340B Drug Pricing Program; Administrative Dispute Resolution Regulation, 28643-28659 [2024-08262]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 89, Number 77 (Friday, April 19, 2024)]
[Rules and Regulations]
[Pages 28643-28659]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08262]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES

42 CFR Part 10

[Docket No. 2021-0004]
RIN 0906-AB28


340B Drug Pricing Program; Administrative Dispute Resolution 
Regulation

AGENCY: Health Resources and Services Administration (HRSA), Department 
of Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: The Health Resources and Services Administration administers 
section 340B of the Public Health Service (PHS) Act, which is referred 
to as the ``340B Drug Pricing Program'' or the ``340B Program.'' This 
final rule will apply to all drug manufacturers and covered entities 
that participate in the 340B Program. The final rule sets forth the 
requirements and procedures for the 340B Program's administrative 
dispute resolution (ADR) process. This final rule revises the 340B 
administrative dispute resolution process set forth in the Code of 
Federal Regulations.

DATES: This final rule is effective June 18, 2024.

FOR FURTHER INFORMATION CONTACT: Michelle Herzog, Deputy Director, 
Office of Pharmacy Affairs, HRSA, 5600 Fishers Lane, Mail Stop 08W12, 
Rockville, MD 20857; email: [email protected]; telephone: 301-594-4353.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 340B of the PHS Act entitled ``Limitation on Prices of 
Drugs Purchased by Covered Entities,'' was created under section 602 of 
Public Law 102-585, the ``Veterans Health Care Act of 1992,'' and 
codified at 42 U.S.C. 256b. The 340B Program is intended to enable 
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 Health and Human Services (Secretary) has delegated the 
authority to administer the 340B Program to the HRSA Administrator, who 
has further delegated authority to the Office of Pharmacy Affairs 
(OPA), within HRSA, which oversees the 340B Program. Eligible covered 
entity types are defined in section 340B(a)(4) of the PHS Act, as 
amended. Section 340B(a)(1) of the PHS Act instructs HHS to enter into 
pharmaceutical pricing agreements (PPAs) with manufacturers of covered 
outpatient drugs. Under section 1927(a)(5)(A) of the Social Security 
Act, a manufacturer must enter into an agreement with the Secretary 
that complies with section 340B of the PHS Act ``[i]n order for payment 
to be available under section 1903(a) or under part B of title XVIII of 
the Social Security Act for covered outpatient drugs of a 
manufacturer.'' When a drug manufacturer signs a PPA, it agrees that 
the prices charged for covered outpatient drugs to covered entities 
will not exceed statutorily defined 340B ceiling prices. 340B ceiling 
prices are based on quarterly pricing reports that manufacturers must 
provide to the Secretary through the Centers for Medicare & Medicaid 
Services (CMS) and are calculated and verified by HRSA.
    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), jointly referred to as 
the ``Affordable Care Act,'' added section 340B(d)(3) to the PHS Act, 
which requires the Secretary to promulgate regulations establishing and 
implementing a binding 340B ADR process for certain disputes arising 
under the 340B Program. Under the 340B statute, the purpose of the 340B 
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 PHS Act, that a covered 
entity has violated the prohibition on diversion or duplicate 
discounts.
    The 340B ADR process is an administrative process designed to 
assist covered entities and manufacturers in resolving disputes 
regarding overcharging, duplicate discounts, or diversion, as outlined 
in statute. This 340B ADR process is also designed to provide 
stakeholders the opportunity to have disputes evaluated in a timely, 
consistent, and fair and equitable manner.
    Historically, HHS has encouraged manufacturers and covered entities 
to work with one another to attempt to resolve disputes in good faith. 
HHS recognizes that most disputes that occur between individual parties 
are resolved in a timely manner without HRSA's involvement. The 340B 
ADR process is not intended to replace these good faith efforts and 
should be considered only when good faith efforts to resolve disputes 
independently have been exhausted and failed.
    In 2020, HHS issued a final rule ((85 FR 80632, Dec. 14, 2020) 
herein referred to as the 2020 final rule), which was codified at 42 
CFR 10.20 through 10.24. HRSA began implementing the 2020 final rule 
when it became effective on January 13, 2021, by accepting claims 
through the 340B ADR process. HRSA encountered policy and operational 
challenges with implementation of the 2020 final rule and issued a 
notice of proposed rulemaking (NPRM) on November 30, 2022 (87 FR 
73516), to propose a revision to the 340B ADR process.
    HHS is issuing this final rule to revise the current ADR process by 
modifying the regulations issued under the 2020 final rule. As HHS has 
indicated in the 2022 NPRM, the 2020 final rule poses policy and 
operational challenges that are described in this section.
    First, HHS is finalizing that the 340B ADR process be revised to be 
more accessible, administratively feasible and timely than the 2020 
final rule. The 340B statute at section 340B(d)(3)(B)(ii) of the PHS 
Act, requires the establishment of deadlines and procedures that ensure 
that claims are resolved fairly, efficiently, and expeditiously. This 
ADR process should be an expeditious and less formal process for 
parties to resolve disputes than the 2020 final rule. An ADR process 
governed by the Federal Rules of Evidence (FRE) and Civil Procedure 
(FRCP), as envisioned in the 2020 final rule, does not advance these 
goals. For example, potential petitioners, many of whom are safety net 
providers in under-resourced communities, may lack the resources to 
undertake ADR even if it would be in their best interest to do so. In 
addition, reliance on the FRE and FRCP could create unnecessary delays 
in what is intended to be a timely decision-making process. Finally, it 
is challenging to assign ADR Panel members with expertise in the FRE or 
FRCP. In implementing the 2020 final rule, HRSA received questions from 
stakeholders about the formality of the ADR process and the legal 
requirements under the FRCP for submitting a petition and accompanying 
documents, e.g., whether the filings submitted must conform to the 
FRCP, which added to the complexity and difficulty of the ADR process.
    HHS is finalizing an ADR process that is designed to assist covered 
entities and manufacturers in resolving disputes regarding 
overcharging, duplicate discounts, or diversion, as set forth in the 
340B statute. HHS believes that for the ADR process to be workable, it 
needs to be accessible. HHS recognizes that many covered entities are 
small,

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community-based organizations with limited means. These covered 
entities may not have the financial resources to hire an attorney to 
navigate the complex FRCP and FRE requirements and engage in a lengthy, 
trial-like process, as envisioned in the 2020 final rule. The 340B 
statute does not compel such a process. The 2020 final rule also 
institutes a minimum threshold of $25,000 or where the equitable relief 
sought will likely have a value of more than $25,000 to be met before 
the petition could be filed. Given the smaller, community-based nature 
of many covered entities, HHS believes that flexibility should be 
maintained with respect to the amount of damages and is therefore not 
finalizing a minimum threshold for accessing the ADR process. However, 
covered entities and manufacturers should carefully evaluate whether 
the ADR process is appropriate for minor or de minimis claims given the 
time and resource investment required of the parties involved. After 
deliberate consideration of these issues and review of the comments, 
HHS is finalizing rule provisions that create a more accessible process 
where stakeholders have equal access to the ADR process and can easily 
understand and participate in it without having legal expertise or 
expending significant resources.
    Second, the 2020 final rule states that the Secretary of HHS shall 
establish a 340B ADR Board that consists of at least six members 
appointed by the Secretary with equal numbers from HRSA, CMS, and the 
HHS Office of the General Counsel (OGC). It also requires the HRSA 
Administrator to select three members from the ADR Board to form a 340B 
ADR Panel and that each 340B ADR Panel include one ex-officio, non-
voting member (appointed by the Secretary) from OPA to assist the 340B 
ADR Panel. The 2020 final rule states that HRSA and CMS ADR Board 
members must have relevant expertise and experience in drug pricing or 
drug distribution and that the OGC ADR Board members must have 
expertise and experience in handling complex litigation. While the 340B 
Program is related to drug pricing and drug distribution, it is a 
distinct program that requires knowledge of the 340B statute and 
specific 340B Program operations. Few OGC, CMS, and HRSA employees 
(outside of OPA) have both the required expertise as well as the 
availability (in addition to their day-to-day responsibilities) to 
serve on such 340B ADR Panels.
    Therefore, HHS is finalizing rule provisions requiring that 340B 
ADR Panel members should be subject matter experts from OPA to ensure 
Panel members have specific knowledge of the authorizing statute and 
the operational processes of the 340B Program (e.g., registration and 
program integrity efforts) and the ability to dedicate a portion of 
their time to ADR Panel service. Moreover, decisions by subject matter 
experts from OPA are less likely to conflict with current 340B policy. 
All members on the 340B ADR Panel will undergo an additional screening 
prior to reviewing a specific claim to ensure that the 340B ADR Panel 
member was not involved in previous agency actions related to the claim 
(including previous 340B ADR Panel decisions).
    Third, HHS is finalizing final rule provisions stating that prior 
to initiating the ADR process, parties must undertake good-faith 
efforts to resolve the disputed issues. Historically, HRSA has 
encouraged parties to work in good faith and covered entities, and 
manufacturers have not had significant numbers of disputes due to the 
success of these good-faith-resolution efforts. 340B Program 
administrative improvements have narrowed the areas where parties had, 
in the past, disagreed over 340B Program issues. For example, HRSA 
released the pricing component of the 340B Office of Pharmacy Affairs 
Information System (340B OPAIS) in February 2019, which, for the first 
time, provided 340B ceiling prices to authorized covered entity users. 
OPAIS implementation has provided the necessary transparency to 
decrease disputes specific to the 340B ceiling price and its 
calculation. Outside of an issue involving some manufacturers placing 
restrictions on certain covered entities use of contract pharmacies, 
OPA has only received three covered entity overcharge complaints since 
making 340B ceiling prices available to covered entities through 340B 
OPAIS. Of additional note, prior to the 2020 final rule, stakeholders 
were able to utilize an informal dispute resolution process to resolve 
disputes between covered entities and manufacturers (61 FR 65406, Dec. 
12, 1996) (``1996 guidelines''). There have been only four informal 
dispute resolution requests since the publication of the 1996 
guidelines. Of the four informal dispute resolution requests received, 
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 each other's 
attempts of good faith resolution. The relatively small number may also 
be attributed to the parties' successful attempts to resolve issues in 
good faith. With this very small number of past informal disputes, the 
increased transparency in 340B pricing data, and HRSA's encouragement 
that parties work to resolve issues in good faith, HHS is finalizing 
final rule provisions that include an ADR process more closely aligned 
with the process that was established in the 1996 guidelines, and less 
trial-like and resource-intensive--for both the participants and HHS--
than that established in the 2020 final rule.
    Also, in the time since Congress enacted the 340B ADR statutory 
provision, HRSA implemented its extensive audit program in 2012, which 
ensures that participating covered entities and manufacturers can 
demonstrate compliance with all 340B Program requirements. On average, 
HRSA conducts 200 covered entity audits each fiscal year including 
child/associate sites and contract pharmacies associated with the 
covered entities, and issues findings in three areas: eligibility, 
diversion, and duplicate discounts. These findings vary in terms of 
severity--from covered entities not having the correct information in 
the 340B OPAIS to the diversion of 340B drugs to individuals who are 
not patients of the covered entity. HRSA conducts approximately five 
manufacturer audits each year and makes findings related to 
manufacturers charging above the 340B statutorily required ceiling 
price and manufacturers not reporting the required 340B pricing data to 
HRSA. Since HRSA began auditing covered entities and manufacturers, 
HRSA has identified 340B compliance concerns that would have previously 
been disputed. In addition to the extensive audit program, HRSA has 
also developed a comprehensive program integrity strategy to ensure 
compliance among all stakeholders participating in the 340B Program. 
These activities include quarterly checks of 340B Program eligibility, 
a self-disclosure and allegation process, which involves communication 
between OPA and the stakeholders regarding the compliance issue, and 
spot checks of covered eligibility documentation including contracts 
with State and local governments and contract pharmacy agreements.
    Further, manufacturers are required to audit a covered entity prior 
to filing an ADR claim pursuant to section 340B(d)(3)(B)(iv) of the PHS 
Act. Since November 2022, HRSA has received two final audit reports 
from the manufacturers. The infrequency of finalized manufacturer audit 
reports along with the requirement that

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manufacturers audit covered entities prior to filing an ADR claim 
suggests that the number of manufacturer ADR claims will be low.
    HRSA's impartial facilitation of good faith resolution efforts have 
allowed parties to take advantage of opportunities for open 
communication to better understand each other's positions and come to 
an agreement, without need for formal intervention by HRSA (e.g., 
through a HRSA targeted audit).
    Fourth, the ADR process should be reserved for those disputes set 
forth in the statutory ADR provision (overcharge, diversion, or 
duplicate discount). For example, a manufacturer that audited a covered 
entity may report its findings of alleged duplicate discounts 
identified by specific purchasing patterns over a period of time. The 
covered entity may disagree with the audit assessment of purchases. In 
this example, the matter would be best resolved through the ADR process 
as it involves an alleged duplicate discount violation.
    This final rule aligns with the statutory provisions by outlining 
the specific types of claims that can be brought forth through the ADR 
process--claims for overcharge, diversion or duplicate discounts.
    Fifth, HHS believes that there should be an opportunity for 
dissatisfied parties to seek reconsideration of the 340B ADR Panel's 
decision by HRSA. The 2020 final rule did not include such a process. 
This final rule establishes an appeals or reconsideration process 
option that would be made available to either party.
    Therefore, based on these issues with the 2020 final rule, HHS is 
finalizing in this rule to (1) establish a more accessible ADR process 
that is reflective of an administrative process rather than a trial-
like proceeding; (2) revise the structure of the 340B ADR Panel so that 
it is comprised of 340B Program subject-matter experts; (3) ensure that 
the parties have worked in good faith before proceeding through the ADR 
process; (4) more closely align the ADR process with the provisions set 
forth in the 340B statute (diversion, duplicate discounts, and 
overcharges); and (5) include a reconsideration process for parties 
dissatisfied with a 340B ADR Panel's decision.
    HRSA received 112 non-duplicative comments and, after consideration 
of the comments received, HHS has developed this final rule.

