.23, HHS proposes that the 340B ADR Panel review the
documents submitted by the parties and determine if there is adequate
support to conclude that a violation as described in subsection (a)(1)
or (2) of Sec. 10.21 has occurred. The 340B ADR Panel will prepare a
draft agency decision letter, which includes the 340B ADR Panel's
findings and conclusions regarding the alleged violation. HHS is
proposing a process whereby the 340B ADR Panel's draft agency decision
letter will be sent to all parties, and the parties involved will have
20 business days to respond to the 340 ADR Panel. HHS is seeking
specific comments on this process and whether this proposed process
will facilitate or hinder the fair, efficient, and timely resolution of
claims.
HHS also proposes that once the parties have reviewed and submitted
comments to the draft agency decision letter, the 340B ADR Panel will
prepare and submit its final agency decision letter to all parties in
the dispute, which may incorporate rebuttals from the parties that were
considered by the 340B ADR Panel to help inform the final agency
decision. The final agency decision made by 340B ADR Panel will
conclude the administrative resolution process; however, HHS proposes
that the final agency decision letter also be submitted to HSB to take
enforcement action or apply sanctions, as appropriate. For example, if
the 340B ADR Panel makes a decision that a covered entity has violated
the prohibition against diversion, HSB may require, as a sanction, that
the covered entity repay the affected manufacturer. If the 340B ADR
Panel makes a decision that a manufacturer overcharged a covered
entity, HSB may require, as a sanction, that the manufacturer refund or
issue a credit to the affected covered entity. In both cases, HSB will
work with the party in violation on any remedy and corrective action.
HHS proposes that the 340B ADR Panel's final agency decision letter
will be binding upon the parties involved, unless invalidated by an
order of a court of competent jurisdiction in accordance with section
340B(d)(3)(C) of the PHSA. HHS may, at its sole discretion, publish a
summary of the claims that have gone through the 340B ADR process on
the HRSA Web site, including the names of the parties and the nature of
the 340B ADR Panel's findings (e.g., overcharging, duplicate discount,
or diversion). HHS will consider issuing future subregulatory guidance
on this topic as necessary.
III. Regulatory Impact Analysis
HHS has examined the effects of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 8, 2011), the Regulatory Flexibility Act (September 19,
1980, Pub. L. 96-354), the Unfunded Mandates Reform Act of 1995 (Pub.
L. 104-4), and Executive Order 13132 on Federalism (August 4, 1999).
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 is supplemental to and reaffirms the principles,
structures, and definitions governing regulatory review as established
in Executive Order 12866, emphasizing the importance of quantifying
both costs and benefits, of reducing costs, harmonizing rules, and
promoting flexibility. Section 3(f) of Executive Order 12866 defines a
``significant regulatory action'' as an action that is likely to result
in a rule: (1) Having an annual effect on the economy of $100 million
or more in any one year, or adversely and materially affecting a sector
of the economy, productivity, competition, jobs, the environment,
public health or safety, or State, local, or tribal governments or
communities (also referred to as ``economically significant''); (2)
creating a serious inconsistency or otherwise interfering with an
action taken or planned by another agency; (3) materially altering the
budgetary impacts of entitlement grants, user fees, or loan programs or
the rights and obligations of recipients thereof; or (4) raising novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive Order. A
regulatory impact analysis must be prepared for major rules with
economically significant effects ($100 million or more in any one
year), and a ``significant'' regulatory action is subject to review by
the Office of Management and Budget (OMB).
This proposed rule is not likely to have economic impacts of $100
million or more in any one year; therefore, it has not been designated
an ``economically significant'' rule under section 3(f)(1) of Executive
Order 12866. This proposed rule creates a framework for the Department
to resolve certain disputed claims regarding manufacturers overcharging
covered entities and disputed claims of diversion and duplicate
discounts by covered entities audited by manufacturers under the 340B
Program. HHS does not anticipate the introduction of an administrative
dispute resolution process to result in significant economic impacts.
The Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) and the
Small Business Regulatory Enforcement and Fairness Act of 1996, which
amended the RFA, require HHS to analyze options for regulatory relief
of small businesses. If a rule has a significant economic effect on a
substantial number of small entities, HHS must specifically consider
the economic effect of the rule on small entities and analyze
regulatory options that could lessen the impact of the rule. HHS will
use an RFA threshold of at least a 3 percent impact on at least 5
percent of small entities.
