340B programme: PhRMA files court challenge to final rule on orphan drug exception

On 27 September, the Pharmaceutical Research and Manufacturers of America (PhRMA) filed suit against the Department of Health and Human Services (HHS) challenging the 340B orphan drug final rule. The complaint seeks both to invalidate the final rule and enjoin (stop) its implementation.

As you may recall, the Affordable Care Act expanded the 340B programme to add certain new categories of eligible covered entities but excluded drugs subject to an orphan designation from the 340B ceiling price requirement as to those entities. The final rule, which became effective on 1 October 2013, interpreted that ceiling price exception narrowly, to apply only to orphan drugs when used for the indication subject to the orphan designation. As a result, the final rule allows the new covered entity types to purchase orphan drugs at the 340B ceiling price when those drugs are used for non-orphan indications.

PhRMA makes two arguments in support of its legal challenge. First, PhRMA alleges that the final rule is inconsistent with the statute. PhRMA’s position is that the statutory language that creates the ceiling price exception applies to the orphan drug as a whole, and not on an indication basis. Second, PhRMA alleges that neither HHS nor the Health Resources and Services Administration (HRSA) had authority to issue a rule interpreting the orphan drug exception…

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