II. Summary of Proposed Provisions and Analysis and Responses to Public 
Comments

    Part 10 of title 42 of the Code of Federal Regulations has been 
revised to incorporate changes to the 340B ADR process, which is 
described below in conjunction with the comments received to each such 
section.

General Comments

    Comments received during the comment period addressed general 
issues that were raised in the preamble of the NPRM. We have summarized 
these general comments and have provided a response below.
    Comment: The 2020 final rule instituted a minimum threshold of 
$25,000 or where the equitable relief sought would likely have a value 
of more than $25,000 as an ADR petition prerequisite. In the NPRM, HHS 
did not propose a minimum threshold for accessing the 340B ADR process. 
Many covered entity comments favored eliminating the threshold and 
argued that the 340B ADR process would be more accessible and would 
help ensure all providers could seek relief through the 340B ADR 
process. Most manufacturer comments were against eliminating the 
minimum threshold and argued that de minimis claims and frivolous 
claims would be filed through the 340B ADR process.
    Response: Many 340B covered entities are small, rural or health 
care providers in underserved areas. The 340B ADR process should be 
accessible and available to these and all other stakeholders regardless 
of their volume of purchases or sales, and that flexibility should be 
maintained with respect to the amount of damages demonstrated when 
filing a 340B ADR claim; therefore, HHS is finalizing this provision as 
proposed without a minimum threshold for accessing the 340B ADR 
process. As noted above, HHS recognizes that most disputes that occur 
between individual parties are resolved in a timely manner without 
HRSA's involvement. The 340B ADR process should be considered only when 
good faith efforts to resolve disputes have been exhausted and failed.
    Comment: The 2020 final rule established the 340B ADR process as 
reliant on the Federal Rules of Civil Procedure (FRCP) and the Federal 
Rules of Evidence (FRE). These rules govern civil proceedings and the 
introduction of evidence at civil and criminal trials in Federal 
courts. In the NPRM, HHS proposed removing reliance on these rules as 
the statute does not compel reliance on the FRCP and FRE and many 
covered entities lack the expertise in these legal rules as well as the 
resources to hire outside counsel to navigate them. Conflicting 
comments were received related to removal of reliance on the FRCP and 
FRE for the 340B ADR process. Some covered entity stakeholders 
appreciated the proposal to make the process more accessible and 
administrative rather than trial-like. Most manufacturer commenters 
raised concerns that HHS had not proposed an alternative procedural 
framework or evidentiary standards in the absence of the Federal Rules 
asserting that without standards, the ground rules would be subject to 
dispute in each case.
    Response: HHS believes the new 340B ADR process will be a more 
accessible process, especially for covered entities with fewer 
resources, and will not require legal expertise during the claim 
resolution process. This approach will be more accessible to 
stakeholders and will use fewer stakeholder and government resources to 
resolve disputes. As such, this final rule sets up an accessible and 
comprehensible process without needing to invoke the more elaborate 
procedures available under the FRCP and FRE.
    Comment: Some covered entity commenters approved of the proposal to 
automatically transfer claims under the 2020 final rule to the new 
process.
    Other commenters disagreed that claims should be automatically 
transferred to the new process. These commenters specifically argued 
that HHS should proceed to handle the claims that are currently in the 
queue under the 2020 final rule as opposed to automatically 
transferring them to the new process. Further, one covered entity 
commenter generally stated that it was unclear whether HHS would be 
permitted under administrative law principles to transfer claims to the 
new process. The commenter suggested that such a transfer would 
conflict with the general principle that agencies must apply the law in 
effect at the time a decision is made, even when that law has changed 
during the course of a proceeding.
    Most manufacturer commenters disagreed, arguing that all pending 
ADR claims should be dismissed upon issuance of a final rule, and 
claimants should be required to refile claims if they wished to 
initiate new ADR proceedings.
    Response: After consideration of the comments received, HHS is 
finalizing this provision as proposed to provide for the automatic 
transfer of any pending claims to the new process. The decision to 
automatically transfer any

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claims that were submitted pursuant to the 2020 final rule and that are 
pending will minimize burden on all parties involved. For petitioners, 
it will mean that they do not have to resubmit claims under the new 
process. It will ensure the continuity of the 340B ADR process for the 
stakeholders involved in claims under the 2020 final rule, despite the 
new process as envisioned in this final rule.
    In particular, we disagree that automatically transferring claims 
to the new process will run afoul of any administrative law principles. 
The general presumption that agencies apply the law in effect at the 
time a decision was made is of no moment here, because nothing in this 
final rule changes the substantive law governing disputes covered by 
the 340B ADR process. Transferring pending claims to the new process 
``takes away no substantive right but simply changes the tribunal that 
is to hear the case''; in such a situation, ``[p]resent law normally 
governs.'' Landgraf v. USI Film Prod., 511 U.S. 244, 274 (1994) 
(cleaned up). As the Supreme Court has explained, a law ``govern[ing] 
the transfer of an action instituted prior to that statute's 
enactment'' may ``be applied in suits arising before their enactment 
without raising concerns about retroactivity.'' Id. at 275. ``Because 
rules of procedure regulate secondary rather than primary conduct, the 
fact that a new procedural rule [is] instituted after the conduct 
giving rise to the suit does not make application of the rule at trial 
retroactive.'' Id.
    This rule modifies procedural requirements for the 340B ADR 
process. It does not impair any rights possessed by parties when they 
acted, increase or affect their liability for past conduct, or impose 
new duties on the parties for already completed transactions. The 
changes in this final rule do not affect the substance of claims at 
issue for the ADR panel and accordingly could not be considered to have 
retroactive application that affects potential consequences understood 
by the parties when they began the 340B ADR process.
    Claims that are automatically transferred will be first in the 
queue to be reviewed once this final rule becomes effective. Within a 
specified time period, HHS will allow petitioners of claims submitted 
under the 2020 final rule to submit additional information or revise 
their petition, as necessary, in support of their original claim. 
Petitioners will also be able to withdraw their pending claims. HRSA 
will work with affected parties to the extent that additional 
information is needed as part of the process outlined in this final 
rule. Details concerning this automatic transfer of claims will be 
provided to affected parties once this final rule becomes effective.
    Comment: Many manufacturer commenters requested that HHS revise the 
1996 manufacturer audit guidelines before it issues regulations on ADR. 
They stated that the guidelines are problematic because they impose 
onerous and unnecessary barriers on a manufacturer's ability to audit a 
covered entity for 340B compliance.
    Response: Revisions to the 1996 manufacturer audit guidelines are 
outside the scope of this final rule. The requirement for a 
manufacturer to conduct an audit prior to initiating the 340B ADR 
process is a statutory requirement (section 340B(d)(3)(B)(iv) of the 
PHS Act). This rule is not meant to address how a manufacturer should 
conduct the audit--only that a manufacturer does conduct the audit 
prior to initiating the ADR process. Multiple manufacturers have 
utilized the 1996 manufacturer audit guidelines to conduct audits of 
covered entities. In the last 5 years, six have followed the guidelines 
to request audits of covered entities. During that same time frame, 
HRSA has not denied a request for a manufacturer audit of a covered 
entity, thereby, demonstrating the guidelines are not overly burdensome 
or present any barriers to a manufacturer's ability to perform an audit 
of a covered entity. Further, the guidelines present a clear and 
transparent process that may decrease burden on both parties with open 
dialogue and present an objective review of a covered entity's 
compliance.
    Comment: Several manufacturer commenters raised that HHS has failed 
to establish procedures for manufacturers to issue refunds to covered 
entities for overcharges. They explained that this is a prerequisite to 
the 340B ADR process in order for it to be fair, efficient, and 
expeditious. Relatedly, they stated that there is a need for HHS to 
address refund procedures that permit offsets of covered entity 
overpayments and underpayments to a manufacturer.
    Response: Specific procedures for refunds are outside the scope of 
this final rule, as the authority for this final rule directly relates 
to the development of an administrative process for the resolution of 
claims as described in section 340B(d)(3) of the PHS Act.

Subpart A--General Provisions

Section 10.3 Definitions
    In the NPRM, HHS sought to add or revise the following definitions: 
``Administrative Dispute Resolution Panel (340B ADR Panel),'' ``340B 
Administrative Dispute Resolution Process,'' ``claim,'' ``consolidated 
claim,'' ``joint claim,'' and ``Office of Pharmacy Affairs.'' HHS did 
not receive substantive comments on this section, and we are finalizing 
this section as proposed. HHS received numerous comments on defining 
the types of claims that could be adjudicated through the 340B ADR 
process, and HHS addresses those comments in Sec.  10.21.

Subpart C--Administrative Dispute Resolution

Section 10.20 340B Administrative Dispute Resolution Panel
(a) Members of the 340B ADR Panel
    The 2020 final rule states that the Secretary shall establish a 
340B ADR Board consisting of at least six members appointed by the 
Secretary with equal numbers from HRSA, CMS, and the HHS OG C. It also 
requires the HRSA Administrator to select three members from the ADR 
Board to form a 340B ADR Panel and that each 340B ADR Panel include one 
ex-officio, non-voting member (appointed by the Secretary) from OPA to 
assist the 340B ADR Panel. HHS proposed to revise the composition of 
the 340B ADR Panel that would review and make decisions for claims 
filed by covered entities and manufacturers. In the NPRM, HHS proposed 
that the Secretary appoint a roster of no fewer than 10 eligible 
individuals (Roster) consisting of OPA staff to serve on the 340B ADR 
Panels. Under the proposed rule, the OPA Director, or designee, selects 
at least three members for each 340B ADR Panel from the Roster of 
appointed staff; has the authority to remove an individual from the 
340B ADR Panel and replace such individual; selects replacement members 
should a 340B Panel member be removed or resign; and screens for any 
potential conflicts of interests. After consideration of the comments 
received, HHS is finalizing this provision as proposed. HHS has 
addressed specific comments with respect to this section below.
    Comment: Several covered entity commenters favored the proposal to 
have OPA staff serve as the 340B ADR Panel members, because the staff 
understand the intricacies of the 340B Program. They explained that the 
340B Program is complex and it is important that individuals understand 
the complexities of the 340B Program to adjudicate these disputes in 
order to ensure a fair outcome. Some concerns were raised that the 
workload may be too much for a small OPA staff, and that