The proposed rule would affect drug manufacturers (North American
Industry Classification System code 325412: Pharmaceutical Preparation
Manufacturing). The small business size standard for drug manufacturers
is 750 employees. Approximately 600 drug manufacturers participate in
the 340B Program. While it is possible to estimate the impact of the
proposed rule on the industry as a whole, the data necessary to project
changes for specific manufacturers or groups of manufacturers is not
available, as HRSA does not collect the information necessary to assess
the size of an individual manufacturer that participates in the 340B
Program. The proposed rule would also affect health care providers. For
purposes of the RFA, HHS considers all health care providers to be
small entities either by virtue of meeting the Small Business
Administration (SBA) size standard for a small business, or for being a
nonprofit organization that is not dominant in its market. The current
SBA size standard for health care providers ranges from annual receipts
of $7 million to $35.5 million. As of July 1, 2016, over 12,000 covered
entities participate in the 340B Program, which represent safety-net
healthcare providers across the country.
The proposed rule introduces an administrative mechanism to review
claims by manufacturers that covered entities have violated certain
statutory obligations and claims by covered entities that have been
overcharged for
[[Page 53386]]
covered outpatient drugs by manufacturers. The documentation required
as part of this administrative process are documents that manufacturers
and covered entities are already required to maintain as part of their
participation in the 340B Program. HHS expects that this documentation
would be sufficiently available prior to submitting a claim. Therefore,
the collection of this information would not result in an economic
impact or create additional administrative burden on these businesses.
HHS believes the proposed administrative dispute resolution process
will provide a cost-efficient option for resolving claims that would
otherwise remain unresolved or require litigation. The proposed rule
provides an option to consolidate claims by similar situated entities,
and covered entities may have claims asserted on their behalf by
associations or organizations which could reduce costs. HHS has
determined, and the Secretary certifies that this final rule will not
have a significant economic impact on a substantial number of small
health care providers or a significant impact on the operations of a
substantial number of small manufacturers; therefore we are not
preparing an analysis of impact for the purposes of the RFA. HHS
estimates that the economic impact on small entities and small
manufacturers will be minimal and less than 3 percent. HHS welcomes
comments concerning the impact of this proposed rule on small
manufacturers and small health care providers.
Unfunded Mandates Reform Act
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires
that agencies prepare a written statement, which includes an assessment
of anticipated costs and benefits, before proposing ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and Tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year.'' In 2014, that threshold level was
approximately $155 million. HHS does not expect this proposed rule to
exceed the threshold.
Executive Order 13132--Federalism
HHS has reviewed this proposed rule in accordance with Executive
Order 13132 regarding federalism, and has determined that it does not
have ``federalism implications.'' This proposed rule would not ``have
substantial direct effects on the States, or on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government.''
The proposals in this notice of proposed rulemaking, if implemented,
would not adversely affect the following family elements: family
safety, family stability, marital commitment; parental rights in the
education, nurture, and supervision of their children; family
functioning, disposable income, or poverty; or the behavior and
personal responsibility of youth, as determined under section 654(c) of
the Treasury and General Government Appropriations Act of 1999. HHS
invites additional comments on the impact of this proposed rule from
affected stakeholders.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires
that OMB approve all collections of information by a Federal agency
from the public before they can be implemented. This proposed rule will
not have a significant impact on the current reporting and
recordkeeping burden for manufacturers or covered entities under the
340B Program. Based on current experience with the informal ADR process
offered by the 340B Program, there have only been four requests for
informal dispute resolution since the inception of the Program. Of the
four dispute resolution requests, two were terminated by HRSA due to
non-participation by one of the parties, another was dismissed due to
lack of sufficient evidence, and the last was terminated because the
parties disputed the existence of any attempt of good faith resolution.
The relatively small number is attributed to the success of parties'
attempts to resolve issues in good faith. Due to this very small number
of informal dispute resolution requests, there has been very limited
experience to date with dispute resolution record keeping. Changes
proposed in this rulemaking would not result in significant reporting
or recordkeeping burden. Comments are welcome on the accuracy of this
statement.
Dated: May 24, 2016.
James Macrae,
Acting Administrator, Health Resources and Services Administration.
Approved: June 7, 2016.
Sylvia M. Burwell,
Secretary. Department of Health and Human Services.
List of Subjects in 42 CFR Part 10
Biologics, Business and industry, Diseases, Drugs, Health, Health
care, Health facilities, Hospitals, 340B drug pricing program.
For the reasons set forth in the preamble, the Department of Health
and Human Services proposes to amend 42 CFR part 10 as follows:
PART 10--340B DRUG PRICING PROGRAM
0
1. The authority citation for part 10 is revised to read as follows:
Authority: Sec. 340B of the Public Health Service Act (42 U.S.C.
256b), as amended.
0
2. Amend Sec. 10.3 by adding definitions for ``Administrative Dispute
Resolution (ADR) process'','' Administrative Dispute Resolution Panel
(340B ADR Panel)'', ``Claim'', and ``Consolidated claim'' to read as
follows:
Sec. 10.3 Definitions.
