Administrative Dispute Resolution (ADR)
Definition
The Administrative Dispute Resolution (ADR) process is a binding dispute resolution mechanism established by statute and implemented by HRSA. It provides a formal pathway for two types of disputes: claims by covered entities that manufacturers have charged above the 340B ceiling price, and claims by manufacturers (following their own audit of a covered entity) that the entity has violated the prohibitions on diversion or duplicate discounts.
The ADR final rule sets forth the specific requirements, procedures, and timelines for the process. ADR decisions are binding on the parties. Covered entities that believe they have been overcharged by a manufacturer can pursue ADR to recover overpayments. Manufacturers that conduct audits of covered entities and identify violations can pursue ADR to seek repayment.
Understanding the ADR process is important for covered entities both as a tool for protecting their pricing rights and as a risk to be managed. Manufacturer-initiated ADR proceedings are a significant compliance exposure for entities with weak documentation.
Frequently Asked Questions
Why Administrative Dispute Resolution (ADR) Matters
ADR is both a protection and a risk. Covered entities can use it to recover overcharges from manufacturers. But manufacturers can also use it to pursue repayment for violations they identify during their own audits. Maintaining strong compliance documentation is the best defense against manufacturer-initiated ADR.
How Virtue 340B Uses It
Virtue 340B helps covered entities understand their ADR rights and maintain the documentation needed to defend against manufacturer-initiated proceedings. We also help entities evaluate whether they may have been overcharged and whether ADR is an appropriate remedy.