May 16, 2013—The long-awaited regulation to implement health care reform’s partial limit on 340B discounts for orphan drugs is back on hold.
On May 8, the White House Office of Management and Budget (OMB) reported online that its review of the Health Resources and Services Administration’s (HRSA) proposed 340B orphan drug exclusion final rule had been extended.[ms-protect-content id=”2799″] OMB reviews all agency draft and proposed final regulatory actions before they are released. HRSA submitted the orphan drug rule for review on Jan. 31. Under a 1993 executive order, OMB is generally required to complete such reviews within 90 calendar days—which, for the orphan drug rule, was May 1.
The same executive order allows the OMB Director to extend a review period on a one-time basis for no more than 30 days. It also lets the head of the rulemaking agency extend the review indefinitely. It is not known whether OMB or HRSA extended the 340B orphan drug review.
OMB does not comment on rules under review and refers all questions to the relevant rulemaking agency. On May 2, the day after the initial 90-day review period ended, HRSA said it was “continuing to work with OMB on finalizing the rule.”
The orphan drug exclusion rule would be the first formal regulation in the 340B program’s history. In the past, HRSA has published notices in the Federal Register regarding 340B participation and operations.
The Affordable Care Act (ACA) added free-standing cancer hospitals, critical access hospitals, sole community hospitals, and rural referral centers to the list of health care providers eligible for 340B drug discounts. A related budget reconciliation bill passed a few days after ACA became law excluded orphan drugs “for a rare disease of condition” from the definition of 340B covered outpatient drug for the newly-eligible hospitals as well as for children’s hospitals, which gained eligibility for 340B discounts under a 2005 law. Congress lifted the restriction for children’s hospitals in December 2010.
HRSA issued a notice of proposed rulemaking on May 20, 2011 stating that rural and freestanding cancer hospitals should be allowed to buy orphan drugs at 340B-discounted prices when they use the medicines to treat non-orphan diseases or conditions.
340B health care providers welcomed HRSA’s interpretation of the exclusion but attorneys for drug manufacturers criticized it, with some saying it would “gut” the restriction on 340B pricing.[/ms-protect-content]