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AHA furious over ruling to exclude 'orphan' drugs from 340B program

The ruling means pharmaceutical companies that make orphan drugs do not have to sell then to rural and cancer hospitals at a discount.

Susan Morse, Managing Editor

The American Hospital Association is blasting a court ruling siding with the Pharmaceutical Research and Manufacturers of America over the 340B Orphan Drug program, according to AHA Executive Vice President Tom Nickels.

"The ruling excludes all drugs with an 'orphan' designation from the 340B Drug Pricing Program for rural and cancer hospitals," Nickels said in a statement. "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."

[Also: 'Mega-guidance' proposal puts big limits on 340B Drug discounts]

The ruling means pharmaceutical companies that make orphan drugs do not have to sell then to rural and cancer hospitals at a discount.

Hospitals fear the ruling could mean higher prices and limited access to some drugs, particularly for rural providers.

PhRMA's win could prompt a minor exodus of health care providers from the program, invite other legal challenges, and ramp up pressure on Congress to intervene, according to Law360.

The Orphan Drug Act and the 340B drug program were both designed to ensure greater access to medications.

[Also: 340B drug pricing debate pits hospitals against doctors against big pharma]

The Orphan Drug Act provides financial incentives to pharmaceutical manufacturers that develop drugs to treat rare diseases and conditions. 340B imposes ceilings on prices drug manufacturers charge for medications sold to specific health facilities that help low-income patients.

The Affordable Care Act added a significant number of new covered entities and the Department of Health and Human Services interpreted the law to extend drug discounts to treat conditions other than rare diseases.

On Wednesday, United States District Court Judge Rudolph Contreras sided with PhRMA, the lobbying group that sued over the Health and Human Services interpretation.

Contreras said the law shows Congress intended to exclude all drugs carrying an orphan-designation from the 340B program eligibility for newly added entities.

Not only is the HHS interpretation of the law contrary to what is written, but it is "arbitrary, capricious and an abuse of discretion," Contresas wrote.

Twitter: @SusanJMorse