June 13, 2014—The Department of Health and Human Services has opted not to ask a federal district judge to uphold its 340B orphan drug exclusion regulation as an “interpretative” rather than “legislative” rule. [ms-protect-content id=”2799″]
The June 2013 orphan drug regulation said that, under language in the Affordable Care Act, rural and cancer hospitals could not get 340B pricing on an orphan drug when used for the disease or condition for which the drug received its orphan designation, but they could access 340B discounts on such drugs when used for non-orphan purposes.
In a June 12 filing, government lawyers said “HHS is currently evaluating its options as to how to respond” to the judge’s May 23 ruling vacating the regulation on the grounds that HHS lacked authority to issue it as a legislative rule. It said those options include “whether to appeal and/or whether to propound an interpretative rule or other type of interpretative guidance that would set forth HHS’s interpretation” of the 340B orphan drug exclusion.
“HHS does not interpret the Court’s decision as precluding it from issuing an interpretative rule or other type of interpretative guidance, even if that rule or guidance sets forth the same interpretation previously embodied in the challenged regulation,” the government said.
In general, legislative rules are issued under statutory authority; impose new standards or requirements with the force of law; and must go through the notice and comment process. Interpretative rules inform the public about how an agency intends to read and apply an existing law’s requirements. They bind those being regulated but not the courts. Even though it is not required, agencies often voluntarily publish interpretative rules for public comment.
Earlier this week, Office of Pharmacy Affairs Director Cmdr. Krista Pedley said the Health Resources and Services Administration “is now having to assess the status” of its comprehensive 340B program regulation, aka “mega-reg,” in light of the ruling on the orphan drug exclusion regulation.
On June 5, Apexus, the 340B Prime Vendor, said on its website that the biopharmaceutical company Genentech had notified it that “they have stopped providing 340B discounts on orphan drugs effective today” for rural and free-standing cancer hospitals. “Genentech will be sending their customers and the distributors more formal communications regarding this decision within the next few days,” Apexus said.
Cardinal Health sent affected hospitals a similar notification. “Effective June 9, 2014, all Cardinal Health customers who are 340B covered entities subject to the orphan drug exclusion will be removed from 340B contract pricing for orphan drugs,” it reads. “Cardinal Health will be honoring chargebacks per supplier discretion.” [/ms-protect-content]