May 17, 2011— The White House Office of Management and Budget (OMB) has finished reviewing proposed federal regulations to implement health care reform’s partial prohibition on 340B discounts for orphan drugs.
On its Web site late yesterday, the budget agency noted that it sent the draft back to the Health Resources and Services Administration (HRSA) with unspecified changes. The contents of the proposed rule and the date on which it will be publish are both unknown as well. HRSA submitted the rules to OMB on Feb. 15.
HRSA, meanwhile, still has not issued a proposed new definition of the term “patient” for 340B purposes following its clearance by OMB almost a month ago. It is expected to be published imminently.
Scope of Exclusion
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 diseases affecting children. They also include blood factor product used to treat bleeding disorders and expensive IVIG therapies.
The new regulations are expected to address whether the exclusion on discounted sales applies only to the 362 drugs approved for an orphan use or to the much larger group of 2,315 drugs that have been granted an orphan designation. They are also expected to answer whether the exclusion applies to all uses of an orphan drug, including off-label use, or only to uses for which the drug received orphan status.
Last month, the Office of Pharmacy Affairs (OPA) reported that it added 150 rural, cancer and children’s hospital sites to its 340B covered entity database at the beginning of the second quarter of 2011—a 50 percent decline from the number of such sites added at the start of the previous quarter.
Some rural hospitals have said that the orphan drug exclusion has dissuaded them from enrolling in 340B. The exclusion originally applied to children’s hospitals as well but Congress passed legislation late last year lifting the ban for them.
Patient Definition Guidelines
OMB cleared the orphan drug proposal nearly a month after it cleared draft HRSA guidance that will redefine the term “patient” for purposes of 340B discounts and formally withdraw a 2007 version that 340B providers strongly opposed. HRSA’s public affairs office said late last week that it had no information “on a specific timeline for publication.” It remains unclear whether HRSA’s definition will be in the form of guidance or regulation. The former is more flexible than the latter.