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an insufficient number of available panelists could lead to delayed 
decisions. Some covered entity commenters who favored OPA staff serving 
on 340B ADR Panels also recommended that other staff within HRSA could 
serve on 340B ADR Panels, such as staff working on programs with 
grantees that participate in the 340B Program.
    Response: HHS agrees with the commenters that OPA staff should 
serve on 340B ADR Panels given their specialized knowledge and 
expertise of the 340B Program. Therefore, HHS is finalizing this 
provision as proposed. HHS also appreciates the commenters' concerns 
regarding the workload of OPA staff and the suggestion to include other 
HRSA staff that work with grantees participating in the 340B Program. 
However, as stated in the preamble of the proposed rule, OPA staff are 
subject matter experts and have years of experience with complex 340B 
matters involving covered entities and manufacturers. Given this 
expertise, HHS continues to believe that OPA staff are best suited to 
serve on 340B ADR Panels to ensure that the process is efficient and 
that claim reviews are handled in a timely fashion. This final rule 
limits 340B ADR Panel participation to OPA staff who have daily 
exposure to the complex issues facing both covered entities and 
manufacturers, to ensure there will be equitable, consistent, and fair 
340B ADR adjudications. In addition, the OPA Director is aware of the 
workload of each OPA staff member and will be able to appropriately 
assign 340B ADR Panel members taking into consideration existing 
workload demands and priorities.
    Comment: Some manufacturer commenters opposed OPA staff serving on 
340B ADR Panels. These commenters argued that all OPA staff are 
involved in audits of covered entities and manufacturers, and with at 
least 10 staff planned to be on the ADR Roster under the proposed rule, 
there may be too many conflicts of interests and, in turn, the 
possibility and perception of bias may arise. Moreover, manufacturers 
opposing this policy were concerned that, given OPA's regular and 
extensive involvement in the day-to-day administration of the 340B 
Program, it may be difficult for OPA staff to approach adjudications 
without the appearance that they may be predisposed to particular views 
on relevant issues. Some commenters suggested Administrative Law Judges 
be the adjudicators of the 340B ADR process because they have the 
professional background, legal training and independence needed to 
resolve claims in a fair, consistent, and well-reasoned manner.
    Response: HHS continues to believe that a Panel of OPA staff 
members who are steeped in 340B knowledge and experience and who can 
provide a consistent application of 340B policies will ensure a more 
efficient ADR adjudication process. As such, HHS is finalizing this 
provision as proposed. OPA staff members work to provide oversight of 
the 340B Program without bias--working with both manufacturers and 
covered entities in a manner that is impartial to the stakeholders 
involved. In addition, staff members work toward the goal of ensuring 
the integrity of the 340B Program and they do so without prejudice 
toward particular stakeholders. Those serving as 340B ADR Panel members 
will be fair and make consistent decisions in a well-reasoned manner 
using the 340B statute, applicable regulations, policies, and guidance 
documents. OPA staff have demonstrated their ability to follow the 
principles of fairness, consistency, transparency of applicable 
statute, regulations, policies, and guidance in their performance of 
covered entity and manufacturer audits. The breadth of experience, 
which we believe far outweighs any risks of perceived bias, among the 
OPA staff members serving on a 340B ADR Panel will ensure fairness, 
consistency, and transparency in ADR decisions. In addition, the OPA 
Director, in consultation with government ethics officials, will 
consider financial interest(s), current or former business or 
employment relationship(s), or other involvement of a prospective panel 
member or close family member who is either employed by or otherwise 
has a business relationship with an involved party, subsidiary of an 
involved party, or particular claim(s) expected to be presented to the 
prospective panel member.\1\
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    \1\ ``Confidential Financial Disclosure Guide: OGE 450.'' U.S. 
Office of Government Ethics. October 2023.
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    In addition, specialized legal knowledge or training is not 
necessary for 340B ADR Panel members to effectively function in their 
role as the 340B ADR process is an administrative process that is best 
served by having 340B subject matter experience rather than legal 
experience. HHS disagrees with the recommendation that Administrative 
Law Judges should be appointed as adjudicators of the 340B ADR process.
    The 340B ADR process is different, as it is designed as a process 
to resolve disputes between covered entities and manufacturers and in 
this final rule, HHS is establishing 340B ADR Panels comprised of OPA 
staff, who are uniquely suited to handle the complexities of the 340B 
Program, given their day-to-day administration of the Program. 
Processes are well established to provide staff opportunity for 
continuous learning and training on program implementation and 
oversight. OPA staff also have distinct knowledge of the 340B statute, 
laws, and policies as they apply that subject matter expertise 
throughout the work that is conducted on a daily basis to oversee the 
program and therefore will be able to handle such disputes effectively 
and efficiently.
    Comment: Some manufacturer commenters argued that the new proposed 
rule has the same Appointments Clause and structural constitutional 
defects as the 2020 final rule. They stated that there is no mechanism 
for review of a 340B ADR Panel decision by a principal officer, 
appointed by the President with Senate confirmation, before that 
decision becomes ``final agency decision.''
    Response: HHS disagrees. Under this final rule, the Secretary will 
appoint a roster of eligible individuals (Roster) consisting of staff 
within OPA to serve on a 340B ADR Panel. When a 340B ADR claim is 
presented, the OPA Director will select three members from the Roster 
to serve on a 340B ADR Panel to review claims and make final agency 
decisions that will be binding on the parties involved, unless 
invalidated by an order of a Federal court. As discussed further in 
Sec.  10.20(c), the Secretary, who is appointed by the President and 
Senate-confirmed, has the authority to intervene in the 340B ADR 
process at any time, including the ability to remove any individual 
from the Roster of 340B ADR Panelists for any reason. The Secretary had 
inherent authority to take these same actions under the 2020 final 
rule, and the codified regulatory text now explicitly addresses this 
authority. Specifically, as outlined further below, any 340B Panel 
decision or reconsideration decision regarding a 340B ADR Panel's 
decision will be effective 30 business days from issuance and serve as 
the final agency decision unless within 30 business days of issuance, 
the Secretary makes a determination that the Secretary will review the 
decision.
(b) Conflicts of Interest
    In the NPRM, HHS proposed that the OPA Director would ensure that 
each 340B ADR Panel member is screened prior to reviewing a claim and 
that there

[[Page 28648]]

are no conflicts of interest between the parties involved in the 
dispute and the 340B ADR Panel member. The conflict-of-interest review 
includes financial interest(s), current or former business or 
employment relationship(s), or other involvement of a prospective panel 
member or close family member who is either employed by or otherwise 
has a business relationship with an involved party, subsidiary of an 
involved party, or particular claim(s) expected to be presented to the 
prospective panel member. Under the proposed rule, members of the 340B 
ADR Panel will also undergo additional screening prior to reviewing a 
specific claim to ensure that the 340B ADR Panel member was not 
involved in the previous agency action, including previous 340B ADR 
Panel decisions, concerning the specific issue in the claim. HHS 
received several comments on this provision, which are summarized 
below. After a review and analysis of the comments, HHS is clarifying 
the additional conflict of interest screening as discussed in more 
detail below.
    Comment: Both manufacturer and covered entity commenters agreed 
that HHS should evaluate conflicts of interest with regard to a 340B 
ADR Panel member; however, they recommended that the parties should 
have the ability to make objections to a proposed panelist. Some 
commenters mentioned the small size of the OPA staff may make having 
too broad of screening for conflict of interest, such as having worked 
on an audit, difficult to fill a panel with subject matter experts. 
Commenters also requested the policies and procedures for screening 
panel members be publicly outlined.
    Response: HHS will inform the parties involved in the ADR of Panel 
members for that specific claim. The OPA Director has full knowledge of 
a Panel member's workload and will select Panel members for each claim, 
which will also be based on the OPA Director's awareness of any 
potential conflicts of an OPA staff member, including financial 
interest conflicts, current or former business relationships or other 
involvement. We believe that the process sufficiently addresses the 
need to screen for conflicts and allowing the parties to object to 
proposed panelists or the specific policies or procedures for screening 
panel members would unduly lengthen the 340B ADR process. To the extent 
a conflict arises regarding an assigned panelist, the OPA Director is 
authorized to make changes to the panel composition. The commenters 
also raised concern about whether the additional conflict of interest 
screenings would make it difficult to fill 340B ADR Panel positions, 
given the small staff within OPA. In order to make this process fair, 
efficient and transparent, HHS is retaining the policy that a conflict 
of interest screening will be conducted on all 340B ADR Panel members 
to ensure there is no conflict of interest with respect to financial 
conflicts or current/former business relationships or other involvement 
of a prospective panel member or close family member who is either 
employed by or otherwise has a business relationship with an involved 
party, subsidiary of an involved party in an 340B ADR claim. However, 
based on the comments received, HHS is clarifying that the additional 
screening in Sec.  10.20(b)(2) will be conducted to ensure that a 340B 
ADR Panel member was not directly involved in a decision concerning the 
specific issue of the ADR claim as it relates to the specific covered 
entity or manufacturer involved, including previous 340B ADR Panel 
decisions. This clarification responds to the concerns of the 
commenters and balances the fact that 340B ADR Panel members will be 
selected from a relatively small staff. Indirect or tangential 
involvement in matters affecting a specific covered entity or 
manufacturer will not be considered a conflict of interest.
    To the extent that any significant conflict issue is raised outside 
of those specifically addressed in Sec.  10.20(b), the OPA Director or 
the Secretary still have the discretion to remove a 340B ADR Panel 
member (as addressed in Sec.  10.20(a) and (c) of this final rule, 
respectively).
(c) Secretarial Removal Power
    The NPRM proposed to codify in regulatory text the Secretary's 
authority to remove any individual from the Roster of 340B ADR 
Panelists for any reason, including from any 340B ADR Panel to which 
the individual has already been assigned. After a review of the 
comments received, HHS is modifying this provision by clarifying the 
Secretary's role in the 340B ADR process.
    To respond to commenter requests for transparency, HHS commits to 
publishing these policies and procedures for screening panel members on 
a HRSA public-facing website within 120 calendar days of the 
publication of this final rule and, likewise, in the event that these 
policies and procedures are modified, HHS commits to publishing these 
policies and procedures for screening panel members on a HRSA public-
facing website within 120 calendar days of such modification.
    Comment: Many manufacturers argued that while the preamble to the 
proposed rule suggests that the Secretary would have the inherent 
authority to review and reverse or alter the 340B ADR Panel's decision, 
it was not explicitly included in the proposed regulatory text. 
Further, they stated that the Secretary does not exercise sufficient 
control over ADR panelist decisions.
    Response: There are no restrictions on the Secretary's oversight or 
supervision over the 340B ADR process. The Secretary has the authority 
to intervene in the 340B ADR process at any time, has the authority to 
remove Panel members from the Roster, and has the authority to review, 
reverse, or alter any decision made by the 340B ADR Panel or any 
reconsideration decision made by the HRSA Administrator as outlined in 
Sec.  10.24. In consideration of the comments received, HHS is 
modifying this provision to make explicit that the Secretary has the 
authority to review, alter, reverse, or uphold any 340B ADR Panel or 
reconsideration decision. Specifically, as outlined further below, any 
340B Panel decision or reconsideration decision regarding a 340B ADR 
Panel's decision will be effective 30 business days from issuance and 
serve as the final agency decision unless within 30 business days of 
issuance, the Secretary makes a determination that the Secretary will 
review the decision. If the Secretary reviews and reverses, alters, or 
upholds any 340B ADR Panel or reconsideration decision, the Secretary's 
decision will serve as the final agency decision and will be binding 
upon the parties involved in the dispute, unless invalidated by an 
order of a Federal court.
(d) Duties of the 340B ADR Panel
    The proposed rule outlined the duties of the 340B ADR Panel, which 
included:
    (1) reviewing and evaluating claims, including consolidated and 
joint claims, and documents and information submitted by covered 
entities and manufacturers;
    (2) reviewing and possibly requesting additional documentation, 
information, or clarification of an issue from any or all parties to 
make a decision;
    (3) evaluating claims based on information received, unless, at the 
340B ADR Panel's discretion, the nature of the claim necessitates that 
a meeting with the parties be held;
    (4) consulting with other Federal agencies while reviewing the 
claim, at the 340B ADR Panel's discretion; and
    (5) making decisions on each claim.

