Federal court rules against 340B orphan drug exclusion

Cancer and rural hospitals are currently barred from obtaining orphan drugs through the 340B discount program, a ruling that has outraged both the hospital and pharmacy communities.

Federal judge Rudolph Contreras of the District of Columbia circuit court ruled late last week that pharmaceutical companies do not have to provide orphan drugs--which are used to treat rare diseases and disorders--at the 340B program discount to rural facilities and specialty oncology hospitals. He wrote that Congress interpreted the law to exclude recently added participants to the program from the orphan drug discount, Healthcare Finance News reported.

The Health Resources and Services Administration (HRSA) ruled last year that the only exclusion for the 340B discount applied when the drugs were being used for off-label purposes. The pharmaceutical industry sued to block the implementation of the regulation.

"It's a win for the highly profitable drug industry and a big loss for rural hospitals and their patients," Randy Barrett, vice president of communications for the 340B Health lobbying group, told Managed Healthcare Executive. He noted that the ruling does not affect safety-net hospitals, which comprise a large proportion of 340B program participants.

The American Hospital Association (AHA) criticized the ruling. "This decision comes at a steep cost for the vulnerable patients cared for by rural and cancer hospitals...denying these hospitals the ability to utilize 340B discounts for these drugs will reduce access to critical services and treatments for some of the most vulnerable patients in society," the AHA said in a statement. "Sadly, the biggest beneficiary of this ruling is the pharmaceutical industry--it does nothing to help either patients or taxpayers."

"ASHP has long maintained that the interpretation by HRSA of the orphan drug provisions of the Affordable Care Act was correct and that rural and cancer hospitals should be able to access orphan drugs under the 340B program when used for non-orphan indications," said Kasey K. Thompson vice president of policy, planning and communications for the American Society of Health System Pharmacists in a statement.

There has been friction between hospitals and pharmaceutical companies over the 340B program in recent years, particularly as some providers have come under fire for reselling their 340B allotments at significant profits, as well as not providing what some regarded as sufficient charity care.

To learn more:
- read the Managed Healthcare Executive article 
- here's the AHA statement
- check out the ASHP statement
- read the Healthcare Finance News article

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