Last week, the Health Resources and Services Administration (HRSA) of the US Department of Health and Human Services (HHS) announced the availability of an interpretive rule (the “Interpretive Rule”) regarding section 340B(e) of the Public Health Service Act (PHSA), effective July 21, 2014. The Interpretive Rule, “Implementation of the Exclusion of Orphan Drugs for Certain Covered Entities Under the 340B Program,” affirms the agency’s previous guidance that requires pharmaceutical manufacturers to discount orphan drugs when entities utilize them for conditions other than their designated indication. The Interpretive Rule specifically states that HHS interprets 340B(e) of the PHSA as excluding from the drug pricing program “drugs that are transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the drug was designated” under the Federal Food, Drug, and Cosmetic Act (FFDCA). The Interpretive Rule states that the PHSA does not exclude from the program “drugs that are transferred, prescribed, sold, or otherwise used for conditions or diseases other than for which the drug was designated” under the FFDCA.
This Interpretive Rule comes on the heels of the US District Court for the District of Columbia’s ruling that HHS does not have the authority to issue substantive rules regarding section 340B(e)’s orphan drug exclusion. PhRMA v. HHS, No. 13-01501 (D.D.C. May 23, 2014). The court’s decision, however, left open the ability of HHS to issue interpretive rules on the provision. Following this, HRSA has characterized the former substantive rule as interpretive. Otherwise, the rule is largely unchanged.
For pharmaceutical manufacturers, the Interpretive Rule means that HRSA and HHS will continue to require that orphan drugs be provided to freestanding cancer hospitals and other newly eligible entities at 340B Program rates when the drugs are transferred, prescribed, sold or otherwise used for conditions or diseases other than for which the drug was designated under section 526 of the FFDCA.
Squire Patton Boggs has specific expertise in guiding clients through 340B Program issues. If you have questions the interpretive rule, or any other 340B Program matter, please contact one of the individuals listed in this mailing.