HHS reissues disputed 340B policy on orphan-drug discounts

HHS has issued an interpretive rule requiring drug companies to provide discounts on orphan drugs sold through the federal 340B drug discount program, just months after a federal judge struck down its previous version of the rule.

The new rule, published last week, requires drug companies to provide discounts between 20% and 50% on orphan drugs used for non-orphan conditions or diseases to free-standing cancer hospitals, critical-access hospitals, rural referral centers and sole community hospitals that participate in the 340B program.

The Pharmaceutical Research and Manufacturers of America, the drug industry’s lobbying group, last year sued HHS, and a federal judge ruled against HHS in May. The administra- tion, however, took the position that the outcome allowed it to reissue the same policy in a different form.

A PhRMA spokeswoman said her group still thinks the Health Research and Services Administration, which oversees the 340B program, doesn’t have the authority to issue rulemaking around the provision. “The end result of this government power play is that the same rule with the same legal effects would be dressed in new clothing,” PhRMA lawyers said in court documents filed July 18. PhRMA has asked the court whether the rule can survive in its new version or to vacate the rule because HHS doesn’t have the rulemaking authority.

The revised rule is seen as a victory for participating safety net hospitals. Orphan drugs are some of the most expensive drugs on the market and discounts on these therapies may be a contributing reason why some hospitals enroll in the 340B program. HHS’ position on this issue “has been correct all along,” said a spokesman for Safety Net Hospitals for Pharmaceutical Access, which represents hospitals in the 340B program. “Orphan drug discounts are essential to helping these healthcare providers treat underserved patients.”

The purpose of the 340B program is to offer discounts on covered outpatient drugs to providers that serve a large number of uninsured or indigent patients. The providers can then keep the savings and revenue from the discounts.

“Orphan drug discounts are essential to helping these healthcare providers treat underserved patients.”