HHS Relabels Invalidated 340b Regulation As “Interpretative Rule”

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Earlier this week HHS came out swinging in the latest round of its battle with the Pharmaceutical Research & Manufacturers of America (PhRMA) over the Affordable Care Act’s provisions on 340B and orphan drugs.  HHS reasserted its long-held position on its website, this time calling it an “interpretative rule.”

An orphan drug is one developed for a condition so rare (under one in 200,000 people) that absent special incentives, no company could afford to develop and market it.  The 340B program requires manufacturers to sell drugs at deep discounts to hospitals serving large populations of low-income patients.  The ACA added new facilities to the 340B program, including children’s hospitals and cancer hospitals.  But the act excluded orphan drugs.

HHS issued a regulation interpreting the exclusion as applying only when the drug is prescribed for the rare condition for which it was designated as an orphan.  So the discount would apply if the drug is used for some other condition.  Physicians have the authority to do this when they believe it’s in the best interest of the patient.

PhRMA sued, and the district court invalidated the regulation on the grounds that HHS lacked the statutory authority to issue it.  Now HHS has reasserted its interpretation, on the theory that the court didn’t challenge the substance of its interpretation, so the interpretation remains valid.

Is PhRMA conceding?  Not on your life.  Even before the interpretative rule made it to the website, PhRMA was back in court challenging it.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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