February 16, 2011—The Health and Human Resources Administration (HRSA) has sent the White House Office of Management and Budget (OBM) draft proposed regulations to implement health care reform’s partial prohibition on 340B discounts for orphan drugs.
OMB, which reviews all federal rules prior to their publication in the Federal Register, received the draft from HRSA on Feb. 15. The proposed regulation’s contents are unknown. The White House review is supposed to last no longer than 90 days.
HRSA’s submission comes less than a month after the agency sent OMB a draft “notice with comment” that would redefine the term “patient” for purposes of 340B drug discounts.
The Affordable Care Act (ACA) barred rural and freestanding cancer hospitals new to 340B from obtaining discounts on the expensive specialty drugs, which are often used to treat cancer and diseases affecting children. They also include blood factor product used to treat bleeding disorders and expensive IVIG therapies.
Ban Remains for Rural & Cancer Hospitals
In what has been characterized as a mistake, the law also prohibited children’s hospitals from accessing the discounts even though they were already eligible for the program and many were already enrolled. Congress passed legislation in December lifting the ban for these institutions but it remains in place for the rural and cancer hospitals. Many rural and cancer hospitals say the prohibition denies them much of the benefit of enrolling in 340B.
Last fall, at least six drug manufacturers began denying the discounts to children’s, rural and cancer hospitals. HRSA sent letters to drug companies in mid-December notifying them about the lifting of the ban for children’s institutions. Organizations representing a broad spectrum of hospitals had called upon drug companies to immediately resume the sales pending the guidance from HRSA that is now on its way.
The new regulations are expected to address whether the exclusion on discounted sales applies only to the 362 drugs approved for an orphan use or to the much larger group of 2,315 drugs that have been granted an orphan designation. They are also expected to answer whether the exclusion applies to all uses of an orphan drug, including off-label use, or only to uses for which the drug received orphan status.