May 28, 2010 – The U.S. House took a first step today toward repealing the provision in the new health reform law that prohibits certain 340B covered entities from buying “orphan” drugs at a discount.
The House passed the American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213), which contains a provision lifting the orphan-drug prohibition for free-standing children’s hospitals only. The health reform law, signed by President Obama in late March, prohibited free-standing children’s and cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals from buying orphan drugs with the 340B discount. Current 340B covered entities were not affected by the ban.
The prohibition’s removal would be a major relief for children’s hospitals, which feared that their budgets would skyrocket and costs would rise for vulnerable patient populations. The National Association of Children’s Hospitals (NACH) and Safety Net Hospitals for Pharmaceutical Access (SNHPA) had both raised concerns about the exclusion. Lawmakers and health care groups are continuing to push Congress to overturn the 340B orphan-drug prohibition completely entirely.
The Food and Drug Administration (FDA) classifies nearly 350 drugs as orphan products. Some manufacturers fought hard for the ban’s inclusion in health reform, saying they would have trouble recouping the drugs’ R&D costs if they had to sell them at 340B discounts.
Two members of the House Energy and Commerce Committee, which has jurisdiction over the 340B program, have formally asked its chairman, Rep. Henry Waxman (D-Calif.), to introduce legislation to repeal the orphan drug provision.
In a May 25 letter, Reps. Bart Stupak (D-Mich.) and Peter Welch (D-Vt.) argue that “exempting any category of drugs from the 340B program limits access to those drugs that need the discounts the most.”
Three groups representing hospitals affected by the orphan drug prohibition have also asked Waxman and Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin (D-Iowa) to repeal the provision.
The National Rural Health Association (NRHA), the Rural Referral Center/Sole Community Hospital Coalition (RRC/SCCC) and Safety Net Hospitals for Pharmaceutical Access (SNHPA) wrote to the chairmen on May 19 that exempting orphan drugs from the discount program “sets a dangerous precedent and contradicts the mission and purpose of the 340B drug discount program.”
The groups also asked U.S. Department of Health and Human Services Secretary Kathleen Sebelius in a letter to delay the ban’s implementation until her agency has proposed its implementation plan in writing and solicited and reviewed comments from the public.
The Senate is expected to take up H.R. 4213 during the week of June 7 following Congress’ week-long Memorial Day recess.