Federal Register / Vol. 75, No. 181 / Monday, September 20, 2010 / Proposed Rules 57233 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

42 CFR Chapter I 

340B Drug Pricing Program 

Administrative Dispute Resolution 

Process 

AGENCY: Health Resources and Services 

Administration, HHS. 

ACTION: Advance notice of proposed 

rulemaking and request for comments. 

SUMMARY: Section 602 of Public Law 

102–585, the ‘‘Veterans Health Care Act 

of 1992’’ enacted Section 340B of the 

Public Health Service Act (PHSA). 

Section 340B implements a drug pricing 

program by which manufacturers who 

sell covered outpatient drugs to 

particular covered entities listed in the 

statute must agree to charge a price that 

will not exceed the amount determined 

under a statutory formula. Section 7102 

of the Patient Protection and Affordable 

Care Act (Affordable Care Act) (Pub. L. 

111–148) requires the Secretary of 

Health and Human Services (HHS) to 

promulgate regulations to establish and 

implement an administrative dispute 

resolution process for the 340B Drug 

Pricing Program (340B Program). (PHSA 

Section 340B(a)(5)(D) advises the 

Secretary on the sanctions available 

should a covered entity be found to be 

in violation of (a)(5)(A) or (a)(5)(B). The 

ANPRM does not currently refer to 

HRSA’s plan on how it will resolve any 

decision made through the new 

Administrative Dispute Resolution 

Process and the sanctions in current 

law). These regulations will address a 

number of issues that have the potential 

to impact stakeholders. Accordingly, the 

Health Resources and Services 

Administration is issuing an advance 

notice of proposed rulemaking 

(ANPRM) to solicit public comment on 

multiple issues regarding 

implementation of these regulations. 

These comments will be used, as 

appropriate, to help draft a proposed 

rule that will be published in the 

Federal Register for public comments. 

DATES: Submit electronic or written 

comments by November 19, 2010. 

ADDRESSES: Comments in response to 

this ANPRM should be marked 

‘‘Comments on Administrative Dispute 

Resolution Process’’ and sent to Ms. 

Dorcas Ann Taylor, Public Health 

Analyst, Office of Pharmacy Affairs 

(OPA), Health Systems Bureau (HSB), 

Health Resources and Services 

Administration (HRSA), 5600 Fishers 

Lane, Parklawn Building, Room 10C–03, 

Rockville, MD 20857. Comments may 

also be e-mailed to: opadrp@hrsa.gov 

FOR FURTHER INFORMATION CONTACT: CDR 

Krista Pedley, Director, Office of 

Pharmacy Affairs (OPA), Healthcare 

Services Bureau (HSB), Health 

Resources Services Administration 

(HRSA), 5600 Fishers Lane, Parklawn 

Building, Room 10C–03, Rockville, MD 

20857. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Affordable Care Act introduces a 

number of changes to the 340B Program. 

The Affordable Care Act creates several 

new categories of eligibility for 

participation and provides a number of 

tools for improvement in compliance by 

manufacturers and covered entities. 

Among the tools is the creation of an 

administrative dispute resolution 

process for the resolution of claims by 

covered entities and manufacturers. 

Section 7102(a) of the Affordable Care 

Act requires the HHS Secretary to 

establish and implement an 

administrative process through 

regulations for resolution of (1) claims 

by covered entities that they have been 

overcharged for drugs purchased 

through the 340B Program; and (2) 

claims by manufacturers, after the 

conduct of audit as authorized by 

section 340B(a)(5)(C) of the PHSA, of 

violations of the prohibition of 

duplicate discounts or rebates and/or 

the prohibition on resale of drugs 

purchased under the 340B Program. As 

amended by the Affordable Care Act, 

section 340B(d)(3)(B) of the PHSA 

requires the Secretary to promulgate 

regulations that shall: 

