With all due credit to the Coroner from the Wizard of Oz, like the Wicked Witch of the East crushed by Dorothy\u2019s house, the 340B Drug Discount Program mega-reg is \u201cnot only merely dead, it\u2019s really most sincerely dead.\u201d And to quote one of my favorite sports commentators, Tony Kornheiser, \u201cI believe I had that.\u201d<\/p>\n\n\n\n
Let\u2019s recap. In January 2014, HRSA announced that it would be \u201cformalizing\u201d existing guidance and issuing a regulation designed to cover \u201ca number of aspects\u201d of 340B program operations. Termed the \u201cmega-reg,\u201d it was intended to address such controversial issues as the definition of a \u201cpatient\u201d eligible to receive a 340B drug, compliance requirements for 340B contract pharmacies, and mandatory criteria for hospital eligibility as a 340B covered entity. HRSA stated that the proposed mega-reg would be published and available for comment no later than June 2014. And indeed the draft rule was forwarded to OMB for review in April 2014. So what happened? Well, let\u2019s just say that HRSA\u2019s Orphan Drug Rule was the tornado which carried the house to Oz, causing it to land on the witch.<\/p>\n\n\n\n
Orphan Drug Rule Lawsuit<\/strong><\/p>\n\n\n\n I\u00a0wrote<\/a>\u00a0about HRSA\u2019s Orphan Drug Rule in July 2013.\u00a0 \u201cOrphan\u201d drugs, designated as such by the FDA under the Orphan Drug Act, are used to treat specific rare conditions such as ALS or Huntington\u2019s disease.\u00a0 The Orphan Drug Act provides incentives for manufacturers of such drugs and, through a specific provision in the Affordable Care Act (ACA), Congress exempted orphan drugs from 340B drug discounts.<\/p>\n\n\n\n In its 2013 implementing Orphan Drug Rule, HRSA limited application of the ACA\u2019s orphan drug exception to just three types of 340B covered entities, and further limited application of the exception to situations where the drug was being used for the rare condition or disease for which it was designated as orphan by the FDA. So, for example, if drug X is designated as orphan for treatment of ALS, but is also FDA-approved to treat anorexia, manufacturers would have to make the drug available to covered entities at 340B discounted prices if the entity intended to dispense the drug to anorexia patients.<\/p>\n\n\n\n The\u00a0Pharmaceutical Research and Manufacturers of America (PhRMA)<\/a>\u00a0filed a lawsuit to enjoin enforcement of Orphan Drug Rule, arguing in part that HRSA was not authorized to issue rules interpreting the legislatively adopted orphan drug exception to 340B pricing.\u00a0 And in May 2014, U.S. District Judge Rudolph Contreras\u00a0ruled<\/a>\u00a0that HRSA lacked regulatory authority to promulgate regulations \u201cinterpreting\u201d the breadth of the statutory orphan drug exception, finding that \u201c(w)here Congress prescribes the form in which an agency may exercise its authority\u2026[the court] cannot elevate the goals of an agency\u2019s action, however reasonable, over that prescribed form.\u201d<\/p>\n\n\n\n Orphan Drug Rule Lawsuit Fallout<\/strong><\/p>\n\n\n\n Since the May ruling, HRSA has tried to implement its intended orphan drug rule by reissuing it as a statutory\u00a0interpretation<\/a>; PhRMA filed a\u00a0new lawsuit<\/a>\u00a0seeking to enjoin any implementation or enforcement of HRSA\u2019s statutory \u201cinterpretation\u201d as beyond its authority; and a number of commentators, including me,\u00a0theorized<\/a>\u00a0that that the court ruling would cause HRSA to reconsider whether to proceed with issuing its mega-reg.<\/p>\n\n\n\n In early September 2014, I\u00a0predicted<\/a>\u00a0that HRSA would not issue its mega-reg, but might move forward in finite areas where it had specific Congressional authorization to promulgate rules, such as civil monetary penalty law authority for compliance violations.\u00a0 And in fact the mega-reg continued to sit at OMB.\u00a0 That is, until November 13, 2014, when the regulation was officially pulled.<\/p>\n\n\n\n What\u2019s Next?<\/strong><\/p>\n\n\n\n Well, I must say that I had that.\u00a0 On its\u00a0website<\/a>, HRSA now says that in 2015 it will issue proposed regulations in areas in which it has specific congressional authorization to act, such as calculation of 340B ceiling prices; creation of an administrative dispute resolution process; and civil monetary penalties for regulatory violations.\u00a0<\/p>\n\n\n\n HRSA also says it will issue proposed guidance for notice and comment on unstated \u201ckey\u201d issues, which may include such issues as the definition of a 340B patient, covered entity eligibility, and the operations of contract pharmacies. \u00a0It remains to be seen whether HRSA will address the thorny issue referenced in the OIG\u2019s\u00a0Report<\/a>\u00a0on 340B Contract Pharmacy Operations: the lack of existing processes to protect against unlawful duplicate discounting\/rebates of 340B drugs billed through Medicaid managed care plans.\u00a0 Or whether HRSA will tackle another question repeatedly raised by OIG: whether 340B drugs should be identified as such and billed at acquisition cost to Medicare Part D Plans.<\/p>\n\n\n\n But the actual impact of any HRSA non-regulatory \u201cguidance\u201d may once again rest with the Courts and a ruling on PhRMA\u2019s pending lawsuit challenging HRSA\u2019s authority to implement and enforce its \u201cinterpretation\u201d of the statutory orphan drug exception.<\/p>\n\n\n\n In all likelihood, HRSA guidance will not solve the underlying problem. My constant refrain over the last two years has been that the problems with the 340B Drug Discount Program come back to the on-going dispute over the Program\u2019s purpose: Is the 340B Program intended to provide uninsured safety-net patients with access to outpatient drugs, or is it intended to provide safety-net providers with enhanced revenue to increase patient access to health services? Unless and until HRSA, or Congress, is prepared to answer that question, it is likely 340B Program operations, and HRSA authority over those operations, will remain in flux.<\/p>\n","protected":false},"excerpt":{"rendered":" With all due credit to the Coroner from the Wizard of Oz, like the Wicked Witch of the East crushed by Dorothy\u2019s house, the 340B Drug Discount Program mega-reg is \u201cnot only merely dead, it\u2019s really most sincerely dead.\u201d And to quote one of my favorite sports commentators, Tony Kornheiser, \u201cI believe I had that.\u201d … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_generate-full-width-content":"","footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts\/4495"}],"collection":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/comments?post=4495"}],"version-history":[{"count":3,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts\/4495\/revisions"}],"predecessor-version":[{"id":4498,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts\/4495\/revisions\/4498"}],"wp:attachment":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/media?parent=4495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/categories?post=4495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/tags?post=4495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}