The Orphan Drug Wars: HHS Interpretive Rule Clarifies Orphan Drug Exclusion

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On July 21, 2014, the U.S. Department of Health and Human Services (HHS) released an “Interpretive Rule” in response to a recent U.S. District Court decision that vacated the July 23, 2013, orphan drug rule on the grounds that HHS lacked the statutory authority to promulgate the rule. See PhRMA v. HHS, No. 13-01501 (D.D.C. May 23, 2014). However, according to HHS, the court’s decision in PhRMA v. HHS did not invalidate the agency’s interpretation of the orphan drug exclusion or prohibit related guidance, such as the Interpretive Rule, which, according to HHS, further explains how the agency will interpret and implement section 340B(e) of the Public Health Service Act (PHSA). 42 U.S.C. 256b(e). For more information, please see related blog postings.

The Interpretive Rule clarifies that HHS interprets section 340B(e) of the PHSA as “excluding drugs with an orphan designation only when those drugs are transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the drug was designated under section 526 of the Federal Food, Drug and Cosmetic Act (FFDCA).” In other words, “[t]his section of the PHSA does not exclude drugs that 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.”

The effective date of the Interpretative Rule is July 21, 2014. Consequently, pharmacies and other healthcare providers will need to ensure that they follow the Interpretive Rule when utilizing 340B pricing in the future.

 


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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