August 2, 2013—Sen. Orrin Hatch (R-Utah) has sent a letter to HRSA Administrator Mary Wakefield saying the agency’s 340B orphan drug exclusion final regulation is “incorrectly interpreting the law” and diminishes incentives for orphan drug development.[ms-protect-content id=”2799″]
A HRSA spokesperson said the agency “is in receipt of the letter from Senator Hatch and we will respond to the Senator in a timely fashion.”
In the July 30 letter, the Senator asserted that the amendment to the Affordable Care Act (ACA) that excluded 340B discounts on orphan drugs for rural and free-standing cancer hospitals “clearly states” that ‘…the term covered outpatient drug shall not include a drug designated” for orphan drug status.
Senator Hatch questioned whether HRSA has the capacity to “track when a drug is used for an orphan disease or condition to ensure the manufacturers and covered entities are complying with the final rule.” Also, he said “the narrow application of the final rule will diminish the value of the incentive provided under the Orphan Drug Act and will result in fewer investments in products intended to treat rare diseases.”
Pharmaceutical Research and Manufacturers of America (PhRMA) expressed a similar concern in a July 23 statement about the final rule that appeared in Modern Healthcare. HRSA’s regulation, the drug industry group said, “will undermine Congress’ goal of preserving the incentives for orphan drug development that existed before the Affordable Care Act’s 340B expansion.”
Other industry stakeholders, however, say the regulation has positive attributes, even if it is not everything that drug companies had hoped for. For example, analyst Michael McCaughan of Prevision Policy recently observed that HRSA’s narrow reading of the statute “assures that products approved for orphan uses benefit from the exemption—and especially for those orphan drugs that are approved solely for rare diseases.” At the same time, he adds, “by limiting the exemption solely to products used for the FDA-approved rare disease indication, HRSA cuts off the potential that manufacturers might seek orphan designations solely to avoid discounts on non-orphan uses.”
While Senator Hatch and drug industry groups have criticized the rule, hospital groups applauded it. In a July 30 post on its 340BFacts.com website, Safety Net Hospitals for Pharmaceutical Access (SNHPA) commended HRSA “for its sensible interpretation” of the orphan drug exclusion. Nevertheless, it said, the restriction should never have been enacted and ultimately should be repealed.
HRSA’s final rule is fundamentally the same as the draft version it published for public review in May 2011. In written comments on the proposed rule, the American Hospital Association said it supported HRSA’s interpretation of the orphan drug exclusion. The American Society of Health-System Pharmacists, the National Rural Health Association, and the Rural Referral Center/Sole Community Hospital Coalition also endorsed HRSA’s reading of the law in written comments, as did Senate HELP Committee Chairman Tom Harkin (D-Iowa) and House Energy and Commerce Ranking Member Henry Waxman (D-Calif.).[/ms-protect-content]