340B Orphan Drug Rule Invalidated

    U.S. District Judge Rudolph Contreras has ruled that HRSA lacks regulatory authority to promulgate regulations expanding access to 340B discounts for so-called Orphan Drugs.   Rules that went into effect in October of 2013 implemented provisions of the Affordable Care Act that excluded orphan drugs from 340B pricing.  In the rules HRSA interpreted the exception as only applying to limited types of 340B covered entities and only applying if the drug at issue is being used for its orphan-approved purpose – meaning that 340B pricing would be available if the drug at issue was being prescribed for another purpose.

    The judge’s decision means there is no longer a regulation in place that authorizes rural and cancer hospitals to access 340B discounts on orphan drugs under any circumstances.  It is  anticipated that drug manufacturers will stop offering 340B pricing on orphan drugs to the affected hospitals.

    The judge’s decision could have implications for HRSA’s so-called 340B “mega-reg” currently pending review by the White House Office of Management and Budget. HRSA has said that it hoped to publish the proposed regulation for notice and comment in June. That regulation is expected to cover the definition of an eligible patient, contract pharmacy arrangements, hospital eligibility criteria, and eligibility of off-site facilities.