June 18, 2014—The Health Resources and Services Administration announced this morning that it stands by its interpretation of the 340B orphan drug exclusion that lets critical access hospitals, sole community hospitals, rural referral centers, and free-standing cancer hospitals access 340B pricing on orphan drugs when they “are used for any indication other than treating the rare disease or condition for which the drug received an orphan designation.”[ms-protect-content id=”2799”]
The announcement indicates HRSA will hold drug manufacturers responsible for providing rural and cancer hospitals with 340B pricing on orphan drugs as spelled out in HRSA’s July 2013 final regulation. The regulation took effect on Oct. 1. A federal district judge invalidated the regulation on May 23, holding that HRSA lacked authority to issue a “legislative” regulation to implement the orphan drug exclusion. The judge’s decision, however, focused solely on technical aspects of administrative law and specifically did not invalidate HRSA’s underlying interpretation of the orphan drug provision.
HRSA made its position about the regulation known on the Office of Pharmacy Affairs website’s Orphan Drug Exclusion page. It said that although the court vacated the regulation, the court “did not invalidate HRSA’s interpretation of the statute.”
“HHS/HRSA continues to stand by the interpretation described in its published final rule, which allows the 340B covered entities affected by the orphan drug exclusion to purchase orphan drugs at 340B prices when orphan drugs are used for any indication other than treating the rare disease or condition for which the drug received an orphan designation,” the notice on the OPA website states. “HRSA is continuing to post updated Orphan Drug Designation Lists … as well as the Orphan Selection File, found on the 340B database, in order to assist all 340B stakeholders in complying with HRSA’s policy.”
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. Cardinal Health notified hospitals affected by the orphan drug exclusion that they would no longer provide those hospitals with access to 340B contract pricing for orphan drugs. Hospitals report, however, that many drug manufacturers have continued to provide 340B pricing on orphan drugs, in recognition of the fact that the court’s decision did not invalidate HRSA’s underlying orphan drug policy.
The notice on the OPA website says hospitals subject to the orphan drug exclusion “are responsible for ensuring that any orphan drugs purchased through the 340B Program are not transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the orphan drugs are designated.”
Pharmaceutical Research and Manufacturing of America filed the suit challenging the rule.
Safety Net Hospitals for Pharmaceutical Access, which represents hospitals enrolled in 340B, issued the following statement about HRSA’s action: “SNHPA is very pleased that the Health Resources and Services Administration is holding fast on its well-reasoned and legally valid interpretation on the use of orphan drugs in the 340B program. HRSA’s policy will go far in helping rural and cancer hospital better serve their vulnerable populations. These savings are absolutely vital to helping providers stay open and provide much-needed services.”[/ms-protect-content]