Orphan Drug Exclusion – Court Ruling

On October 14, 2015, a federal court vacated the Department of Health and Human Services’ (HHS) Orphan Drug Rule that had allowed certain 340B Drug Pricing Program hospital entities to purchase orphan drugs for non-orphan use.

Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s lobbying group, has twice sued the Obama Administration over its attempts to extend 340B discounts to orphan drugs when they are used for non-orphan indications.  Some orphan drugs are used almost exclusively to treat something other than the rare diseases and conditions that they were developed for.  Prozac, for example, was originally intended to treat Autism and Body Dysmorphic Disorder in pediatric patients.  However, it’s more commonly prescribed for depression.  PhRMA was able to successfully argue that the Orphan Drug policy interpretation, allowing orphan drugs to be discounted for non-orphan applications, undermined incentives for drug makers to continue research and development on new pharmaceuticals.

“This decision comes at a steep cost for the vulnerable patients cared for by rural and cancer hospitals,” Tom Nickels, Executive Vice President of the American Hospital Association, stated. “Sadly, the biggest beneficiary of this ruling is the pharmaceutical industry – it does nothing to help either patients or taxpayers.”  Hospitals will now be unable to provide as much uncompensated care due to the immediate cessation of financial aid from this ruling.  It may cause poorer or more rural hospitals to have to discontinue stocking orphan drugs at all and it most certainly will decrease the available reimbursements in the 340B Program.  Participating entities of the 340B Program will also need to immediately revise their policies and procedures regarding Orphan Drug purchases.

It is possible that HHS may appeal the Court’s decision on this matter.  Many entities hope that they do, especially those already struggling to make ends meet for their patients at rural hospitals.

Although the future of the Orphan Drug Rule is unclear, we at HPSA Acumen look forward to assisting our clients in every avenue of their healthcare planning capacity.  Whether it is facilitating designations or following the court cases of certain healthcare programs, we strive to offer instruction and guidance throughout the planning process.  We pride ourselves in implementing the tools hospitals need to provide the highest level of care to their patients.

An extended article on the Orphan Drug Ruling can be found here: http://www.mwe.com/Federal-Court-Rejects-HHS-Interpretation-of-340B-Programs-Orphan-Drug-Rule-10-20-2015/.

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