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340B Administrative Dispute Resolution (ADR)

On March 16, 2021, the United States District Court for the Southern District of Indiana issued a preliminary injunction in the case Eli Lilly and Company, et al. v. Norris Cochran, et al., 1:21-cv-00081-SEB-MJD.

Pursuant to the Court's order, HRSA is currently enjoined from enforcing the Administrative Dispute Resolution regulations (published at 85 Fed. Reg. 80,632 and codified at 42 C.F.R. §§ 10.20-24) against the plaintiffs in that lawsuit: Eli Lilly and Company and Lilly USA, LLC.

What is the 340B ADR Process?

In accordance with section 340B(d)(3) of the Public Health Service Act (PHSA), HHS is required to establish and implement a binding ADR process for certain disputes arising under the 340B Program. The ADR final rule (PDF - 309 KB) sets forth the requirements and procedures for the 340B Program’s ADR process. 

The purpose of the ADR process is to resolve (1) claims by covered entities that they have been overcharged for covered outpatient drugs by manufacturers and (2) claims by manufacturers, after a manufacturer has conducted an audit as authorized by section 340B(a)(5)(C) of the PHSA, that a covered entity has violated the prohibition on diversion or duplicate discounts. 

The ADR final rule establishes an ADR Board consisting of members with complex litigation, drug distribution, drug pricing, or 340B Program expertise and who are appointed by the HHS Secretary. From the ADR Board, three members are selected to form an ADR Panel. Each Panel is selected and convened by the HRSA Administrator and will be assisted by one, ex-officio, non-voting HRSA, Office of Pharmacy Affairs (OPA) staff member. The ADR Panel reviews petitions on a case-by-case basis and has the authority to make final agency decisions.

How can Stakeholders Submit a Petition?

HRSA continues to encourage covered entities and manufacturers to attempt to resolve issues in good faith prior to initiating a formal ADR process, which should be used as a method of last resort. Covered entities and manufacturers should carefully evaluate whether the ADR process is appropriate given the investment of the time and resources required of the parties involved. 

Specific steps about the ADR process are outlined in detail below. HRSA also encourages stakeholders to review the ADR final rule for additional information regarding the submission process and timelines.

What are the steps in the ADR Process?

In general, the ADR process will involve the following steps:

  1. A petitioner emails HRSA at 340BADR@hrsa.gov with a request to file a petition through the ADR process.
  2. HRSA responds with specific instructions on accessing a secure email and file transfer system in order to file the petition.
  3. Once the petition, including any supporting documentation, is received, HRSA reviews the petition for completeness and will notify the petitioner of whether the petition will move forward to the ADR Panel for review.
  4. If HRSA deems the petition complete, ADR Panel members are selected from the 340B ADR Board and are convened to begin their review of the petition.
  5. The petitioner (or initiating party) must provide a copy of their petition with any attachments to the General Counsel or other senior official of the opposing party at its principal place of business by certified mail, return receipt requested, within three days of filing the claim.
  6. The opposing party (or respondent) will have an opportunity to respond to the petition.
  7. HRSA will provide both the petitioner and the opposing party access to a secure email and file transfer system upload any relevant documents related to the petition.
  8. The ADR Panel will review the petition, the opposing party’s response, and all supporting documentation or other information from the parties. 
  9. Following its review of all of the evidence, the ADR Panel will make a final agency decision that will be sent to the parties and HRSA. 
  10.  HRSA then will take enforcement actions or apply sanctions as appropriate, including referral to the HHS Office of Inspector General for its consideration of civil monetary penalties, as appropriate.

FAQs

Below are some frequently asked questions (FAQs) related to 340B ADR process. If you have a question related to the 340B ADR process that is not covered by the information on this page or in the FAQs listed below, please submit your question to 340BADR@hrsa.gov

When can parties begin submitting petitions?

Stakeholders can begin submitting petitions once the 340B Administrative Dispute Resolution (ADR) final (85 FR 80632, December 14, 2020) rule becomes effective on January 13, 2021. The information on this webpage provides detailed information on the petition submission process. 

Who is involved in the ADR process?

The ADR Board consists of at least six voting members with equal representation from the Centers for Medicare & Medicaid Services, the Health Resources and Services Administration (HRSA) and the HHS Office of General Counsel. The ADR Board members are appointed by the HHS Secretary and will be HHS employees with complex litigation, drug pricing, drug distribution, and other relevant 340B expertise.

