Notice Regarding Section 602 of the Veterans Health Care Act of 1992; Manufacturer Audit Guidelines and Informal Dispute Resolution

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Section 602 of Public Law 102-585, the ``Veterans Health Care Act of 1992'' (the ``Act''), enacted section 340B of the Public Health Service Act (``PHS Act''), ``Limitation on Prices of Drugs Purchased by Covered Entities.'' Section 340B provides that a manufacturer who sells covered outpatient drugs to eligible entities must sign a pharmaceutical pricing agreement (the ``Agreement'') with the Secretary of Health and Human Services (the ``Secretary'') in which the manufacturer agrees to charge a price for covered outpatient drugs that will not exceed an amount determined under a statutory formula. Section 340B(a)(5) of the PHS Act identifies certain requirements for covered entities concerning potential double price reductions and drug diversion. A covered entity must permit the manufacturer of a covered outpatient drug that has signed the Agreement, to audit the records of the covered entity directly pertaining to the entity's compliance with the requirements of section 340B(a)(5) (A) and (B) as to drugs purchased from the manufacturer. These audits must be conducted in accordance with guidelines established by the Secretary, as stated in section 340B(a)(5)(C). Further, the Office