340B Ruling on Orphan Drug Exclusion – Impact to Your Hospital

InsightsClient Alert

340B Ruling on Orphan Drug Exclusion

As many of us were headed out for a long Memorial Day weekend, a federal judge issued a ruling on Friday, May 23, 2014 that is expected to have significant impact on certain hospitals affected by the Orphan Drug Exclusion under the 340B Drug Pricing Program (340B Program.)

U.S. District Judge Rudolph Contreras ruled that certain hospitals (rural referral center, critical access, sole community, and cancer) participating in the 340B Program should not have access to 340B discounts on orphan drugs when the drugs are used for non-orphan indications. Judge Contreras indicated that although the regulations issued by the Secretary of Health and Human Services (HHS) may be “the most reasonable way of administering the statute,” it was still necessary to rule that Congress did not grant HHS the “rulemaking authority to do so.”

The lawsuit was brought by drug manufacturers, seeking to limit access to the lower priced drugs through the 340B Program. As a result of this ruling, drug manufacturers may stop providing the discounted pricing under the 340B Program for orphan drugs. This will cause a financial strain on participating hospitals as well as the hospitals’ patients.

In addition, the Judge’s ruling may call into question the proposed 340B Program “Mega-Reg” expected to be published for comments in June.

The Office of Pharmacy Affairs 340B database indicates your hospital has elected to purchase orphan drugs under the 340B Program. You may potentially be impacted by this new ruling and soon be facing higher pharmacy costs. Please take some time now to analyze the impact to your hospital.

For further information and assistance on this 340B Program issue or any other 340B matters, please contact Cindy DuPree or Sarah Dekutowski at 404.220.8494.