Last month, in the case of PhRMA v. U.S. Department of Health & Human Services ("HHS"), a federal district court held that pharmaceutical companies are not required to provide orphan drugs to certain covered entities at reduced prices under the 340B Program, regardless of how the drugs will be used by the covered entities. At issue was rulemaking activity related to section 340B(e) of the Public Health Services Act, which states that for certain covered entities, "the term 'covered outpatient drug' shall not include a drug designated [under statutory orphan drug provisions] for a rare disease or condition." The case involved a challenge to the validity of an interpretive rule promulgated by HHS, following a prior ruling by the same court that HHS lacked authority to promulgate a legislative rule implementing certain provisions of the 340B Program. In its final interpretive rule, HHS took the position that drug manufacturers must provide orphan drugs under the 340B Program when a drug is used for indications other than the rare disease or condition for which it was designated an orphan drug. The court invalidated this rule, finding that it contravenes the plain language of section 340B(e). As a result, all drugs designated as "orphan drugs" will be excluded from the 340B program for certain covered entities.
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