The HRSA Administrator will select and convene 3-member ADR Panels from the ADR Board to review claims and make final agency decisions. Each ADR Panel will be assisted by one, ex-officio, non-voting HRSA Office of Pharmacy Affairs (OPA) staff member, who will also be selected by the HRSA Administrator. All panelists (voting and non-voting) will be screened for conflicts of interest prior to reviewing a claim.

What kinds of petitions are to be submitted for review by the ADR Panel?

In accordance with the 340B ADR final rule (85 FR 80632, December 14, 2020), petitions may be submitted by 1) covered entities that may have been overcharged for covered outpatient drugs purchased from manufacturers and 2) manufacturers of 340B drugs, after the manufacturer has conducted an audit of the covered entity, that the covered entity may have violated the prohibitions against duplicate discounts or diversion. In addition, the petition must be within three years of the date of the alleged violation. Stakeholders should also submit documentation of any prior good faith efforts to resolve the dispute at issue.

In addition, the final rule established a monetary threshold that must be satisfied in order for a claim to move forward for review to the ADR Panel.

What is the monetary threshold for filing an ADR claim?

The petition must seek monetary damages in excess of $25,000 or equitable relief with a likely value in excess of $25,000 during the twelve-month period after the 340B ADR Panel’s final agency decision (see 42 C.F.R. §10.21(b) of the ADR final rule (85 FR 80632, December 14, 2020).

What type of information is needed from stakeholders prior to submitting a petition through the ADR process?

HRSA continues to encourage covered entities and manufacturers to attempt to resolve issues in good faith prior to initiating a formal ADR process, which should be used as a last resort. Covered entities and manufacturers should carefully evaluate whether the ADR process is appropriate given the investment of the time and resources required of the parties involved.

When submitting a petition, stakeholders should include any documentation of prior good faith efforts. This webpage provides detailed information on the petition submission process. Stakeholders can submit petitions to 340BADR@hrsa.gov to begin the 340B ADR process. 

Consistent with the 340B statute, manufacturers must have completed an audit of a covered entity prior to initiating the ADR process and submit the final audit report with their petition, along with the covered entities written response to the audit findings.

How long is the ADR process expected to take?

The timeframe for each case will vary based on the information submitted and the complexity of the matter.

How does an ADR Panel formulate the final agency decision?

The ADR Panel will review the petition, the opposing party’s response, and supporting documentation or other information from the parties. Following its review of all of the evidence, the ADR Panel will make a final agency decision that will be sent to the parties and HRSA. 

After the final decision, HRSA will take enforcement actions or apply sanctions as appropriate, including referral to the HHS Office of Inspector General for its consideration of civil monetary penalties, as appropriate.

Can organizations or associations representing covered entities file an ADR action? 

Yes. Covered entities must be members of the organization or association filing a petition on their behalf. All petitions must allege violations by the same manufacturer and for the same drug(s). Petitions must also include a letter requesting consolidation that is signed by a representative of each covered entity that has agreed to representation by the association or organization on its behalf.

What rules govern the ADR process?

The ADR process will be governed, to the extent applicable, by the Federal Rules of Civil Procedure (PDF - 431 KB) and Federal Rules of Evidence (PDF - 188 KB), unless the parties agree otherwise and the 340B ADR Panel concurs. In addition, the ADR Panel may entertain motions to dismiss pursuant to Rule 12 of the Federal Rules of Civil Procedure, may permit limited discovery by covered entities, as necessary, may entertain motions for summary judgment (see Fed. R. Civ.P. 56), and may hold evidentiary hearings as necessary. 


Can claims be combined for covered entities?

Joint claims are permitted for covered entities if certain criteria are met. Multiple covered entities, or their membership organizations or associations, can file together against one manufacturer for the same drug(s) (a joint claim), but each must submit all documentation required to file a claim (e.g., invoice, 340B ceiling price, attempts to purchase at 340B). A letter requesting combination must also be submitted that is signed by a representative of each covered entity that is included in the joint claim.

Can claims be combined for manufacturers?

Multiple manufacturers can file together against a single covered entity (a consolidated claim), but each must submit all documentation required to file a claim. A letter requesting consolidation must also be submitted that is signed by a representative of each manufacturer that is included in the consolidated claim.

Claims by associations or organization representing manufacturers are not permitted.

Date Last Reviewed:  January 2021