PhRMA Again Asks Federal Court to Strike Down 340B Orphan Drug Discount

October 15, 2014

PhRMA is asking a D.C. federal court to once again strike down a price discount mandated by HHS for orphan drugs, when used to treat non-rare conditions at certain covered hospitals.

The trade group filed a new lawsuit last Thursday against HHS’s Health Resources and Services Administration after the agency reissued the same vacated rule under a different aspect of its authority.

PhRMA is asking a repeat of the D.C. federal court’s May decision striking down HHS’s carve-out rule for the 340B drug discount program. The rule requires pharmaceutical companies to sell orphan drugs to certain hospitals at a discount when those drugs are earmarked to treat indications other than those for which they received their orphan status.

Orphan drug status confers various financial incentives to promote the development of rare-disease treating therapies. The 340B discount program, by contrast, is meant to alleviate the financial burden of hospitals that treat remote and underserved populations, and can require up to a 50 percent price reduction for drugs dispensed under the program.

The court in May agreed with PhRMA’s 2013 lawsuit in finding that Congress had specifically excluded orphan drugs from 340B discounts, and in trying to skirt that exclusion, HHS exceeded its authority. Weeks later, however, the agency doubled down, this time requiring the discount as an interpretive, rather than final, rule.

PhRMA contends that in whatever form the rule is issued, it still exceeds HHS’s authority under 340B.

In its new complaint, the group asks that the reissued rule be declared illegal, along with “any future agency pronouncements, policies, rulings, rules, adjudications, or other action, regardless of how characterized, adopting the same interpretation.” — Bryan Koenig

Originally appeared in Drug Industry Daily, the pharmaceutical industry’s number one source for regulatory news and information. Click here for more information.