340B Program: HRSA Proposes to Modify Administrative Dispute Resolution Process

On November 30, 2022, the Health Resources and Services Administration (HRSA) published a proposed rule (Proposed Rule) in the Federal Register that proposes to introduce several changes to the current administrative dispute resolution (ADR) process for the 340B Drug Pricing Program (340B Program). The Proposed Rule comes nearly two years after HRSA finalized the 2020 final rule governing the current ADR process (2020 Final Rule), which is currently the subject of litigation.

As a general matter, and as detailed below, the Proposed Rule would place access to and the results of the ADR process more firmly in the control of the HRSA Office of Pharmacy Affairs (OPA), as compared to the current process. If the Proposed Rule is finalized, any in-process claims submitted pursuant to the 2020 Final Rule will automatically be transferred to the new ADR process. HRSA is accepting comments on the Proposed Rule until January 30, 2023.

Access to the ADR Process

HRSA’s stated goal in revising the ADR process is to improve its accessibility, administrative feasibility, and timeliness. HRSA purports to accomplish this by making the process less trial-like and more like an administrative process. For example, the Proposed Rule moves away from the use of the Federal Rules of Evidence and Civil Procedure under the existing ADR process, which HRSA believes could create unnecessary delays and prevent potential petitioners from accessing ADR. Overall, HRSA seeks to create a process that all entities can access without regard to their ability to retain counsel or engage in a lengthy trial, which is more likely to have been a barrier to covered entities than to manufacturers.

Rules for Filing Claims

  • General Rules. Most of the filing rules from the existing ADR process would remain in place under the Proposed Rule. For instance, the Proposed Rule continues to require covered entities and manufacturers to file their written claim within three years of the alleged violation, and to include supporting documentation that supports the basis for the claim.
  • Good Faith Efforts to Resolve Claim. The Proposed Rule newly requires that the party filing the claim submit a written summary of attempts to work in good faith to resolve the claim with the other party. HRSA seeks comments on what evidence would demonstrate good faith and whether it should establish a threshold for attempts at communication.
  • Limiting Claims. HRSA states in the Proposed Rule that the ADR process “should be reserved for those disputes set forth in the statutory ADR provision (overcharge, diversion, or duplicate discounts),” and seeks comments on whether there may be appropriate limitations to ensure that ADR is limited to the statutorily specified dispute types.  
  • Minimum Threshold. The Proposed Rule seeks to make the process more accessible to small covered entities by eliminating entirely the existing jurisdictional threshold of $25,000. HRSA seeks comment on whether to retain the existing minimum threshold, eliminate the minimum threshold as proposed, or set a new minimum threshold for submitting a claim.
  • Initial Review for Completeness. Unlike the current ADR process, where claims are sent directly to the ADR Panel, the Proposed Rule provides that OPA will initially review submitted claims and request additional information as needed. The OPA staff conducting the initial review of a claim will not be appointed to serve on the ADR Panel reviewing that claim. If OPA determines the claim is not complete, the claim will not move forward to the ADR Panel.

If OPA determines the claim is complete, the opposing party will be notified and will have 30 business days to respond or request an extension. Upon receiving the response, OPA will forward the claim and response to the ADR Panel. If the opposing party fails to timely respond, OPA will still forward the claim to the ADR Panel for review.

ADR Panel Composed Entirely of OPA Staff

The Proposed Rule would change the composition of the ADR Panel by limiting the panel to subject matter experts from OPA. This would alter the current 340B ADR process, which requires the Department of Health and Human Services (HHS) to establish a six-member ADR Board, comprised of equal numbers of individuals from HRSA, the Centers for Medicare & Medicaid Services, and the HHS Office of the General Counsel. The Proposed Rule would instead require the OPA director to choose three individuals, from a “Roster” of 10 pre-selected subject matter experts from OPA, to oversee each ADR claim. Panel members would continue to be screened for conflicts of interest, and the OPA Director and HHS Secretary would have the authority to remove an individual from the panel for reasons including a conflict of interest. HRSA requests comment on the size and composition of the ADR Panel.

Requests for Information

Similar to the existing ADR process, the Proposed Rule would permit a covered entity to request “information and documents from the manufacturers and third parties relevant to a claim that a covered entity has been overcharged by the manufacturer.” No similar right is available to manufacturers. In contrast to the existing ADR process, where a covered entity submits a request for information directly to a manufacturer after the ADR Panel deems the request reasonable, the Proposed Rule provides that information requests will be facilitated by the ADR Panel.

ADR Decision-Making Process

Once OPA forwards a claim to the ADR Panel, the panel will conduct an initial review to determine if the claim is within its jurisdiction and if the issue involved is being litigated in federal court. In the latter case, the panel will suspend review until the matter is no longer pending in court. If the ADR Panel proceeds with reviewing the claim, it will evaluate all documentation associated with the claim and request additional information as necessary. The panel must base its decision on the documents submitted for review, but may also request additional information from or meet with the parties or others.

As in the existing rule, the panel will set the timeline for reviewing a claim based on the complexity of the claim. When review is complete, the ADR Panel must make a decision supported by a majority of its members, and circulate a decision letter to the parties setting forth its findings and an explanation of the decision.

Reconsideration Requests

Under the existing ADR process, the decision of the ADR Panel constitutes a final agency decision, and there is no appeals process or other recourse available except through judicial review. By contrast, the Proposed Rule would introduce a new provision that permits either party to initiate a reconsideration request to the HRSA Administrator within 20 business days of the panel's decision letter. The HRSA Administrator could also initiate a reconsideration if neither parties makes a request.

Once the decision becomes final, the OPA Director “will determine any necessary corrective action, or consider whether to take enforcement action, and the form of any such action.”


As always, it is important that you carefully review this regulation in light of considerations that may be relevant to your organization. Please feel free to contact the Hogan Lovells Government Price Reporting Team if you have any questions or concerns.



Authored by Alice Valder Curran, Ken Choe, Kathleen Peterson, Samantha D. Marshall, Ashley Ifeadike, Katherine Kramer, Mahmud Brifkani, and Rianna Modi.


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