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Court deals setback to hospital 340B drug discounts


By Modern Healthcare
Posted: May 24, 2014 - 11:30 am ET
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(This article has been updated with a correction.)

The pharmaceutical industry scored another victory Friday in its battle to limit access to lower-priced drugs through HHS' 340B drug discount program.

A U.S. district court judge ruled rural and cancer hospitals participating in 340B program could not buy high-priced rare disease drugs at discounted prices if the drugs were being used for common conditions, according to Drug Discount Monitor, the newsletter of the Safety Net Hospitals for Pharmaceutical Access.

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A rule issued by HHS in 2013 said providers had to pay the higher prices—which can range up to $300,000 a year for so-called orphan drugs—when treating patients who had rare diseases, but not when used for more common conditions. Drug company clinical research conducted after a drug receives orphan designation from the Food and Drug Administration sometimes shows it has much wider application than its original indication.

The ruling by District of Columbia Judge Rudolph Contreras came in response to a lawsuit filed by drug companies seeking to rein in the use of the 340B program, whose use by hospitals has grown sharply in recent years. The number of hospitals in the program has doubled to more than 2,100 under the 2010 Patient Protection and Affordable Care Act.

“SNHPA anticipates that drug manufacturers will stop offering 340B pricing on orphan drugs to affected hospitals, which will impose a very heavy financial burden on these institutions and their patients,” the safety net hospital trade group said in a news release Friday.

More setbacks for users of the program may come as soon as next month when the federal government is expected to issue new rules that could narrow the reach of the drug discount program for hospitals that serve numerous low-income and uninsured patients.

A drug industry-backed group called the Alliance for Reform and Integrity is lobbying to limit use of the law by requiring all savings from 340B discounts go to benefit low-income and uninsured patients. Hospitals in the program argue the 340B law allows them to use savings from the program to improve their overall financial and operational health to better serve all patients.

(This article has been updated to indicate that facilities could not buy high-priced rare disease drugs at discounted prices if the drugs were being used for common conditions. The article was also updated to indicate that the program was expanded under the ACA.)


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