According to report in BioCentury, the U.S. District Court for the District of Columbia vacated HHS' July 2013 final rule that discounted Orphan drugs when used in non-Orphan indications under Medicare's 340B program. The court said HHS lacked authority to make the rule.
The 340B program requires manufacturers to deeply discount outpatient drugs to hospitals and clinics bearing the brunt of healthcare for low income and other special populations. In 2010, Congress amended 340B to exclude Orphan drugs from discounting, but the law was unclear on whether the exclusion applied when the drugs were used for non-Orphan indications. In 2013, HHS issued the final rule saying the drugs were to be discounted when used in non-Orphan indications, and the Pharmaceutical Research and Manufacturers of America subsequently sued to challenge it.
In the decision, the court said that while the rule "seems like the most reasonable way for implementing the orphan drug exclusion, unfortunately Congress did not delegate to HHS broad rulemaking authority as a means of doing so," noting Congress limited HHS's 340B rulemaking authority to three purposes -- establishing a dispute resolution process, setting methodology for price calculations and imposing monetary civil sanctions. Plaintiff PhRMA said in a statement it is "extremely pleased" with the ruling.
The 340B program has been scrutinized for expanding margins. In June, HHS' Health Resources and Services Administration (HRSA) plans to publish a proposed rule addressing eligibility criteria. HRSA declined to comment on implications of the decision on that rule.