Earlier today, HRSA published online its long-awaited final regulation to implement the 340B “orphan drug exclusion,” which limits 340B-purchasing for free-standing cancer hospitals, critical access hospitals, sole community hospitals, and rural referral centers participating in the 340B drug discount program. The final regulation mirrors HRSA’s May 2011 proposed rulemaking in most ways, with some key changes and clarifications, and will appear in tomorrow’s Federal Register.[ms-protect-content id=”2799″]
Under HRSA’s final regulation, the orphan drug exclusion prohibits these hospitals from buying an orphan drug at a 340B-discounted price only when the drug is used to treat the rare disease or condition for which the drug received its orphan designation. Drug manufacturers had suggested that the exclusion should prohibit these hospitals from purchasing orphan drugs at 340B prices regardless of how they are used. Hospital groups rural health organizations as well as Senate HELP Committee Chairman Tom Harkin (D-Iowa) and Henry Waxman (D-CA), the ranking Democrat on the House Energy and Commerce Committee submitted comments to HRSA in support of the proposed rule. They encouraged HRSA to finalize its proposal to apply the orphan drug exclusion in this limited manner.
As indicated in the proposed rule, the final regulation also makes clear that hospitals must have tracking systems in place to demonstrate orphan drugs purchased at 340B prices are not used to treat the rare diseases and conditions for which those drugs received their designations. Hospitals must also maintain auditable records demonstrating compliance with the regulation. If a hospital cannot or chooses not to implement such a tracking system, it should not purchase orphan drugs at 340B prices and should notify HRSA of its decision.
The final regulation will be effective on Oct. 1, 2013. However, HRSA will only apply the regulation prospectively. Safety Net Hospitals for Pharmaceutical Access and other hospital groups had encouraged HRSA to apply the final regulation retrospectively, as many manufacturers have not been offering 340B prices for any orphan drugs purchased by rural and free-standing cancer hospitals since they first enrolled in 340B in 2010.
The Monitor will provide additional analysis of the final orphan drug regulation in the coming days.[/ms-protect-content]