* * * * *
Administrative Dispute Resolution (ADR) process means a process
used to resolve claims by covered entities that may have been
overcharged for 340B drugs purchased by manufacturers, and claims by
manufacturers of 340B drugs, after a manufacturer has conducted an
audit of a covered entity, that a covered entity may have violated the
prohibitions against duplicate discounts or diversion.
Administrative Dispute Resolution Panel (340B ADR Panel) means a
decision-making body within the Department that reviews and makes a
binding decision for claims brought under the ADR Process.
* * * * *
Claim means an allegation made by or on behalf of a covered entity
or by a manufacturer for purposes of the ADR Process.
Consolidated claim means the submittal of joint claims by covered
entities (or their membership organization or association) or
manufacturers to the 340B ADR Panel asserting the same allegation
against the same party.
* * * * *
0
3. Revise subpart C to read as follows:
Subpart C--Administrative Dispute Resolution
Sec.
10.20 Administrative Dispute Resolution Panel.
10.21 Claims.
10.22 Covered entity information requests.
10.23 Final agency decision.
Sec. 10.20 Administrative Dispute Resolution Panel.
The Secretary shall establish a decision-making body known as the
Administrative Dispute Resolution Panel (340B ADR Panel) to review and
make a binding final agency decision
[[Page 53387]]
regarding claims filed by covered entities and manufacturers.
(a) Members of the 340B ADR Panel. (1) The Health Resources and
Services Administration (HRSA) shall:
(A) Select three voting members of the 340B ADR Panel from a roster
of eligible individuals and one ex-officio, non-voting member from the
staff of HRSA's Office of Pharmacy Affairs (OPA);
(B) Alternate the individuals on the 340B ADR Panel for each claim;
(C) Remove an individual from the 340B ADR Panel for cause; and
(D) Appoint replacement members should an individual be unable to
complete his or her duties.
(2) No member of the 340B ADR Panel may have a conflict of
interest, as defined in subsection (b) of this section.
(b) Conflicts of interest. All members of the 340B ADR Panel will
be screened for conflicts of interest prior to reviewing a claim.
Conflicts of interest may include:
(1) Financial interest in a party involved, a subsidiary of a party
involved, or in the claim before the 340B ADR Panel;
(2) Family or close relation to a party involved; and
(3) Current or former business or employment relation to a party.
(c) Duties of the 340B ADR Panel. The 340B ADR Panel will:
(1) Review and evaluate documents or information submitted by
covered entities and manufacturers;
(2) Request additional information or clarification of an issue
from any or all parties to make a final decision;
(3) Evaluate a claim in a separate session from the parties
involved;
(4) Consult with OPA regarding any inquiries or concerns while
reviewing a claim; and
(5) Make a final agency decision on each claim that will be
communicated to HRSA for appropriate enforcement.
Sec. 10.21 Claims.
(a) Claims permitted. The ADR process is limited to the following:
(1) Claims by a covered entity that it has been overcharged, as
defined in Sec. 10.11(b), by a manufacturer for a covered outpatient
drug; and
(2) Claims by a manufacturer, after it has conducted an audit of a
covered entity pursuant to section 340B(a)(5)(C) of the PHSA, that the
covered entity has violated section 340B(a)(5)(A) of the PHSA,
regarding the prohibition of duplicate discounts, or section
340B(a)(5)(B) of the PHSA, regarding the prohibition of the resale or
transfer of covered outpatient drugs to a person who is not a patient
of the covered entity.
(b) Requirements for filing a claim. (1) A covered entity or
manufacturer must file a claim for administrative dispute resolution in
writing to HRSA within 3 years of the date of the alleged violation.
Any file, document, or record associated with the claim that is the
subject of a dispute must be maintained by the covered entity and
manufacturer until the final agency decision letter is issued by the
340B ADR Panel.
(2) A covered entity filing a claim described in paragraph (a)(1)
of this section must provide documents sufficient to demonstrate its
claim that it has been overcharged by a manufacturer, along with any
such other documentation as may be requested by HRSA.
(3) A manufacturer filing a claim under paragraph (a)(2) of this
section must provide documents sufficient to demonstrate its claim that
a covered entity has violated the prohibition on diversion and/or
duplicate discount, along with any such documentation as may be
requested by HRSA.
(c) Consolidation of claims. (1) Two or more covered entities may
jointly file claims of overcharges by the same manufacturer for the
same drug or drugs if each covered entity that could file a claim
against the manufacturer consents to the jointly filed claim, and meets
the minimum requirements, including submission of the required
documentation, described in paragraph (b) of this section.
(2) An association or organization may file claims of overcharges
by the same manufacturer for the same drug or drugs on behalf of
multiple covered entities if each covered entity represented could file
a claim against the manufacturer, is a member of the association or
organization, meets the requirements described in paragraph (b) of this
section, including submission of the required documentation, and each
covered entity has agreed to representation by the association or
organization on its behalf.
