On August 27, 2014, the United States District Court for the District of Columbia rejected Plaintiff Pharmaceutical Research and Manufacturers of America’s (PhRMA) request to invalidate HHS’s recent interpretive rule pertaining to drugs for rare diseases or conditions, known as orphan drugs, in the 340B Drug Pricing Program. The Court ruled that PhRMA’s challenge to the interpretive rule was beyond the scope of the existing lawsuit between PhRMA and HHS, which originally challenged the final rule promulgated by HHS regarding the orphan drug exclusion under the 340B Program.

As we previously reported, the Court’s May 23, 2014 ruling in Pharmaceutical Research & Manufacturers of America v. United States Department of Health & Human Services, No. 1:13-cv-01501, held that HHS lacked the statutory authority to issue the agency’s July 23, 2013 final rule on Section 340B(e) of the Public Health Service Act, the orphan drug exclusion. In direct response to that ruling, on July 21, 2014, the Health Resources and Services Administration of HHS (HRSA) issued an interpretive rule that adopted the same orphan drug policy as the final rule. The interpretive rule interprets Section 340B(e) as excluding orphan drugs only when those drugs are transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the drug received its orphan drug designation. The rule interprets the statute not to exclude orphan drugs that are transferred, prescribed, sold, or otherwise used for conditions or diseases other than those for which the drugs received their orphan designation.

The Court held that because the PhRMA lawsuit originally challenged the final rule, PhRMA would have to bring a new lawsuit if it wanted to challenge HHS/HRSA new agency action, given that a challenge to the interpretive rule was beyond the scope of the existing lawsuit. This ruling is the latest development in the ongoing dispute over HHS’s position that drug manufacturers must provide discounts to certain entities participating in the 340B Program – such as free-standing cancer hospitals, critical access hospitals, rural referral centers, and sole community hospitals – for orphan drugs that are prescribed for uses other than the indication for which the drug received its orphan drug status.

The court’s order is available here.

Reporter, Jennifer S. Lewin, Atlanta, +1 404 572 3569, jlewin@kslaw.com.