[[Page 28649]]

    There were no substantial comments received on this provision; 
therefore, HHS is finalizing the provision as proposed.
Section 10.21 Claims
(a) Claims Permitted
    In accordance with section 340B(d)(3) of the PHS Act, 340B ADR 
claims may include: (1) claims by a covered entity that it has been 
overcharged 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 PHS Act, that the 
covered entity has violated section 340B(a)(5)(A) of the PHS Act, 
regarding the prohibition of duplicate discounts, or section 
340B(a)(5)(B) of the PHS Act, regarding the prohibition of the resale 
or transfer of covered outpatient drugs to a person who is not a 
patient of the covered entity. The NPRM proposed that all claims must 
be specific to the parties identified in the claims. Based on the 
comments received, HHS is finalizing this provision as proposed. HHS 
has also decided to provide an illustrative but not exhaustive list of 
examples of the types of overcharges, diversion, and duplicate discount 
claims that may be eligible for the 340B ADR process.
    Comment: Several covered entity commenters argued that 
manufacturers should not be allowed to bring claims related to a 
covered entity's eligibility and suggested that manufacturers cannot 
pursue claims alleging Medicaid managed care duplicate discount 
violations. These commenters believe that these types of claims are 
outside those permitted under the ADR statute.
    Response: Generally, HHS agrees with the exclusion of claims 
regarding covered entity eligibility but disagrees with the commenters 
on claims related to duplicate discounts in Medicaid managed care. This 
final rule aligns claims to those expressly set forth in section 
340B(d)(3) of the PHS Act: (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 PHS Act, that a covered entity has violated the 
prohibitions against duplicate discounts and diversion (sections 
340B(a)(5)(A) and (B) of the PHS Act). As duplicate discounts can occur 
with drugs subject to rebates under both Medicaid fee-for-service and 
Medicaid managed care, HHS declines to exclude Medicaid managed care 
claims from the 340B ADR process. In addition, although the eligibility 
of a covered entity is generally outside of the scope of the 340B ADR 
process; if resolution of a diversion claim depends in whole or in part 
on whether a claimant is an eligible covered entity, then that claim 
may proceed through the 340B ADR process, given that the 340B statute 
permits claims for overcharges, diversion, and duplicate discounts. In 
this final rule, the role of the 340B ADR Panel is to independently 
review and apply the 340B statute and applicable regulations, policies, 
and guidance documents to the case-specific factual circumstances at 
issue in an overcharge, diversion, or duplicate discount dispute.
    Comment: Some covered entity commenters urged HHS to reinstate 
language from the 2020 final rule to make clear that covered entities 
may bring an overcharge claim in situations in which a manufacturer has 
limited the covered entity's ability to purchase a covered outpatient 
drug at or below the 340B ceiling price.
    Response: HHS agrees and has modified Sec.  10.21(a)(1) to further 
explain that an overcharge claim generally includes claims that a 
manufacturer has limited the covered entity's ability to purchase 
covered outpatient drugs at or below the 340B ceiling price.
    Comment: Some covered entity commenters recommended that the final 
rule include a definition for the term ``overcharge,'' to mean an 
attempt to collect a price in excess of the 340B price for a covered 
outpatient drug, any attempt to cause a drug wholesaler to decline to 
offer 340B pricing on a covered outpatient drug to a covered entity, 
and any refusal by a manufacturer to sell a covered outpatient drug at 
340B pricing.
    Response: When an overcharge claim is presented before a 340B ADR 
Panel, the Panel will follow the 340B statute, relevant case law, all 
applicable regulations, and consider 340B policies and guidance 
documents when evaluating 340B ADR claims. One example of an overcharge 
claim in the 340B ADR process would be a claim that a manufacturer has 
limited the covered entity's ability to purchase covered outpatient 
drugs at or below the 340B ceiling price or the manufacturer does not 
offer the 340B ceiling price. We do not believe that an explicit 
definition of the term ``overcharge'' is needed in light of the process 
discussed above for addressing an overcharge claim.
    Comment: Many manufacturer commenters objected to the lack of an 
explicit definition in the proposal for the terms ``patient'' or 
``diversion.'' They explained that covered entities are prohibited from 
selling or otherwise transferring drugs purchased under the 340B 
Program to a person who is not a patient of the entity in accordance 
with section 340B(a)(5)(B) of the PHS Act. These commenters believe 
that HRSA should revise and clarify its current guidance (61 FR 55156 
(Oct. 24, 1996)), to strengthen administration of the 340B Program, 
including the 340B ADR process and the parties' ability to work 
together to resolve disputes in good faith as proposed in Sec.  
10.21(b).
    Response: Revision of the 1996 patient definition guidance is 
outside the scope of this rule. When a diversion claim is presented 
before a 340B ADR Panel, the Panel will follow the 340B statute and all 
applicable regulations, and consider 340B policies and guidance 
documents when evaluating 340B ADR claims. Examples of a diversion 
claim that may be submitted (after a manufacturer has conducted an 
audit of a covered entity), include but are not limited to: (1) 
transferring of covered outpatient drugs to a patient where there was 
no record of the individual's health care or no provider relationship 
or (2) transferring covered outpatient drugs to an individual who is an 
inpatient. Similarly, examples of a duplicate discount claim include 
but are not limited to: (1) if it is found after an audit of a covered 
entity that the covered entity billed Medicaid without the site being 
listed on the Medicaid Exclusion File and the manufacturer paid a State 
rebate or (2) if it is found after an audit of a covered entity that 
the manufacturer paid a State rebate and the covered entity had 
incomplete or inaccurate information on the Medicaid Exclusion File.
(b) Requirements for Filing a Claim
    As proposed in the NPRM, a covered entity or manufacturer must file 
a 340B ADR claim in writing to OPA within 3 years of the date of the 
alleged violation. HHS also proposed that 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 date of the 
final agency decision. Before filing a claim, each stakeholder must 
provide appropriate documentation, including documentation of 
communication with the opposing party to resolve the matter in good 
faith. In the case of a covered entity, the covered entity must provide 
documentation to support that it has been overcharged by a 
manufacturer, in addition to any other documentation requested by OPA. 
Covered entities are not permitted to file a claim against multiple 
manufacturers.

[[Page 28650]]

A manufacturer must provide documents that show it audited the covered 
entity and that are sufficient to support its claim that a covered 
entity has violated the prohibition on diversion and/or duplicate 
discounts, in addition to any other documentation as may be requested 
by OPA. HHS received several comments on these provisions and 
considered them carefully. For the reasons detailed below, HHS is 
finalizing these provisions as proposed.
    Comment: Some covered entities commenters requested clarification 
that the 3-year records limitation period begins on the date of sale or 
payment at issue except when the manufacturer issues a restatement of 
the average manufacturer price (AMP), best price, customary prompt pay 
discounts, nominal prices, or other data that affects the 340B ceiling 
prices. Some of these commenters recommended that HHS include an undue 
hardship exemption to the 3-year limitation on claims to benefit small 
rural covered entities. They explain that small rural providers may 
submit ADR claims without outside counsel. Further, they state that 
alongside other challenges that a covered entity could be facing, 
pulling together the needed documentation to file a claim could be 
burdensome for covered entities.
    Some manufacturer commenters expressed that because of the 
manufacturer audit requirement, which may take significant time to 
complete, the final rule should ``toll'' the 3-year period for 
manufacturer ADR claims from the point when a manufacturer first seeks 
to conduct an audit until the audit concludes with the completion of 
the audit report.
    Response: While HHS believes that the 3-year limit is sufficient, 
there may be times when the initial reviewer will account for 
extenuating circumstances. For example, the timeline for manufacturer 
audits of covered entities depends on a variety factors, which may 
affect when they are finalized. Another example is when data affecting 
the 340B ceiling price are revised, such as where AMP or best price are 
corrected or restated, an alleged violation would have not occurred 
until the data were revised. These examples are not exhaustive but 
illustrate situations that may warrant flexibilities. In addition, 
under the current ADR process, the 3-year time period has proved to be 
sufficient for the parties. Noting these flexibilities, HHS is 
finalizing the provision as proposed.
    Comment: Most commenters were generally supportive of the proposal 
that documentation of ``good faith'' efforts is required before a party 
can initiate a claim through the 340B ADR process. However, some 
manufacturer commenters believe that HHS should specify the types of 
documents required to evidence ``good faith'', including, but not 
limited to, documentation demonstrating that the covered entity has 
contacted the manufacturer about the potential issue and has given the 
manufacturer sufficient notice of a potential claim before initiating 
340B ADR process.
    Some covered entity commenters recommend that HHS remove the ``good 
faith'' requirement before filing a claim. Specifically, they argue 
that the act of overcharging a covered entity could not be an act of 
good faith and engaging with the manufacturer would be futile and cause 
unnecessary delay. These commenters argue that a ``good faith effort'' 
prerequisite to filing a claim requires the agency to make difficult 
determinations regarding whether an attempt at resolution was made in 
``good faith.''
    Response: After consideration of the comments received, HHS is 
finalizing this provision as proposed. Given the resources required to 
pursue an ADR claim, HHS encourages covered entities and manufacturers 
to work in good faith to resolve disputes. Good faith attempts include 
for example, at least one instance of written documentation 
demonstrating that the initiating party has made attempts to contact 
the opposing party regarding the specific issues cited in the ADR 
claim. The requirement to engage in good faith efforts may resolve 
disputes before the need to file a petition in many cases. In addition, 
HHS has historically encouraged manufacturers and covered entities to 
work with each other to attempt to resolve disputes in good faith, and 
most disputes have been resolved in a timely manner without needing 
HRSA's involvement. Also, the 340B ADR process is not intended to 
replace these good faith efforts and should be considered only when 
good faith efforts to resolve disputes have been exhausted and failed.
    Good faith efforts and documentation can include communication 
between parties to obtain clarifications or to provide explanations 
that may not be readily apparent and may provide perspective to either 
party that may help mitigate concerns. For example, HRSA currently has 
a process in place when a covered entity is unable to obtain a 340B 
price from a manufacturer. In this case, HRSA can facilitate good faith 
efforts between the parties, and oftentimes help them resolve disputes, 
which typically are as a result of an error or misunderstanding.
    Comment: Some manufacturer commenters encouraged HHS to protect the 
proprietary and confidential components of all parties' information 
throughout the 340B ADR process. They explained that for the 340B ADR 
process to work efficiently, parties need assurances that the 
proprietary and confidential information that they disclose will not be 
made publicly available.
    Response: HHS will work to protect the proprietary and confidential 
information of the parties to the maximum extent that it is able to 
pursuant to current law.
(c) Combining Claims
    The NPRM proposed that two or more covered entities may jointly 
file claims of overcharges by the same manufacturer for the same drug. 
The NPRM also provided that an association or organization may file on 
behalf of one or more covered entities representing their interests 
pertaining to overcharging by a single manufacturer for the same 
drug(s). The proposed rule provided specific parameters for covered 
entities filing joint claims and for associations/organizations filing 
claims on behalf of one or more covered entities, including that each 
covered entity meets the requirements for filing the ADR claim and that 
there is documentation of each covered entity's consent.
    The NPRM also proposes that 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 consolidated 
claim, meets the requirements for filing a claim, and the 340B ADR 
Panel determines that such consolidation is appropriate and consistent 
with the goals of fairness and economy of resources. The statutory 
authority for implementing the 340B ADR process does not address 
consolidated claims on behalf of manufacturers by associations or 
organizations representing their interests. After a careful review and 
consideration of the comments received, HHS is finalizing this 
provision as proposed.
    Comment: Many covered entities commenters indicated that the NPRM 
improperly limits claims brought by associations and organizations 
representing covered entities to only those covered entities that 
consent to the claim being asserted on their behalf. These commenters 
argued that the