(3) A manufacturer or manufacturers may request to consolidate
claims brought by more than one manufacturer against the same covered
entity if each manufacturer could individually file a claim against the
covered entity, consents to the jointly filed claim, meets the
requirements described in paragraph (b) of this section for that claim,
and the 340B ADR Panel determines that such consolidation is
appropriate and consistent with the goals of fairness and economy of
resources. The 340B ADR Panel will not permit joint claims filed on
behalf of manufacturers by associations or organizations representing
their interests.
(d) Deadlines and procedures for filing a claim. (1) Covered
entities and manufacturers must file claims in writing to HRSA. A claim
must include all of the requirements in paragraph (b) of this section.
Additional information to substantiate a claim may be submitted.
(2) The party filing the claim must notify the opposing party in
writing within 3 business days of the date the claim was filed and must
provide documentation of such notification to HRSA. The written notice
to the opposing party must include a summary of the documents submitted
as part of the claim.
(3) HRSA will review all information submitted by the party filing
the claim and will make a determination as to whether all requirements
are met and provide written notice to all parties within 20 business
days after receiving the claim and any subsequently requested
information.
(A) Claims that move forward for review. If HRSA finds that the
party filing the claim submitted all required documentation and thereby
meets the requirements described in paragraph (b) of this section,
written notification will be sent to both the manufacturer and covered
entity advising that the claim will be forwarded to the 340B ADR Panel
for review.
(B) Claims that do not move forward for review. If HRSA finds that
the claim does not meet the requirements described in paragraph (b) of
this section, written notification will be sent to both the
manufacturer and covered entity detailing the reasons that the claim
did not move forward. A claim will not move forward for review by the
340B ADR Panel if the claim does not meet the requirements in paragraph
(b) of this section. That same claim may only be resubmitted if new
information is presented to support the alleged statutory violation.
(e) Responding to a submitted claim. Upon receipt of notification
that a claim will move forward to the 340B ADR Panel for review, the
party in alleged violation will have 20 business days to submit a
written response to the 340B ADR Panel. If an opposing party does not
respond to a request for information from HRSA or the 340B ADR Panel,
or elects not to participate in the 340B ADR process, the 340B ADR
Panel will make a decision on the claim based on the information
submitted in the claim. The 340B ADR Panel will consider any additional
information that was provided by the parties involved.
[[Page 53388]]
Sec. 10.22 Covered entity information requests.
(a) A covered entity must submit a written request for additional
information necessary to support its claim to the 340B ADR Panel within
20 business days of the claim acceptance date. The 340B ADR Panel will
review the information request and notify the covered entity if the
information request is beyond the scope of the claim and will permit
the covered entity to resubmit a revised information request if
necessary.
(b) The 340B ADR Panel will submit the covered entity's information
request to the manufacturer who must respond to the request within 20
business days.
(c) The manufacturer must fully respond, in writing, to an
information request from the 340B ADR Panel by the response deadline.
(1) A manufacturer is responsible for obtaining relevant
information from any wholesaler or other third party that may
facilitate the sale or distribution of its drugs to covered entities.
(2) If a manufacturer anticipates that it will not be able to
respond to the information request by the deadline, it can request one
extension by notifying the 340B ADR Panel in writing within 15 business
days of receipt of the request.
(3) A request to extend the deadline must include the reason why
the current deadline is not feasible and must outline the proposed
timeline for fully responding to the information request.
(4) The 340B ADR Panel may approve or disapprove the request for an
extension of time and will notify all parties in writing of its
decision.
Sec. 10.23 Final agency decision.
(a) The 340B ADR Panel will review documents submitted by the
parties and determine if there is adequate support to conclude that a
violation as described in paragraph (a)(1) or (2) of Sec. 10.21 has
occurred.
(1) The 340B ADR Panel will prepare a draft agency decision letter
based on its review and evaluation of all documents submitted by the
parties, including documents provided as required in paragraph (b) of
Sec. 10.21, information requests in support of a claim, and responses
to a claim.
(2) The draft agency decision letter will be sent to all parties
and will include the 340B ADR Panel's preliminary findings regarding
the alleged violation.
(3) All parties will have 20 business days to respond to the 340B
ADR Panel's draft agency decision letter.
(b) The 340B ADR Panel will review the responses of all parties in
producing the final agency decision letter.
(1) The final agency decision letter will represent the decision of
a majority of the 340B ADR Panel's findings regarding the claim and
discuss the findings supporting the decision.
(2) The 340B ADR Panel will submit the binding final agency
decision letter to all parties, and to HRSA, as necessary, for
appropriate enforcement action.
[FR Doc. 2016-18969 Filed 8-11-16; 8:45 am]
BILLING CODE 4165-15-P