HRSA issued the 2014 rule two months after a court struck down a similar rule in 2013. The court had given it leeway to issue a new rule. The vacated rule exempted only orphan-designated drugs that are “used for the rare condition or disease for which that orphan drug was designated.” The court ruled that HHS and HRSA don't have the legal authority to issue rules regarding the statute that created 340B. The new rule was seen as a victor for safety net hospitals.
The 2014 rule follows the text of the original statute drafted by Congress, but adds that only orphan drugs designated for a rare disease or condition “and used to treat such rare disease or condition” are exempt from the 340B program.
PhRMA says the new rule has basically the same meaning and effect, and continues to be inconsistent with the statute.
“The agency issued the exact same rule, but labeled it 'interpretive,' ” said Mit Spears, PhRMA executive vice president and general counsel. “HRSA's action in this regard is unlawful.”
HRSA has said that companies that violate the rule by refusing to offer discounts may be ordered to issue refunds or face penalties. Manufacturers are required to offer 340B discounts as a condition of Medicaid covering their products. HRSA has called the rules “interpretive,” but PhRMA notes in its complaint that the court ruled that the rule has legal effect because the rule imposes consequences for lack of compliance.
Safety Net Hospitals for Pharmaceutical Access, which represents hospitals that participate in the 340B program, criticized PhRMA for challenging the rule.
"Once again, Big Pharma is trying to increase its prices at the expense of rural and cancer hospitals and their patients," Ted Slafsky, president and CEO of SNHPA, said in a statement. "These providers depend on 340B savings to serve needy patients and, in many cases, to keep their doors open."
Critics of the program say hospitals are pocketing the savings gained from the drug discounts rather than passing them on to patients or using them to improve care. Studies also have shown that hospitals that are newer to the program often serve less-needy patients than older members. The Affordable Care Act expanded the 340B program to include free-standing cancer hospitals, critical-access hospitals, rural referral centers and sole community hospitals.
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