[[Page 28651]]

criteria for inclusion in an organizational claim in the 340B statute 
is merely membership in the organization. Representation by 
associations, regardless of whether the entity consents, allows covered 
entities to access the process more easily. They argued that requiring 
consent from each member of an organization introduces unnecessary 
resource and time burden--and could significantly delay the filing of 
claims that are sometimes time sensitive.
    Response: An ADR claim could substantively affect a covered 
entity's ability to recover for 340B overcharges, as well as a covered 
entity's relationship with a manufacturer. However, after consideration 
of the comments, HHS, will permit associations or organizations filing 
a claim on behalf of its members to submit an attestation, rather than 
submitting signatures from each individual covered entity, that they 
have confirmed that all of the individual covered entities have agreed 
to be part of the ADR claim.
    As part of the initial review of the claim, OPA will review the 
attestation statement submitted by the organization or association. If 
attestation documentation is missing, OPA will follow-up to obtain the 
attestation.
    Comment: A few manufacturer commenters requested that HHS prohibit 
covered entities or manufacturers from asserting any individual claim 
that overlaps with a consolidated claim or joint claim. Commenters also 
urged HHS to clarify that the requirement for a joint claim by covered 
entities must involve the ``same drug or drugs,'' which would mean that 
the alleged overcharges must involve substantially the same national 
drug code (NDC) and quarters.
    Response: As part of the initial claim review, OPA will evaluate 
whether an individual claim would overlap with a consolidated claim or 
joint claim. If an overlap exists, OPA will contact the parties 
involved and request that they resolve the discrepancy. In addition, 
the review will also ensure that the alleged overcharge involves the 
same NDCs for joint claims.
    Comment: Several manufacturer commenters argued that HHS should 
recognize manufacturers' ability to pursue claims through a trade 
association or agent of their choice. The statute required HHS to allow 
the combining of claims and permit claims to be brought on behalf of 
covered entities by associations or organizations--however, commenters 
assert that the statute does not preclude HHS from extending this 
ability to manufacturers. Commenters also argued that few manufacturers 
will utilize the 340B ADR process due to the onerous requirements of 
the 2020 final rule and the audit requirement placed on them. They 
explained that this requirement would further preclude manufacturers 
from accessing the 340B ADR process by requiring them to wait several 
years for each manufacturer to audit a covered entity before bringing a 
consolidated claim.
    Response: Section 340B(d)(3)(B) of the PHS Act permits associations 
to file joint ADR claims on behalf of covered entities; however, it 
does not include similar language for associations to file consolidated 
claims filed on behalf of manufacturers. In addition, due to the 
requirement that a manufacturer must first audit a covered entity 
before submitting an ADR claim, it would be difficult to have each 
manufacturer of the association or organization conduct an audit of a 
covered entity before filing a claim. Therefore, HHS is finalizing this 
provision as proposed. Regarding the commenter's argument about the 
audit requirements, HHS does not have the authority to waive this 
statutory requirement. Section 340B(d)(3)(B)(iv) of the PHSA requires 
that a manufacturer conduct an audit of a covered entity pursuant to 
subsection (a)(5)(C) as a prerequisite to initiating the 340B ADR 
process against a covered entity.
(d) Deadlines and Procedures for Filing a Claim
    The proposed rule set forth the deadlines and procedures for filing 
a claim, including that OPA would conduct an initial review to 
determine whether the claim meets certain requirements as set forth by 
the statute and regulations. HHS proposed that OPA staff reviewing the 
initial claim review may not be appointed to serve on the 340B ADR 
Panel reviewing the specific claim. Additionally, under the proposed 
rule, OPA could request additional information of the initiating party 
and the party would have 20 business days from the receipt of the 
request to respond and if the party does not respond (or request and 
receive an extension to respond during that time period), the claim 
would not move forward to the 340B ADR Panel for review. The proposed 
rule also indicates that a written response would be sent to the 
initiating party once the claim is complete and OPA would send that 
verification of completion to the opposing party with instructions 
regarding the 340B ADR process, including timelines and information on 
how to submit their response as outlined in Sec.  10.21(e). Once OPA 
receives the opposing party's response, OPA would notify both parties, 
either advising that the claim would move forward for the 340B ADR 
Panel for review or that OPA determined the claim did not meet the 
requirements as set forth in Sec.  10.21(b) and the reasons why. HHS 
proposed that for any claim that did not proceed to review by the 340B 
ADR Panel, the claim could be revised and refiled if there were new 
information to support the alleged statutory violation and the claim 
meets the criteria set forth in the statute and the regulation. HHS 
received several comments related to this provision and is finalizing 
this provision as proposed.
    Comment: Several commenters suggested that HHS clarify that OPA's 
initial review of the claim is limited to determining whether the claim 
meets all the information requirements to file a claim and does not 
involve a factual or legal review of the claim. They state that at this 
stage, OPA should only be requesting additional information to satisfy 
the filing requirements. The determination as to whether a claim is 
substantiated should be reserved exclusively for the 340B ADR Panel.
    Response: During the initial claim review, OPA will review a claim 
only for completeness, and not make any determinations whether a claim 
is substantiated. That determination will be reserved for the 340B ADR 
Panel.
(e) Responding to a Submitted Claim
    When responding to a submitted claim, the NPRM proposed that the 
opposing party would have 30 business days to submit a written response 
to OPA upon receipt of notification that the claim is deemed complete. 
The proposed rule indicated that the opposing party may request an 
extension of the initial 30 business days to respond. Once the opposing 
party's response is received, OPA would provide a copy to the 
initiating party as indicated in Sec.  10.21(d). The proposed rule also 
explained that if the opposing party's response was not received or the 
party elects not to participate in the 340B ADR process, OPA would 
notify both parties that the claim has proceeded to 340B ADR Panel 
review, and the 340B ADR Panel will render its decision after review of 
the information submitted in the claim. HHS carefully considered the 
comments received, which are summarized below, and is finalizing the 
provision as proposed.
    Comment: Some commenters suggested that HHS adopt a timeframe of 60 
calendar days (with the possibility of extensions) for opposing parties 
to respond to claims. These commenters are concerned with the proposal 
to

[[Page 28652]]

allow 340B ADR Panels to draw an adverse inference if the opposing 
party does not respond. They argued the proposed rule does not contain 
any standard that would ensure that adverse inferences are drawn 
against a party only in narrow circumstances. Finally, commenters noted 
that the final rule should recognize that an ``adverse inference'' is 
an extraordinary sanction, and there should be clear standards for when 
such a sanction is appropriate.
    Response: HHS is revising this rule to remove references to adverse 
inferences, but otherwise finalizing this rule as proposed. Consistent 
with the statutory goals of efficiency, fairness and timeliness, we 
believe a response in 30 days is an adequate amount of time. However, 
HHS recognizes that there may be instances that require time beyond the 
stated deadlines, such as availability of key personnel. Depending on 
the circumstances presented, the 340B ADR Panel may exercise its 
discretion in granting additional time if warranted.
    In addition, if a non-responsive party fails to respond before the 
deadline, the 340B ADR Panel will render its decision based on the 
information available to it during the adjudication process. If a party 
chooses not to respond, the 340B ADR Panel will move forward with its 
decision and there is a possibility that the decision may not be in 
favor of the non-responsive party.
Section 10.22 Covered Entity Information and Document Requests
    Under the proposed rule and in accordance with section 
340B(d)(3)(B)(iii) of the PHS Act, covered entities may discover or 
obtain information and documents from manufacturers and third parties 
relevant to a claim that the covered entity has been overcharged by a 
manufacturer. The NPRM proposed that the covered entity submit a 
written request within 20 business days of the receipt from OPA that 
the claim was forwarded to the 340B ADR Panel for review. The NPRM 
proposed that such covered entity document requests be facilitated by 
the 340B ADR Panel, including a review of the information/document 
request and notifying the covered entity if the request is not 
reasonable, not relevant or beyond the scope of the claim, and would 
permit the covered entity to resubmit a revised request if necessary.
    The manufacturer (and any affiliated third-party agents of the 
manufacturer--wholesalers or other third parties) must respond to the 
request within 20 business days of receiving the request. The 
manufacturer must fully respond, in writing, to an information/document 
request from the 340B ADR Panel by the response deadline. An extension 
will be granted by notifying the 340B ADR Panel in writing within 15 
business days of receipt of the request. The NPRM proposed that if a 
manufacturer fails to fully respond to an information request, the 340B 
ADR Panel shall draw an adverse inference and proceed with the facts 
that the 340B ADR Panel has determined have been established in the 
proceeding.
    Many commenters recommended changes to the proposed provision 
allowing parties to request and receive information during the 340B ADR 
process, including allowing a manufacturer to submit an information 
request--which was not contemplated by the statute. HHS carefully 
reviewed the comments received, which are summarized below, and is 
finalizing this provision as proposed.
    Comment: Commenters argued HHS should establish a process for 
manufacturers to directly request additional information from covered 
entities during an ADR proceeding. These commenters requested that HHS 
extend the timeframe for manufacturers to respond to additional 
information and document requests from 20 business days to 60 calendar 
days (with the possibility of reasonable extensions).
    Response: Section 340B(d)(3)(B)(iii) of the PHS Act requires a 
process whereby 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 a manufacturer. The statute 
does not have a similar provision for manufacturers and manufacturers 
have the ability to gather needed information through the audits they 
are required to conduct prior to filing ADR claims. As such, the 
provision will be finalized as proposed.
    In addition, HHS believes a response from manufacturers for 
additional information and document requests in 20 business days is an 
adequate amount of time. Any such additional time will unduly delay the 
340B ADR process and run counter to the goals of fairness, efficiency, 
and timeliness. This final rule also contains a provision through which 
manufacturers may request an extension of this deadline.
Section 10.23 340B ADR Panel Decision Process
    Aligned with section 340B(d)(3)(B)(ii) of the PHS Act, HHS has 
sought to ensure that the 340B ADR decision process would ensure that 
its review and decision of the claim is conducted in a fair, efficient, 
and expeditious manner. HHS proposed that the 340B ADR Panel would 
conduct an initial review of the claim to determine if the specific 
issue that would be brought forth in a claim is the same as or similar 
to an issue that is pending in Federal court. If this determination is 
made, the 340B ADR Panel would suspend review of the claim until such 
time as the issue is no longer pending in Federal court. If no such 
issue exists, the proposed rule explained that the 340B ADR Panel would 
review the documents submitted by the parties and determine if there is 
adequate support to conclude that an overcharge, diversion, or a 
duplicate discount has occurred in the specific case at issue. As 
discussed in more detail below and after consideration of the comments 
received on this proposal, HHS is removing this proposed provision from 
this final rule to allow claims on issues pending in Federal court to 
proceed through the 340B ADR process.
    In addition, the NPRM proposed that the 340B ADR Panel would 
prepare a decision that would represent the determination of a majority 
of the 340B ADR Panel members' findings and include an explanation 
regarding each finding. Once the letter has been transmitted to the OPA 
Director and the parties involved, either party may request that the 
HRSA Administrator reconsider the 340B ADR Panel decision or the HRSA 
Administrator may decide to initiate a reconsideration without such a 
request as outlined in Sec.  10.24. Under the NPRM, after 20 business 
days of the issuance of the 340B ADR Panel decision, there is no 
request for reconsideration from either party and the HRSA 
Administrator has not initiated a reconsideration, the 340B ADR Panel's 
decision letter will serve as the final agency decision and will be 
binding upon the parties involved in the dispute, unless invalidated by 
an order of a Federal court. The NPRM proposed that the OPA Director 
would then determine any necessary corrective action or consider 
whether to take enforcement action, and the form of that action, based 
on the final agency decision. Based on comments received and as 
discussed in detail below, HHS is modifying this proposal in this final 
rule by including a timeframe by which the 340B ADR Panel decisions 
will be issued to ensure that 340B ADR claims are resolved in a timely 
manner. Finally, HHS will address the OPA Director's role in making 
determinations for corrective action in future guidance and other 
clarifications as discussed below.
    Comment: The NPRM proposed that if the ADR Panel determines that a 
specific issue in a claim is the same as,