(i) Designate or establish a decision 

making official or decision-making body 

within the Department of Health and 

Human Services to be responsible for 

reviewing and finally resolving claims 

by covered entities that they have been 

charged prices for covered outpatient 

drugs in excess of the ceiling price 

described in subsection (a)(1), and 

claims by manufacturers that violations 

of subsection (a)(5)(A) or (a)(5)(B) have 

occurred; 

(ii) Establish such deadlines and 

procedures as may be necessary to 

ensure that claims shall be resolved 

fairly, efficiently, and expeditiously; 

(iii) Establish procedures by which a 

covered entity may discover and obtain 

such information and documents from 

manufacturers and third parties as may 

be relevant to demonstrate the merits of 

a claim that charges for a manufacturer’s 

product have exceeded the applicable 

ceiling price under this section, and 

may submit such documents and 

information to the administrative 

official or body responsible for 

adjudicating such claim; 

(iv) Require that a manufacturer 

conduct an audit of a covered entity 

pursuant to subsection (a)(5)(C) as a 

prerequisite to initiating administrative 

dispute resolution proceedings against a 

covered entity; 

(v) Permit the official or body 

designated under clause (i), at the 

request of a manufacturer or 

manufacturers, to consolidate claims 

brought by more than one manufacturer 

against the same covered entity where, 

in the judgment of such official or body, 

consolidation is appropriate and 

consistent with the goals of fairness and 

economy of resources; and 

(vi) Include provisions and 

procedures to permit multiple covered 

entities to jointly assert claims of 

overcharges by the same manufacturer 

for the same drug or drugs in one 

administrative proceeding, and permit 

such claims to be asserted on behalf of 

covered entities by associations or 

organizations representing the interests 

of such covered entities and of which 

the covered entities are members. 

The 340B Program creates 

relationships between not only drug 

manufacturers and covered entities, but 

also involves, among others, 

wholesalers, group purchasing 

organizations, pharmacies, and state 

Medicaid agencies. Any change to the 

340B Program has the potential to alter 

these relationships. The regulations 

mandated by the Affordable Care Act 

will be the first regulations for the 340B 

Program. Prior to enactment of the 

Affordable Care Act, the Health 

Resources and Services Administration 

(HRSA) did not have a required 

administrative dispute resolution 

process. The creation of a required 

administrative dispute resolution 

process presents a number of issues in 

the context of the 340B Program that 

have the potential to affect a large 

number of interrelated entities. Given 

these issues, HRSA is issuing this 

ANPRM to gather comments prior to 

committing to a particular regulatory 

path. 

The use of audits and dispute 

resolution in the 340B program has 

limited precedent. On December 12, 

1996, the Secretary of HHS published 

the Manufacturer Audit Guidelines and 

Dispute Resolution Process for the 340B 

Program (61 FR 65406). That notice 

provided auditing guidelines to permit 

the manufacturer of a covered 

outpatient drug to audit the records of 

a covered entity directly pertaining to 

the covered entity’s compliance with 

the requirements of section 

340B(a)(5)(A) and (B) of the PHSA as to 

drugs purchased from the manufacturer. 

Section 340B(a)(5)(C) of the PHSA states 


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57234 Federal Register / Vol. 75, No. 181 / Monday, September 20, 2010 / Proposed Rules 

the Secretary shall establish guidelines 

relating to the number, scope and 

duration of the audits and these audits 

must be conducted in accordance with 

guidelines established by the Secretary. 

Further, the notice provided guidelines 

for disputes that may arise between 

covered entities and participating 

manufacturers regarding 

implementation of the provisions of 

section 340B. To resolve these disputes 

in an expeditious manner, HRSA 

developed a voluntary dispute 

resolution process. 

II. Request for Comments 

The purpose of this document is to 

obtain information and public comment 

on how to efficiently and effectively 

implement the requirements to create an 

administrative dispute resolution 

process for the 340B Program authorized 

by Section 7102 of the Affordable Care 

Act. Although HRSA has identified 

several issues and areas where HRSA 

believes comment would be particularly 

helpful, comments may be submitted on 

any issues directly relevant to the 

implementation of the specified 

requirements. 

