May 19, 2011— The Health Resources and Services Administration (HRSA) this morning made available for public inspection a long-awaited proposed regulation to implement health care reform’s prohibition on 340B discounts for orphan drugs purchased by hospitals that became eligible for the program under reform.
The proposed regulation, which is the first ever for the 340B program, will be formally published in the Federal Register tomorrow, May 20.
The Affordable Care Act (ACA) barred rural and freestanding cancer hospitals new to 340B from obtaining discounts on orphan drugs , which are often used to treat cancer and other serious diseases and conditions. They also include blood factor product used to treat bleeding disorders and expensive IVIG therapies.
HRSA’s proposed rule would limit the prohibition on 340B pricing “to uses for the rare disease or condition for which the orphan drug was designated.” This means rural and cancer hospitals would be free to purchase an orphan drug at its 340B price if the drug is used for a non-orphan indication. The hospitals will have to put in place “tracking and recordkeeping requirements to demonstrate compliance with the limits on the use of orphan drugs,” the notice states. “To demonstrate compliance, it will be necessary for the covered entities to create separate purchasing accounts and improve inventory and auditing capacity.”
The Monitor will report in depth on the proposed regulations shortly.