7.21959752 bw - HRSA issues interpretive rule on orphan drug exclusion

HRSA issues interpretive rule on orphan drug exclusion

Last week, the Health Resources and Services Administration (HRSA) issued an interpretive rule clarifying their position that manufacturers should continue to extend 340B prices for orphan drugs when these drugs are purchased and used by free-standing cancer hospitals (CAN), sole community providers (SCH), rural referral centers (RRC) and critical access hospitals (CAH) for non-orphan indications.

This is the latest 340B development surrounding the orphan drug exclusion. In May, a federal judge ruled that HRSA lacked the authority to create and enforce their final rule on the orphan drug exclusion. Although agreeing that the regulation seemed “reasonable,” the judge vacated the final orphan drug exclusion rule, and affected hospitals were cautioned against purchasing any orphan drugs on 340B. In June, wholesalers began sending letters to affected providers, notifying them that they were being removed from 340B contract pricing for orphan drugs.

However, the judge’s May ruling did not invalidate HRSA’s interpretation of the statute or prevent HRSA from issuing guidance in the form of an interpretive rule. HRSA’s interpretive rule is intended to provide clarity in the marketplace while balancing the needs of hospitals to benefit from the 340B program with the needs of manufacturers to protect their financial incentives for manufacturing orphan drugs. While the interpretive rule is supported by the American Hospital Association (AHA), Pharmaceutical Research and Manufacturers of America (PhRMA) continues to challenge HRSA’s interpretation of the orphan drug exclusion.