Areas for which HRSA is expressly 

seeking comment include: (1) 

Administrative Procedures; (2) Existing 

Models; (3) Threshold Requirements; (4) 

Hearings; (5) Decision-making Official 

or Body; (6) Appropriate Appeals 

Procedures; (7) Deadlines; (8) Discovery 

Procedures; (9) Manufacturer Audits; 

(10) Consolidation of Manufacturer 

Claims; (11) Covered Entity 

Consolidation of Claims; (12) Claims by 

Organizations Representing Covered 

Entities; and (13) Integration of Dispute 

Resolutions with Other Provisions in 

the Affordable Care Act. 

(1) Administrative Procedures 

HRSA is seeking general comments 

regarding the administrative procedures 

associated with alternative dispute 

resolution. Systems must be put in place 

that address how and when to initiate 

the dispute resolution process, what 

level of evidence must be presented, 

who can be a party to a dispute, how 

dispute resolution requests will be 

processed, timelines, what type of 

notice is required for proposed 

determinations, and what involvement 

and notice should be given third parties 

and the public. 

(2) Existing Models 

HRSA is seeking comments regarding 

what aspects of other existing models 

for administrative dispute resolution 

can be adapted to the 340B Program. 

HRSA is aware of several examples of 

administrative dispute resolution both 

within and outside of the Department. 

Certain aspects of these other processes 

can provide useful insight as HRSA 

implements the 340B Program 

administrative dispute resolution 

authority. 

One of the most useful existing 

models is the current dispute resolution 

guidelines for the 340B Program 

outlined at 61 FR 65406 (Dec. 12, 1996) 

(can also be found on the OPA Web site 

at ftp://ftp.hrsa.gov/bphc/pdf/opa/ 

FR12121996.htm). The current dispute 

resolution guidelines contain a 

voluntary process for the resolution of 

disputes between manufacturers and 

covered entities concerning compliance 

with the 340B Program. The current 

guidelines outline the types of disputes 

covered; steps the parties must take 

before bringing a dispute; the review 

process; and the assessment of 

penalties. While the current process has 

been underutilized (because it was a 

voluntary process), it does address 

many issues specific to creating a 

dispute resolution process for the 340B 

Program. HRSA would be interested in 

receiving comments about what aspects 

of the current process could be adapted 

for the new administrative dispute 

resolution process. 

(3) Threshold Requirements 

HRSA is contemplating using a 

standard for bringing claims analogous 

to that utilized under the current 

informal dispute resolution guidelines 

(61 FR 65406). These guidelines state: 

‘‘The party requesting the review may 

not rely only upon allegations but is 

required to set forth specific facts 

showing that there is a genuine and 

substantial issue of material fact in 

dispute that requires a review. The 

request for review shall include a clear 

description of the dispute, shall identify 

all the issues in the dispute, and shall 

contain a full statement of the party’s 

position with respect to such issue(s) 

and the pertinent facts and reasons in 

support of the party’s position. In 

addition to the required statement, the 

party shall provide copies of any 

documents supporting its claim and 

evidence that a good faith effort was 

made to resolve the dispute.’’ 

Generally, HRSA would expect that 

the party initiating the dispute to make 

a showing that it has more than mere 

allegations and to also demonstrate that 

it has made a good faith effort to settle 

the dispute before involving the 

Department. In the case of covered 

entities, the dispute must involve a 

claim of manufacturer overcharge. 

HRSA may consider claims of 

overcharge to include direct and 

indirect evidence of a violation, such as 

cases where refusal to sell at the 340B 

price has led to the purchase of the 

covered outpatient drug outside of the 

340B Program. In the case of 

manufacturers, the dispute must involve 

a claim of a violation of subsections 

340B(a)(5)(A) or (a)(5)(B) of the PHSA. 