[[Page 28653]]

or similar to an issue pending in Federal court, the ADR Panel would 
suspend review of the claim until such time the issue is no longer 
pending in Federal court. The NPRM expressly solicited comments from 
stakeholders on this issue and HHS received significant comments. Some 
commenters favor suspending claims until they are resolved in Federal 
court as it would limit the risk of using limited ADR resources on 
complex legal questions that would also be considered by the courts. 
Without a suspension of claims, they argue there could be a risk that 
the ADR Panel decision would be superseded by a Federal court ruling.
    In contrast, other commenters strongly oppose the proposal and 
argue why the provision should not be finalized. In general, the 
commenters raised the following arguments:
     Commenters opposing the policy expressed that an issue 
relevant to an ADR proceeding may be pending in several district courts 
and the court decisions may diverge and not achieve a final consistent 
resolution on the issue. They stated it is unclear how an ADR Panel 
would decide after the rulings and whether the ruling would be based on 
the outcome of the Federal court decision, and if so, which court 
decision would control in the case of conflicts.
     Commenters also argued that Congress created the 340B ADR 
process since covered entities have limited options for bringing legal 
claims against manufacturers. They asserted that suspending claims is a 
divergence from the statute, as the statute vests the ADR Panel with 
authority to issue final agency decisions that are binding on the 
parties involved through adjudication of 340B disputes. They argued 
that the provision violates the 340B statute and the Administrative 
Procedure Act (APA) as it prevents the 340B ADR Panel from resolving a 
claim for an indefinite period of time based solely on the 
determination that a Federal lawsuit is addressing an issue that is the 
same or similar to the one included in an ADR claim.
     Commenters also expressed that the NPRM did not include 
rules that would govern the 340B ADR Panel's determination that it 
would not review a claim nor is there any mechanism for a covered 
entity or manufacturer to contest a 340B ADR Panel's determination to 
suspend review.
     Commenters cited the 2011 U.S. Supreme Court ruling in 
Astra (Astra USA, Inc. v. Santa Clara County, 563 U.S. 110 (2011)) that 
determined that covered entities do not have a cause of action to sue 
manufacturers for 340B violations, but noted that covered entities do 
have the option of pursuing recourse through the 340B ADR process.
     Finally, commenters opposing the policy explain that the 
suspension of the 340B ADR Panel review may lead a 340B ADR Panel to 
defer to a Federal court's decision on a 340B compliance issue, thereby 
abrogating the 340B ADR Panel's duty to interpret 340B statutory 
requirements. These commenters stated that this is contradictory to the 
role of the 340B ADR Panel envisioned by the NPRM, which is to 
independently review and apply 340B law and policy to the case-specific 
factual circumstances at issue.
    Response: After review of the comments received, HHS is removing 
the provision at Sec.  10.23 in the NPRM that would suspend review of 
ADR claims if the issue is the same as or similar to an issue that is 
pending in Federal court. By allowing claims that are the same as or 
similar to those pending in Federal court to move through the 340B ADR 
process, HHS is proceeding consistent with the Astra decision and 
meeting its statutory mandate to establish and implement a 340B ADR 
process including the establishment of such deadlines and procedures to 
ensure that claims involving certain 340B disputes are resolved fairly, 
efficiently, and expeditiously. Therefore, this final rule will remove 
the proposed Sec.  10.23(a) and revise Sec.  10.23(b) to allow for a 
claim to proceed through the 340B ADR process, regardless of whether it 
is the same as or similar to one that is pending in Federal court.
    Comment: Many commenters argued that HHS should impose a timeframe 
for ADR Panel decisions to ensure that 340B ADR claims are resolved in 
a timely manner. Some suggested 45, 90, 120, or 180 days. Some 
explained that 120 days is longer than the 90-day timeframe that 
Medicare administrative law judges are subject to for Medicare claims 
appeals and would be a sufficient amount of time. Commenters assert 
that HHS should clarify that if an ADR panel has not issued a decision 
within 120 days, a claimant should be able to bypass the 340B ADR 
process and proceed to Federal court. Most commenters agreed that the 
decision should be rendered no later than within one year.
    Response: Based on the comments received, HHS is clarifying that 
the expectation is that the 340B ADR Panel will make a decision on a 
claim within one year of receiving the claim for review. However, HHS 
recognizes that this general timeframe may not be suitable in every 
situation, as there may be complexities that warrant additional time 
beyond the one year timeframe. Additional time may be necessary, for 
example, if a claim is submitted and the 340B ADR Panel requires 
additional material, must determine whether there are overlapping 
claims, must determine whether a covered entity consented to an 
organizational claim, or seeks to consult with, as appropriate or 
necessary, other staff within OPA, other HHS offices, other Federal 
agencies, or with outside parties. Depending on the complexity of the 
issue, this timeframe may exceed the one year timeframe set forth in 
this final rule.
    HHS does not believe it possible to list out every possible 
exception in this final rule as there may be situations that are beyond 
the control of the 340B ADR Panel and cannot be anticipated or 
predicted in this final rule; however, these examples serve to 
illustrate circumstances when it may take longer than one year for a 
340B ADR Panel to render a decision. In any event, HHS does not believe 
that many claims that are submitted under this final rule will take 
longer than a year to resolve. As such, HHS is clarifying that the 
expectation is the 340B ADR Panel decisions will be issued within a one 
year time period; however, the 340B ADR Panel will inform the parties, 
no later than 1 year from the date a claim is deemed complete, if the 
forthcoming decision will exceed that one year timeframe and provide an 
explanation as to why the decision on the claim will exceed one year.
    Comment: Many commenters requested there be the option for an in-
person hearing before the 340B ADR Panel, if requested by either party. 
The commenters explain that ADR claims may often involve factual 
questions and the 340B ADR Panel may benefit from the ``adversarial 
input'' of the parties involved.
    Response: The NPRM did not contemplate in-person hearings as part 
of the 340B ADR process, as HHS proposed a process that would be more 
accessible than the 2020 final rule, by making it more expeditious and 
less trial-like for all parties to resolve disputes. HHS believes 
adding in-person hearings to the process could be arduous, could create 
disadvantages to under-resourced parties, and could create unnecessary 
delays. For example, smaller or rural covered entities, including those 
with limited resources, could have significant difficulties complying 
with such a requirement compared to larger and better resourced 
parties.
    Comment: Some commenters appreciated HHS' proposed removal of

[[Page 28654]]

language indicating that 340B ADR Panel decisions are precedential. 
They argued that the 2020 final rule gave the 340B ADR Panel the 
ability to set and change policy on fundamental program issues, such as 
who qualifies as a 340B-eligbile patient--and they argued that such 
language was inconsistent with the 340B statute, which does not support 
making 340B ADR Panel decisions precedential.
    Conversely, other commenters disagreed and believed that ADR 
decisions should be precedential because, otherwise, it would be 
difficult to adequately assess the viability of a claim prior to 
submitting it to the 340B ADR Panel. They explained that by ensuring 
that decisions are precedential, it would impact how well entities are 
able to evaluate whether the 340B ADR process is appropriate for a 
given claim based on the time and resource investment required of the 
parties involved.
    Response: Section 340B(d)(3)(C) of the PHS Act states that the 
administrative resolution of a claim shall constitute final agency 
decision and will be binding on the parties involved, unless 
invalidated by an order of a court of competent jurisdiction. The 340B 
statute does not expressly state that the 340B ADR Panel decision or a 
subsequent reconsideration decision be precedential. As set forth in 
Sec. Sec.  10.21 and 10.23, the 340B ADR Panel will follow the 340B 
statute, regulations, and all policies governing the 340B Program when 
reviewing and evaluating 340B ADR claims and HHS is finalizing as 
proposed.
    Comment: Most commenters urged wider transparency and requested 
that HHS publish 340B ADR Panel decisions on HRSA's website and require 
340B ADR Panel decisions to include the 340B ADR Panel's factual and 
legal conclusions, including the HRSA policy on which the decision is 
based. They reasoned that this would ensure ADR decisions are 
consistent with current 340B policies and that 340B stakeholders are 
able to understand and apply HRSA's rule and compliance expectations.
    Response: HHS values and supports transparency in the outcome of 
any 340B ADR Panel decision. For HRSA audits of covered entities and 
manufactuers, HRSA publishes its audit findings in summary format as 
full audit reports may include proprietary and/or sensitive business 
information (for example, under the statute, 340B ceiling prices 
themselves cannot be publicly disclosed). Consistent with this 
approach, HRSA will publish 340B ADR final agency decisions on a HRSA 
public-facing website within 120 calendar days of issuance.
    Comment: Some commenters suggest that HHS revise this section to 
require the 340B ADR Panel or OPA to inform the parties of their 
reconsideration rights when the 340B ADR Panel's decision is 
communicated to the parties.
    Response: HHS agrees and is finalizing this rule to include a 
provision that would ensure that parties are informed of their 
reconsideration rights at the time the 340B ADR Panel's decision is 
communicated to the parties.
    Comment: HHS received several comments recommending that HHS revise 
this section to require manufacturers or covered entities to repay the 
other party within a specified time-period (e.g., 60 days) of the date 
340B ADR Panel's decision letter or the HRSA Administrator's 
reconsideration decision.
    Response: The NPRM explained that once the parties have been 
notified of the final agency decision and no request for 
reconsideration has been made in accordance with Sec.  10.24, the OPA 
Director will consider whether to take enforcement action to ensure 
corrective action to the extent allowed under the 340B statute. For 
example, based on the final agency decision, the OPA Director may 
require a covered entity to repay an affected manufacturer in a timely 
manner. In addition, in the case of a 340B ADR Panel decision involving 
an overcharge, the OPA Director may require that the manufacturer 
refund or issue a credit to the impacted covered entity. Such an 
enforcement decision may include the time frame and manner of such 
remedies.
Section 10.24 340B ADR Panel Decision Reconsideration Process
    The NPRM proposed a process for either party to initiate a 
reconsideration request within 20 business days of the date of the 340B 
ADR Panel's decision letter. The HRSA Administrator, or their designee, 
may initiate the process without such a request. The NPRM also proposed 
that a reconsideration process may only be granted when a party 
demonstrates that the 340B ADR Panel decision may have been inaccurate 
or flawed. As proposed, the reconsideration process would involve the 
HRSA Administrator, or designee, reviewing the record and the 340B ADR 
Panel's decision, and either issuing a revised decision to be effective 
20 business days from issuance or declining to issue a revised 
decision. Finally, the NPRM proposed that the reconsideration decision 
or the 340B ADR Panel decision (in the event of a declination) will 
serve as the final agency decision and will be binding upon the parties 
involved in the dispute, unless invalidated by an order of a Federal 
court. The proposed rule indicates that the OPA Director will determine 
any necessary corrective action, or consider whether to take 
enforcement action, and the form of any such action, based on the final 
agency decision. There were several comments received on the 
reconsideration process, and HHS is finalizing this provision with some 
clarifications as discussed below.
    Comment: The majority of comments received support a 
reconsideration process by the HRSA Administrator. Some suggest that 
HHS clarify the timeline for a reconsideration decision.
    Response: HHS appreciates the comments received in support of a 
reconsideration process conducted by the HRSA Administrator. Regarding 
a timeline for the HRSA Administrator's reconsideration and after 
review of the comments, the HRSA Administrator will make efforts to 
issue a reconsideration decision within 180 calendar days from the 
initiation of the reconsideration process. HHS is finalizing, as 
proposed, that if a reconsideration decision is rendered, the 
reconsideration decision, unless altered or reversed (after review) by 
the Secretary, will serve as the final agency decision and will be 
binding on the parties involved in the dispute, unless invalidated by 
an order of a Federal court.
    Comment: Some commenters recommend that HHS lengthen the amount of 
time for parties to request a reconsideration. The NPRM contemplates 
that a request for reconsideration must be made within 20 business days 
of the date of the 340B ADR Panel's decision letter. Commenters urged 
HHS to revise this timeline to either 30 or 60 business days to allow 
for more time to (1) determine that they believe the reconsideration is 
necessary and (2) file the request in a timely manner.
    Response: HHS agrees with the commenters and is finalizing Sec.  
10.24(b) to lengthen the time that a request for reconsideration can be 
made from the proposed 20 business days to 30 business days. This will 
allow a requestor additional time to obtain consent in the case of a 
joint or consolidated claim for a reconsideration request as indicated 
in Sec.  10.24(b)(3). In the event that no request for reconsideration 
is received by either party after the 30-day period, the 340B ADR Panel 
decision or any such alteration or reversal by the Secretary (after 
review) will serve as the final

