HHS Reissues Contested 340B Policy on Orphan-Drug Discounts

In spite of an adverse court judgment, the federal government is retaining its stance on how safety-net healthcare providers may obtain discounts on drugs that might have "orphan" uses.

On July 21, HHS published a document it called an interpretive rule on the exclusion of orphan drugs from the 340B discount program. The policy takes effect without delay. The announcement follows a May court verdict which shot down the HHS's authorization to release a substantive rule regarding whether or not pharmaceuticals with a rare-disease or orphan classification could be attainable at a rebate to health centers for non-orphan uses.

The HHS stated in the document it has been notified by safety-net healthcare providers or covered entities "that some of the newly-eligible covered entities are significant purchasers of drugs with an orphan designation, and if these drugs were excluded from the 340B Program entirely, it is not clear if there would be sufficient financial benefits to participate.".

The pharmaceutical sector has contested the Obama administration's interpretation of a provision in the Patient Protection and Affordable Care Act, asserting that the administration didn't possess the jurisdiction to publish the legislative rule in 2013. The Pharmaceutical Research and Manufacturers of America, the pharmaceutical industry's lobbying organization, filed a claim against HHS in 2013, and a federal judge ruled against HHS in May. The government, however, took the stance that the ruling authorized it to reissue the exact same policy in a different framework.

The new version of the rule, posted to the Federal Register on July 21, requires drug companies to offer markdowns between 20 % and FIFTY % on orphan drugs used for non-orphan ailments or diseases to freestanding cancer hospitals, critical-access hospitals, rural referral centers and sole community hospitals that take part in the 340B program.

A spokesperson for PhRMA stated the organization's stance hasn't changed and it continues to think that the Health Research and Services Administration, which oversees the 340B program, doesn't possess the jurisdiction to issue rulemaking with regard to the regulation.

Meanwhile, the regulation is considered a victory for safety net hospitals that participate in the 340B drug pricing program. Orphan pharmaceuticals are among the most expensive pharmaceuticals on the market and discounts on these types of treatments may be a contributing reason why several health centers sign up in the 340B program.

"The agency's position on this issue has been correct all along," said a spokesman for Safety Net Hospitals for Pharmaceutical Access, a trade organization that stands for healthcare facilities that take part in the 340B program. "Orphan drug discounts are essential to helping these healthcare providers treat underserved patients.".

The intent of the 340B program is to provide reduced rates on covered outpatient drugs to health centers that service a large number of uninsured or indigent patients. The health centers may then keep the financial benefits, or revenue, from the discounts. Read More