Manufacturers’ claims can only be 

brought after the conduct of audits as 

authorized by subsection (a)(5)(C). 

Therefore, HRSA would expect that 

manufacturers would present direct 

evidence of a covered entity’s alleged 

violations of either 340B(a)(5)(A) or 

(a)(5)(B). 

HRSA is seeking comments on the 

feasibility of applying this construct to 

the new statutorily created 

administrative dispute resolution 

process. 

(4) Hearings 

HRSA expects that the alternative 

dispute resolution process would 

involve some type of hearing. The 

hearing could be either conducted 

through an exchange of documents, inperson, or by web access. HRSA is 

inviting comments on the manner in 

which such a hearing should be 

structured. HRSA is considering a large 

number of issues involved in creating a 

fair and efficient hearing process, 

including, but not limited to: Ex parte 

contacts; rehearing conferences; 

subpoenas; form, filing and service of 

papers; motions; sanctions; burden of 

proof; evidence; and post-hearing briefs. 

(5) Decision-making Official or Body 

HRSA expects to designate or 

establish a decision-making official or 

body from within the Department. 

HRSA welcomes comments as to 

whether the same or different decisionmakers should decide the sufficiency to 

state a claim and to make a final 

determination on a claim. HRSA also 

invites comments on whether the 

decision-making official or body should 

be within HRSA, within OPA, or come 

from other parts of the Department. 

(6) Appropriate Appeals Procedures 

HRSA expects to establish an appeals 

process applicable to a final 

administrative determination rendered 

by the decision-making body or official. 

In addition to comments regarding 

existing models and the applicability of 

the Administrative Procedures Act, 

HRSA is requesting public comment on 

the procedures related to this new 340B 

dispute resolution process. 

(7) Deadlines 

HRSA invites comments on whether 

claims should be time barred and the 

standards applicable for maximum 


jdjones on DSK8KYBLC1PROD with PROPOSALS-1
Federal Register / Vol. 75, No. 181 / Monday, September 20, 2010 / Proposed Rules 57235 

timeframes to bring a claim. HRSA 

invites comments on deadlines for 

responses to submissions by the 

participants, the government and 

deciding body or official and the 

consequences of failure to meet a 

particular deadline. 

(8) Discovery Procedures 

HRSA is requesting input on the 

process used for discovery of 

information from participating 

manufacturers and covered entities. 

HRSA will need to determine the scope 

of documents (information, reports, 

answers, records, accounts, papers, 

documentary evidence, etc.) and 

interrogatories eligible for discovery. 

HRSA will also need to determine under 

what circumstances (irrelevancy, 

privileged information, unduly 

burdensome, etc.) protective orders 

should be utilized. Procedures to ensure 

the confidentiality of information 

discovered will also need to be 

developed. Finally, a determination will 

need to be made as to the power to 

compel discovery from third parties 

given that OPA has limited direct 

regulatory authority through the 340B 

Program over entities and individuals 

outside of 340B participating drug 

manufacturers and covered entities. 

(9) Manufacturer Audits 

The administrative dispute resolution 

requirements of the Affordable Care Act 

set forth that manufacturers must 

conduct an audit of a covered entity 

prior to bringing a claim. HRSA 

currently has guidelines regarding the 

requirements for initiating an audit (61 

FR 65406). However, over the history of 

the 340B Program manufacturers have 

rarely utilized the process in the 

guidelines to conduct an audit. HRSA 

invites comments on whether it is 

appropriate or necessary to modify the 

guidelines concerning audits prior to 

implementing the administrative 

dispute resolution regulation or whether 

the current final guidelines are 

sufficient. 

(10) Consolidation of Manufacturer 

Claims 

HRSA is required to create a process 

for consideration of whether requests by 

a manufacturer or manufacturers to 

consolidate claims by more than one 

manufacturer against the same covered 

entity are ‘‘appropriate and consistent 

with the goals of fairness and economy 

of resources.’’ HRSA seeks comments on 

how to create this process, the evidence 

to be considered, timing of requests to 

join in a consolidated claim, and the 

interests to be weighed. 

