October 21, 2014—Hospital groups are applauding federal health officials for telling drugmakers they owe rural and freestanding cancer hospitals refunds for overcharges on orphan drugs. [ms-protect-content id=”2799″]
“We fully support the Health Resources and Services Administration’s enforcement action against the many pharmaceutical manufacturers who are not following the government’s rule on orphan drug pricing,” says SNHPA President and Chief Executive Officer Ted Slafsky. “The government has clearly and correctly interpreted the law as requiring them to provide discounts to rural and cancer hospitals when an orphan drug is used to treat a common condition.”
“We agree that drug companies ignoring the law should be obligated to refund rural safety-net providers,” adds National Rural Health Association CEO Alan Morgan. “At a time when our hospitals are experiencing substantial losses or barely breaking even, it is more important than ever for our providers to be able to access affordable medications. We don’t want more rural hospitals closing and 340B can really make a difference for providers and their communities.”
In the most significant enforcement action affecting drug manufacturers in the 340B program’s 22-year history, HRSA has sent an undetermined number of orphan drug manufacturers letters informing them that they are out of compliance with 340B statutory requirements and their pricing agreements with the government. HRSA told the drugmakers they must notify it of their plans to repay affected rural and cancer hospitals for overcharges.
HRSA said that, under its July 21 rule interpreting the Affordable Care Act’s 340B orphan drug exclusion, critical access hospitals, sole community hospitals, rural referral centers, and free-standing cancer hospitals may buy an orphan drug at a 340B-discounted price when the drug is used for an indication other than the rare disease or condition for which the drug received its orphan designation.
Pharmaceutical Research and Manufacturers of America recently filed suit in federal district court seeking to invalidate HRSA’s interpretative rule. [/ms-protect-content]