[[Page 28655]]

agency decision and will be binding on the parties involved in the 
dispute, unless invalidated by an order of a Federal court.
    Comment: Some commenters request that HHS clarify that new facts or 
information may not be submitted as part of the reconsideration 
process. They argue that new legal or policy arguments may be warranted 
in light of the 340B ADR Panel's decision and should not be prohibited.
    Response: HHS has clarified in Sec.  10.24 to state that no new 
``facts,'' information, or legal or policy arguments may be submitted 
as part of the reconsideration process in order to remain consistent 
with the content reviewed by the 340B ADR Panel in reaching their 
decision.
    Comment: Several commenters request that HHS remove the proposed 
provision at Sec.  10.24(b)(3), which would require that in the case of 
joint or consolidated claims, the requestor for reconsideration submit 
documentation showing consent to the reconsideration process, including 
signatures of the individuals representing each covered entity or 
manufacturer. They state that it is unclear why consent should be 
required for a reconsideration request when the covered entity or 
manufacturer previously consented to joint/consolidated representation 
as part of the 340B ADR process as outlined in Sec.  10.21(c).
    Response: After consideration of the comments, HHS will permit 
associations or organizations filing a claim on behalf of its members 
to submit an attestation that they have confirmed that all covered 
entities have agreed to be part of the reconsideration process. Also, 
as discussed above, HHS is modifying the proposal to lengthen the time 
for a party to initiate a reconsideration request from 20 business days 
to 30 business days.
    Comment: A few commenters recommended that HHS clarify the HRSA 
Administrator's standard of review used when analyzing the 340B ADR 
Panel's decision and further clarify that the 340B ADR Panel's decision 
is held in abeyance until the HRSA Administrator issues a decision on 
reconsideration.
    Response: The standard that the HRSA Administrator will use in 
reviewing any reconsideration request will be the same for each 
request. The HRSA Administrator will review the record, including the 
340B ADR Panel decision, and determine whether there was an error in 
the 340B ADR Panel's decision, including any deviation from policy, 
guidance or statute. HHS has made this clear in this final rule. HHS 
will also clarify in Sec.  10.24 that in the event of a reconsideration 
request, the 340B ADR Panel's decision is held in abeyance until the 
HRSA Administrator modifies or sustains the 340B ADR Panel's decision. 
Any such reconsideration decision letter will be effective 30 business 
days from issuance and serve as the final agency decision unless within 
30 business days of issuance, the Secretary makes a determination that 
the Secretary will review the decision. The final agency decision will 
be binding upon the parties involved in the dispute unless invalidated 
by an order of a Federal court.
Section 10.25 Severability
    In this final rule, we adopt modifications to 42 CFR part 10 that 
support a unified scheme for review of 340B ADR claims. While the unity 
and comprehensiveness of this scheme maximizes its utility, we clarify 
that its constituent elements operate independently of each other. Were 
a provision of this regulation stayed or invalidated by a reviewing 
court, the provisions that remain in effect would continue to provide a 
process for review of 340B claims. For example, this final rule 
contains a number of requirements to be fulfilled prior to review by 
the 340 ADR Panel, such as providing evidence of good faith efforts and 
evidence that each covered entity consents to the combining of the 
claims for a joint claim. To the extent that these provisions were no 
longer in effect, the remainder of the final rule could still function 
without these provisions.
    To best serve these purposes, we have addressed severability in the 
regulations to make clear that the provisions of 42 CFR part 10 are 
designed to operate independently of each other and to convey the 
Department's intent that the potential invalidity of one provision or 
any of its subparts should not affect the remainder of the provisions.

III. Regulatory Impact Analysis

A. Regulatory Impact Analysis

    HHS has examined the effects of this final 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 18, 2011), Executive 
Order 14094 on Modernizing Regulatory Review (April 6, 2023), the 
Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354), the 
Unfunded Mandates Reform Act of 1995 (UMRA; Pub. L. 104-4), and 
Executive Order 13132 on Federalism (August 4, 1999). HHS did not 
receive any substantive comments on this section of the proposed rule 
and is therefore finalizing this section as proposed.

B. Overall Impact

    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.
    Under E.O. 12866, OMB's Office of Information and Regulatory 
Affairs (OIRA) determines whether a regulatory action is significant 
and, therefore, subject to the requirements of the E.O. and review by 
OMB. See 58 FR 51735 (Oct. 4, 1993). Section 1(b) of E.O. 14094 amended 
sec. 3(f) of E.O. 12866 to define a ``significant regulatory action'' 
as an action that is likely to result in a rule that may: (1) have an 
annual effect on the economy of $200 million or more (adjusted every 3 
years by the Administrator of OIRA for changes in gross domestic 
product) or adversely affect in a material way the economy, a sector of 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, territorial, or Tribal governments 
or communities; (2) create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency; (3) 
materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs, or the rights and obligations of recipients 
thereof; or (4) raise legal or policy issues for which centralized 
review would meaningfully further the President's priorities or the 
principles set forth in the E.O. See 88 FR 21879 (Apr. 11, 2023). OIRA 
has determined that this final rule is a significant regulatory action, 
although not a significant regulatory action under sec. 3(f)(1) of E.O. 
12866. Accordingly, OMB has reviewed this final rule.
    This final rule would modify the framework for HHS to resolve 
certain disputed claims regarding manufacturers overcharging covered 
entities and disputed claims of diversion and duplicate discounts by 
covered entities audited by

[[Page 28656]]

manufacturers under the 340B Program. HHS does not anticipate the 
modification of the 340B ADR process to result in significant economic 
impact. Because this rule only updates an existing process, there is no 
additional economic impact. In addition, the parties involved already 
have the information that will reported through the 340B ADR process; 
therefore, we do not anticipate any additional impact. This is also 
consistent with a similar determination in the 2020 final rule that 
``HHS does not anticipate the introduction of an ADR process to result 
in significant economic impacts.'' Pursuant to Subtitle E of the Small 
Business Regulatory Enforcement Fairness Act of 1996, also known as the 
Congressional Review Act (5 U.S.C. 801 et seq.), OIRA has determined 
that this rule does not meet the criteria set forth in 5 U.S.C. 804(2).

C. The Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA; 5 U.S.C. 601 et seq.) and the 
Small Business Regulatory Enforcement and Fairness Act of 1996 
(SBREFA), which amended the RFA, requires 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 this rule on small 
entities and analyze regulatory options that could lessen the impact of 
this rule. HHS will use a RFA threshold of at least a 3 percent impact 
on at least 5 percent of small entities.
    This final rule's requirements 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 700 
drug manufacturers participate in the 340B Program. While it is 
possible to estimate the impact of this final rule on the industry as a 
whole, the data necessary to project the impact of changes on 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. This 
final 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 $8 
million to $41.5 million. As of April 1, 2023, 14,134 covered entities 
participate in the 340B Program.
    This final rule would modify the ADR mechanism for reviewing claims 
by manufacturers that covered entities have violated certain statutory 
obligations and claims by covered entities alleging overcharges for 
340B covered outpatient drugs by manufacturers. This 340B ADR process 
would require submission of 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 readily 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.
    By design of this final rule, the 340B ADR process will resolve 
claims in a fair, efficient, and expeditious manner in accordance with 
section 340B(d)(3)(B)(ii) of the PHS Act. This final rule provides an 
option to join or 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 would 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, HHS is not 
preparing an analysis of impact for the purposes of the RFA. HHS 
estimates that the economic impact on the less than 5 percent of small 
entities and small manufacturers participating in the 340B Program 
would be minimal and less than a 3 percent economic burden and 
therefore does not meet the RFA threshold of 3 percent.

D. Unfunded Mandates Reform Act of 1995

    Section 202(a) of the Unfunded Mandates Reform Act of 1995 UMRA 
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 2023, that threshold is 
approximately $177 million. HHS does not expect this rule to exceed the 
threshold.

E. Executive Order 13132--Federalism

    HHS has reviewed this final rule in accordance with Executive Order 
13132 regarding federalism and has determined that it does not have 
federalism implications. This final 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 final 
rule would also 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.

F. Collection of Information

    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 final rule would 
not impact the current reporting and recordkeeping burden for 
manufacturers or covered entities under the 340B Program. Because the 
340B ADR process provides the mechanism and procedures for an 
administrative action or investigation involving an agency against 
specific individuals or entities, pursuant to 44 U.S.C. 3518(c), the 
340B ADR process is exempt from Paperwork Reduction Act requirements. 
In addition, participants in the 340B Program are already required to 
maintain the necessary records to submit an ADR claim.

List of Subjects in 42 CFR Part 10

    Biologics, Business and industry, Diseases, Drugs, Health, Health 
care, Health facilities, Hospitals, 340B Drug Pricing Program.

    Dated: April 12, 2024.
Xavier Becerra,
Secretary, Department of Health and Human Services.

    For the reasons set forth in the preamble, the Department of Health 
and Human Services amends 42 CFR part 10 as follows:

PART 10--340B DRUG PRICING PROGRAM

0
1. The authority citation for part 10 continues to read as follows:


[[Page 28657]]


    Authority: Sec. 340B of the Public Health Service Act (42 U.S.C. 
256b) (PHSA), as amended.

0
2. Amend Sec.  10.3 by:
0
a. Removing the definition for Administrative Dispute Resolution (ADR) 
Process and dding the definition 340B Administrative Dispute Resolution 
(ADR) process in its place;
0
b. Revising the definitions for Administrative Dispute Resolution Panel 
(340B ADR Panel), Claim, Consolidated claim, and Joint claim; and
0
c. Adding in alphabetical order the definition for Office of Pharmacy 
Affairs (OPA).
    The revisions and additions read as follows:


Sec.  10.3  Definitions.

* * * * *
    340B Administrative Dispute Resolution (ADR) process means a 
process used to resolve the following types of claims, including any 
issues that assist the 340B ADR Panel in resolving such claims:
    (1) Claims by covered entities that may have been overcharged for 
covered outpatient drugs purchased from manufacturers; and
    (2) Claims by manufacturers of 340B drugs, after a manufacturer has 
conducted an audit of a covered entity (pursuant to section 
340B(a)(5)(C) of the Public Health Service Act (PHS Act)), 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 Health Resources and Services 
Administration's Office of Pharmacy Affairs that reviews and makes 
decisions for claims filed through the 340B ADR process.
* * * * *
    Claim means a written allegation filed by or on behalf of a covered 
entity or by a manufacturer for resolution under the 340B ADR process.
* * * * *
    Consolidated claim means a claim resulting from combining multiple 
manufacturers' claims against the same covered entity.
* * * * *
    Joint claim means a claim resulting from combining multiple covered 
entities' claims (or claims from their membership organizations or 
associations) against the same manufacturer for the same drug or drugs.
* * * * *
    Office of Pharmacy Affairs (OPA) means the office, or any successor 
office assigned to administer the 340B Program, within the Health 
Resources and Services Administration, or any successor agency, that 
oversees the 340B Program.
* * * * *

0
3. Revise subpart C to read as follows:
Subpart C--Administrative Dispute Resolution
Sec.
10.20 340B Administrative Dispute Resolution Panel.
10.21 Claims.
10.22 Covered entity information and document requests.
10.23 340B ADR Panel decision process.
10.24 340B ADR Panel decision reconsideration process.
10.25 Severability.

Subpart C--Administrative Dispute Resolution


Sec.  10.20  340B Administrative Dispute Resolution Panel.

    The Secretary shall appoint a roster of eligible individuals 
(Roster) consisting of staff within OPA, to serve on a 340B ADR Panel, 
as defined in Sec.  10.3. The OPA Director, or the OPA Director's 
designee, shall select at least three members from the Roster to form a 
340B ADR Panel to review and make decisions regarding one or more 
claims filed by covered entities or manufacturers.
    (a) Members of the 340B ADR Panel. (1) The OPA Director shall:
    (i) Select at least three members for each 340B ADR Panel from the 
Roster of appointed staff;
    (ii) Have the authority to remove an individual from the 340B ADR 
Panel and replace such individual; and
    (iii) Select replacement 340B ADR Panel members should an 
individual resign from the panel or otherwise be unable to complete 
their duties.
    (2) No member of the 340B ADR Panel may have a conflict of 
interest, as set forth in paragraph (b) of this section.
    (b) Conflicts of interest. (1) All members appointed by the 
Secretary to the Roster of individuals eligible to be selected for a 
340B ADR Panel will be screened for conflicts of interest prior to 
reviewing a claim. In determining whether a conflict exists, the OPA 
Director, in consultation with government ethics officials, will 
consider financial interest(s), current or former business or 
employment relationship(s), or other involvement of a prospective panel 
member or close family member who is either employed by or otherwise 
has a business relationship with an involved party, subsidiary of an 
involved party, or particular claim(s) expected to be presented to the 
prospective panel member.
    (2) All members of the 340B ADR Panel will undergo an additional 
screening prior to reviewing a specific claim to ensure that the 340B 
ADR Panel member was not directly involved in a decision concerning the 
specific issue of the ADR claim as it relates to the specific covered 
entity or manufacturer involved, including previous 340B ADR Panel 
decisions.
    (c) Secretarial authority in the 340B ADR process. The Secretary 
may remove any individual from the Roster of 340B ADR Panelists for any 
reason, including from any 340B ADR Panel to which the individual has 
already been assigned. The Secretary has the authority to review and 
reverse, alter, or uphold any 340B ADR Panel or reconsideration 
decision as outlined in Sec. Sec.  10.23 and 10.24. Any such decision 
of the Secretary will serve as the final agency decision and will be 
binding upon the parties involved in the dispute, unless invalidated by 
an order of a Federal court.
    (d) Duties of the 340B ADR Panel. The 340B ADR Panel will:
    (1) Review and evaluate claims, including consolidated and joint 
claims, and documents and information submitted by (or on behalf of) 
covered entities and manufacturers;
    (2) Review and may request additional documentation, information, 
or clarification of an issue from any or all parties to make a decision 
(if the 340B ADR Panel finds that a party has failed to respond or 
fully respond to an information request, the 340B ADR Panel may proceed 
with facts that the 340B ADR Panel determines have been established in 
the proceeding);
    (3) Evaluate claims based on information received, unless, at the 
340B ADR Panel's discretion, the nature of the claim necessitates that 
a meeting with the parties be held;
    (4) At its discretion, consult with others, including staff within 
OPA, other HHS offices, and other Federal agencies while reviewing a 
claim; and
    (5) Make decisions on each claim.


