HHS POISED FOR ROUND TWO OF ORPHAN DRUG FIGHT

HHS isn’t ready to throw in the towel in the fight over expansion of the 340B program under the Affordable Care Act (ACA).  On Thursday HHS said in a court filing that it will appeal last month’s federal court ruling that struck down a regulation issued by the Health Resources & Services Administration.

That regulation concerned an ACA provision that added new facilities—critical access hospitals, sole community hospitals, rural referral centers and free-standing cancer hospitals—to the 340B program.  That program calls for big discounts—from 20% to 50%—to facilities that serve low-income patients.  The program has grown rapidly in recent years.

The ACA provision that added new categories of facilities contains a provision excluding “orphan drugs”—drugs developed for conditions so rare (fewer than one in 200,000) that without special incentives, manufacturers couldn’t afford to produce them.

But the regulation limited the orphan drug exclusion by saying the exclusion applies only when the orphan drug is used for the rare condition for which it was designated as orphaned.  In other words, the regulation said that the new categories of facilities get the 340B discount for an orphan drug whenever it’s to be used for something other than the specified rare condition.

The court said that the agency didn’t have the authority to issue the regulation and struck it down.  Some pharmaceutical companies immediately stopped providing the 340B discount to the new categories of facilities.

But Thursday’s court filing shows that the agency intends to fight back and defend its authority to issue the regulation, as well as proposed regulations it sent to the Office of Management & Budget last May.

Today’s post was contributed by Norman G. Tabler, Jr.

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