(UPDATED Oct. 4, 2013 with comment from 340B hospitals.) October 2, 2013—Pharmaceutical Research and Manufacturers of America (PhRMA) filed suit in federal district court on Sept. 27 to stop the Department of Health and Human Services (HHS) and the Health Resources and Services Administration (HRSA) from implementing HRSA’s regulation setting conditions under which critical access hospitals, sole community hospitals, rural referral centers, and free-standing cancer hospitals may purchase orphan drugs through the 340B drug discount program.[ms-protect-content id=”2799″]
PhRMA’s filing came to light today. Under the final regulation, the orphan drug exclusion prohibits affected 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. Yesterday was the regulation’s effective date.
Most federal offices were forced to close yesterday because Congress did not pass a government-wide appropriations bill for fiscal year 2014. This includes the U.S. Justice Department (DOJ), which is representing HHS in the action.
Yesterday, DOJ filed a motion for a stay of proceedings in the case until Congress restores its appropriations and its attorneys “are permitted to resume their usual civil litigation functions.” PhRMA filed a motion opposing DOJ’s request for a stay.
PhRMA Executive Vice President and General Counsel Mit Spears issued the following statement about the lawsuit:
“PhRMA strongly supports the 340B program, which was intended to help vulnerable, uninsured patients access life-saving medicines. We are committed to working with all stakeholders to improve the program. To achieve this important objective, it is critical that the program operates in a manner consistent with the clear and unambiguous direction of Congress.
“At issue is a final rule regarding the 340B orphan drug exemption, which was enacted as part of the Affordable Care Act (ACA). ACA expanded the type of entities that can access 340B discounts for prescription drugs. To preserve incentives to invest in research and development of new treatments for rare diseases, the Act expressly exempts manufacturers from having to provide these discounts on orphan drugs to these newly eligible providers.
“PhRMA is filing suit against the U.S. Department of Health and Human Services (HHS) to challenge a rule that unfortunately disregards the plain language of the statute. The interpretation is inconsistent with the clear statutory direction. Moreover, as a practical matter, the final rule imposes significant administrative burdens on 340B providers and manufacturers to determine the prescribed use of a medicine.
“While we value the hard work and efforts of all agencies, it is important that Federal agencies recognize and work within the bounds set by Congress. They cannot redefine the law and ignore Congressional direction.
“PhRMA’s member companies are dedicated to discovering innovative medicines and critical to this effort are policies that help sustain research and development.”
Hospitals in the 340B program expressed dismay about PhRMA’s decision to sue. They said they hope the district court will deny the drug manufacturers’ request for an injunction and uphold the regulation in any subsequent litigation.
“As we said when the regulation was published in July, HRSA’s interpretation of the 2010 law that created the exclusion is consistent with common sense,” Safety Net Hospitals for Pharmaceutical Access (SNHPA) said in an Oct. 2 statement. “It balances congressional intent to lower drug costs for rural and cancer hospitals with congressional intent to encourage orphan drug development.”
SNHPA’s statement continues:
“HRSA, acting under the authority of the HHS Secretary, has broad power to interpret and implement the laws that the Secretary is charged to administer. It followed formal rulemaking procedure to promulgate the regulation.
“It is clear from the plain meaning of the relevant language in the 2010 law that orphan drugs should only be excluded from 340B pricing for the affected hospitals when they are used to treat their orphan indications.
“The 340B statute only excludes drugs that have been given orphan designations ‘for a rare disease or condition.’ To apply the orphan drug exclusion in the manner suggested by PhRMA would ignore these words in the statute.
“Further, the orphan drug exclusion references the Federal Food, Drug and Cosmetic Act (FDCA). Orphan drug designation under the FDCA applies only for purposes of specific diseases or conditions, and does not apply for just any use of the drug.
“The final regulation helps rural and free-standing cancer hospitals advance their mission of serving the nation’s most vulnerable patients. These hospitals are ready and willing to implement the systems necessary to ensure compliance with the final regulation and uphold the integrity of the 340B program.”[/ms-protect-content]