Sec.  10.21  Claims.

    (a) Claims permitted. All claims must be specific to the parties 
identified in the claims and are limited to the following:
    (1) Claims by a covered entity that it has been overcharged by a 
manufacturer for a covered outpatient drug, including claims that a 
manufacturer has limited the covered entity's ability to purchase 
covered outpatient drugs at or below the 340B ceiling price; and

[[Page 28658]]

    (2) Claims by a manufacturer, after it has conducted an audit of a 
covered entity pursuant to section 340B(a)(5)(C) of the PHS Act, that 
the covered entity has violated section 340B(a)(5)(A) of the PHS Act, 
regarding the prohibition of duplicate discounts, or section 
340B(a)(5)(B) of the PHS Act, 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) Absent extenuating 
circumstances, a covered entity or manufacturer must file a claim under 
this section in writing to OPA 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 date of the final agency 
decision.
    (2) A covered entity filing a claim described in paragraph (a)(1) 
of this section must provide the basis, including all available 
supporting documentation, for its belief that it has been overcharged 
by a manufacturer, in addition to any other documentation as may be 
requested by OPA. A covered entity claim against multiple manufacturers 
is not permitted.
    (3) A manufacturer filing a claim under paragraph (a)(2) of this 
section must provide documents sufficient to support its claim that a 
covered entity has violated the prohibition on diversion and/or 
duplicate discounts, in addition to any other documentation as may be 
requested by OPA.
    (4) A covered entity or manufacturer filing a claim must provide 
documentation of good faith efforts, including for example, 
documentation demonstrating that the initiating party has made attempts 
to contact the opposing party regarding the specific issues cited in 
the ADR claim.
    (c) Combining 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 consents to the jointly filed claim and 
meets the filing requirements.
    (i) For covered entity joint claims, the claim must list each 
covered entity, its 340B ID and include documentation as described in 
paragraph (b) of this section, which demonstrates that each covered 
entity meets all of the requirements for filing the ADR claim.
    (ii) For covered entity joint claims, a letter requesting the 
combining of claims must accompany the claim at the time of filing and 
must document that each covered entity consents to the combining of the 
claims, including signatures of individuals representing each covered 
entity and a point of contact for each covered entity.
    (2) An association or organization may file on behalf of one or 
more covered entities representing their interests if:
    (i) Each covered entity is a member of the association or the 
organization representing it and each covered entity meets the 
requirements for filing a claim;
    (ii) The joint claim filed by the association or organization must 
assert overcharging by a single manufacturer for the same drug(s); and
    (iii) The claim includes a letter from the association or 
organization attesting that each covered entity agrees to the 
organization or association asserting a claim on its behalf, including 
a point of contact for each covered entity.
    (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 consolidated claim, meets the 
requirements for filing a claim, and the 340B ADR Panel determines that 
such consolidation is appropriate and consistent with the goals of 
fairness and economy of resources. Consolidated claims filed on behalf 
of manufacturers by associations or organizations representing their 
interests are not permitted.
    (d) Deadlines and procedures for filing a claim. (1) Covered 
entities and manufacturers must file claims in writing with OPA, in the 
manner set forth by OPA.
    (2) OPA will conduct an initial review of all information submitted 
by the party filing the claim and will make a determination as to 
whether the requirements in paragraph (b) of this section are met. The 
OPA staff conducting the initial review of a claim may not be appointed 
to serve on the 340B ADR Panel reviewing that specific claim.
    (3) Additional information to substantiate a claim may be submitted 
by the initiating party and may be requested by OPA. If additional 
information is requested, the initiating party will have 20 business 
days from the receipt of OPA's request to respond. If the initiating 
party does not respond to a request for additional information within 
the specified time frame or request and receive an extension, the claim 
will not move forward to the 340B ADR Panel for review.
    (4) OPA will provide written notification to the initiating party 
that the claim is complete. Once the claim is complete, OPA will also 
provide written notification to the opposing party that the claim was 
submitted. This written notification will provide a copy of the 
initiating party's claim, and additional instructions regarding the 
340B ADR process, including timelines and information on how to submit 
their response in accordance with the procedures for responding to a 
claim as outlined in paragraph (e) of this section.
    (5) If OPA finds that the claim meets the requirements described in 
paragraph (b) of this section, and once OPA receives the opposing 
party's response in accordance with the procedures outlined in 
paragraph (e) of this section, additional written notification will be 
sent to both parties advising that the claim will be forwarded to the 
340B ADR Panel for review.
    (6) If OPA finds that the claim does not meet the requirements 
described in paragraph (b) of this section, written notification will 
be sent to both parties stating the reasons that the claim did not move 
forward.
    (7) For any claim that does not move forward for review by the 340B 
ADR Panel, the claim may be revised and refiled if there is new 
information to support the alleged statutory violation and the claim 
meets the criteria set forth in this section.
    (e) Responding to a submitted claim. (1) Upon receipt of 
notification by OPA that a claim is deemed complete and has met the 
requirements in paragraph (b) of this section, the opposing party in 
alleged violation will have 30 business days to submit a written 
response to OPA.
    (2) A party may submit a request for an extension of the initial 30 
business days response period and OPA will make a determination to 
approve or disapprove such request and notify both parties.
    (3) OPA will provide a copy of the opposing party's response to the 
initiating party and will notify both parties that the claim has moved 
forward for review by the 340B ADR Panel.
    (4) If an opposing party does not respond or elects not to 
participate in the 340B ADR process, OPA will notify both parties that 
the claim has moved forward for review by the 340B ADR Panel and the 
340B ADR Panel will render its decision after review of the information 
submitted in the claim.


Sec.  10.22  Covered entity information and document requests.

    (a) To request information necessary to support its claim from an 
opposing party, a covered entity must submit a written request for 
additional

[[Page 28659]]

information or documents to the 340B ADR Panel within 20 business days 
of the receipt from OPA that the claim was forwarded to the 340B ADR 
Panel for review. The 340B ADR Panel will review the information/
document request and notify the covered entity if the request is not 
reasonable, not relevant or beyond the scope of the claim, and will 
permit the covered entity to resubmit a revised request if necessary.
    (b) The 340B ADR Panel will transmit the covered entity's 
information/document request to the manufacturer who must respond to 
the request within 20 business days of receipt of the request.
    (c) The manufacturer must fully respond, in writing, to an 
information/document request from the 340B ADR Panel by the response 
deadline.
    (1) A manufacturer is responsible for obtaining relevant 
information or documents 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/document 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 specific deadline is not feasible and must outline the proposed 
timeline for fully responding to the information/document 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.
    (5) If the 340B ADR Panel finds that a manufacturer has failed to 
fully respond to an information/document request, the 340B ADR Panel 
will proceed with the facts that the 340B ADR Panel has determined have 
been established in the proceeding.
    (6) If a manufacturer believes an information request to a covered 
entity is necessary for the 340B ADR Panel's review, it may make a 
request to the 340B ADR Panel to make the request to the covered 
entity.


Sec.  10.23  340B ADR Panel decision process.

    (a) The 340B ADR Panel will conduct a review of the claims. The 
340B ADR Panel will review all documents gathered during the 340B ADR 
process to determine if a violation as described in Sec.  10.21(a)(1) 
or (2) has occurred.
    (b) The 340B ADR Panel will prepare a decision letter based on its 
review. The 340B ADR Panel's decision letter will be completed within 
one year of receiving a complete claim for review, except to the extent 
that there are situations beyond the control of the 340B ADR Panel that 
may affect the ability to issue a decision on a claim within one year. 
If the issuance of a 340B ADR Panel decision will exceed one year, the 
340B ADR Panel must provide notice to the parties involved. The 340B 
ADR Panel decision letter will represent the determination of a 
majority of the 340B ADR Panel members' findings regarding the claim 
and include an explanation regarding each finding. The 340B ADR Panel 
will transmit its decision letter to all parties and to the OPA 
Director.
    (c) The 340B ADR Panel decision letter will inform the parties 
involved of their rights for reconsideration as described in Sec.  
10.24. Either party may request reconsideration of the 340B ADR Panel 
decision or the Health Resources and Service Administration (HRSA) 
Administrator may decide to initiate a reconsideration without such a 
request. The final agency decision will be binding upon the parties 
involved in the dispute unless invalidated by an order of a Federal 
court. The 340B ADR Panel's decision letter will be effective 30 
business days from issuance and serve as the final agency decision 
unless:
    (1) Within 30 business days of issuance, reconsideration occurs 
under Sec.  10.24; or
    (2) Within 30 business days of issuance, the Secretary makes a 
determination that the Secretary will review the decision.
    (d) The OPA Director will determine any necessary corrective action 
or consider whether to take enforcement action, and the form of any 
such action, based on the final agency decision.


Sec.  10.24  340B ADR Panel decision reconsideration process.

    (a) Either party may initiate a reconsideration request, or the 
HRSA Administrator may decide to initiate the process without such a 
request. In the event of a reconsideration request, the 340B ADR 
Panel's decision is held in abeyance until such time the HRSA 
Administrator makes a reconsideration decision of the 340B ADR Panel 
decision (or in the event of a declination). A reconsideration decision 
will affirm or supersede a 340B ADR Panel decision.
    (b) The request for a reconsideration of the 340B ADR Panel's 
decision must be made to the HRSA Administrator within 30 business days 
of the date of the 340B ADR Panel's decision letter.
    (1) The request for reconsideration must include a copy of the 340B 
ADR Panel decision letter, and documentation indicating why a 
reconsideration is warranted.
    (2) New facts, information, legal arguments, or policy arguments 
may not be submitted as part of the reconsideration process in order to 
remain consistent with the facts that were reviewed by the 340B ADR 
Panel in determining their decision.
    (3) In the case of joint or consolidated claims, the 
reconsideration request must include an attestation confirming that all 
of the entities have agreed to be part of the reconsideration process.
    (c) The standard for review of the reconsideration request by the 
HRSA Administrator, or their designee, will include a review of the 
record, including the 340B ADR Panel decision, and a determination of 
whether there was an error in the 340B ADR Panel's decision. The HRSA 
Administrator, or designee, may consult with other HHS officials, as 
necessary.
    (d) The HRSA Administrator, or their designee, will make a 
determination based on the reconsideration request by either issuing a 
revised decision or declining to issue a revised decision.
    (e) The reconsideration decision letter will be effective 30 
business days from issuance and serve as the final agency decision 
unless within 30 business days of issuance, the Secretary makes a 
determination that the Secretary will review the decision. The final 
agency decision will be binding upon the parties involved in the 
dispute unless invalidated by an order of a Federal court.
    (f) The OPA Director will determine any necessary corrective 
action, or consider whether to take enforcement action, and the form of 
any such action, based on the final agency decision.


Sec.  10.25  Severability.

    If any provision of this subpart is held to be invalid or 
unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further agency action, the provision 
shall be construed so as to continue to give the maximum effect to the 
provision permitted by law, unless such holding shall be one of utter 
invalidity or unenforceability, in which event the provision shall be 
severable from this part and shall not affect the remainder thereof.

[FR Doc. 2024-08262 Filed 4-18-24; 8:45 am]
BILLING CODE 4165-15-P