(11) Covered Entity Consolidation of 

Claims 

Similar to the consolidation of 

manufacturer claims, HRSA is required 

to create a process for consideration of 

requests for consolidation of particular 

covered entity claims. HRSA invites 

comment on whether the standard for 

manufacturers and covered entities 

should differ and whether there should 

be a presumption of allowing such 

consolidation of claims absent a finding 

that consolidation would be 

inconsistent with the goals of fairness 

and economy of resources. 

(12) Claims by Organizations 

Representing Covered Entities 

The legislation provides for claims by 

organizations representing entities. 

HRSA is interested in input on when a 

third party can bring claims on behalf of 

member covered entities in the context 

of a binding formal dispute resolution 

process and how to ensure that the 

group in fact represents the interests of 

the covered entities. In order to ensure 

that such organizations actually 

represent the interests of covered 

entities, HRSA is contemplating that 

prior to seeking to file a claim on behalf 

of covered entities, such groups must 

have a signed agreement with the 

covered entities. The agreement would 

indicate that the organization is 

authorized to bring a claim on behalf of 

the covered entities; the precise nature 

of the claim; that the covered entities 

agree to participate in good faith and 

abide by discovery procedures; and that 

the covered entities agree to be bound 

by any decision of the decision-making 

official or body. HRSA contemplates a 

decision-making official or body having 

the authority to not allow claims that 

would result in unfairness or a 

substantial waste of resources. 

(13) Integration of Dispute Resolutions 

With Other Provisions in the Affordable 

Care Act 

In addition to the compliance tools 

already available to HRSA, such as 

audits and alternative dispute 

resolution, the Affordable Care Act 

provides HRSA with many additional 

tools to monitor compliance. These 

additional tools include establishing 

procedures to verify the accuracy of 

ceiling prices; creating processes for 

manufacturers to refund overcharges; 

selective auditing of manufacturers; 

annual recertification of covered 

entities; and providing access to ceiling 

price information. The use of the new 

administrative dispute resolution 

authority must be used in conjunction 

with these other compliance tools to 

ensure its most effective use. HRSA 

invites comments concerning the 

relationship between administrative 

dispute resolution and other oversight 

mechanisms. 

While these thirteen areas were 

identified for comment, we welcome 

comments on any other issues that 

stakeholders believe are key to 

implementing an effective alternate 

dispute resolution process. 

Dated: September 14, 2010. 

Mary K. Wakefield, 

Administrator. 

[FR Doc. 2010–23460 Filed 9–17–10; 8:45 am] 

BILLING CODE 4165–15–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 635 

[Docket No. 100825390–0431–01] 

RIN 0648–BA17 

Atlantic Highly Migratory Species; 

Atlantic Shark Management Measures 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Advance notice of proposed 

rulemaking; request for comments. 

SUMMARY: NMFS issues this advance 

notice of proposed rulemaking (ANPR) 

to provide background information and 

request public comment on potential 

adjustments to the regulations governing 

the U.S. Atlantic shark fishery to 

address several specific issues currently 

affecting management of the shark 

fishery and to identify specific goals for 

management of fishery in the future. 

NMFS is requesting public comment 

regarding the potential implementation 

of changes to the quota and/or permit 

structure that are currently in place for 

the Atlantic shark fishery. NMFS is also 

requesting comments on the 

implementation of programs such as 

catch shares, limited access privilege 

programs (LAPPs), individual fishing 

quotas (IFQs), and/or sectors for the 

Atlantic shark fishery. 

DATES: Written comments regarding the 

issues in this ANPR must be received no 

later than 5 p.m. on January 14, 2011. 

Public meetings to obtain additional 

comments on the items discussed in this 

ANPR will be held in September, 

October, November, and December 

2010. Please see the SUPPLEMENTARY

INFORMATION section of this ANPR for 

specific dates, times, and locations. 


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