There have been a number of developments since the U.S. District Court for the District of Columbia “vacated,” or invalidated, HRSA’s final rule on the treatment of orphan drugs under the 340B Drug Discount Program. The Health Resources and Services Administration (HRSA), which administers the 340B program, issued the regulation in July 2013. It went into effect on October 1, 2013 and was vacated by the court on May 23, 2014, after a legal challenge brought by the Pharmaceutical Research and Manufacturers of America (PhRMA).

HHS Declines to Pursue Interpretive Rule Status: As described in our recent Health, Pharmaceutical, and Biotechnology Alert, the court previously had given the Department of Health and Human Services (HHS) — the parent agency of HRSA — until June 13 to decide whether it wanted to further brief and defend the regulation as an “interpretive rule.” Last week HHS declined to do so. In a June 12 filing, HHS declined the court’s offer for further briefing but noted that the government continues to evaluate whether to appeal the decision or to re-issue the regulation as an interpretive rule or issue other interpretive guidance.

HRSA Reasserts Its Interpretation of the Orphan Drug Exclusion: On June 18, HRSA updated the 340B program’s orphan drug web page with a statement in response to the court decision. While the statement concedes the regulation has been invalidated, HRSA states the following:

However, the Court did not invalidate HRSA’s interpretation of the statute. HHS/HRSA continues to stand by the interpretation described in its published final rule, which allows the 340B covered entities affected by the orphan drug exclusion to purchase orphan drugs at 340B prices when orphan drugs are used for any indication other than treating the rare disease or condition for which the drug received an orphan designation. HRSA is continuing to post updated Orphan Drug Designation Lists, found below, as well as the Orphan Selection File, found on the 340B database, in order to assist all 340B stakeholders in complying with HRSA's policy.

This statement raises the question whether HRSA believes it can continue to require manufacturers to comply with its interpretation of the orphan drug exclusion, even in the absence of a rule.

PhRMA Challenges HRSA’s Posting: In a prompt response to HRSA’s posting, PhRMA, on the same day of the HRSA website posting, filed a brief with the court objecting to the new website language. The brief calls out HRSA for what PhRMA characterizes as an attempt to enforce the regulation as an interpretive rule despite HHS’ refusal to pursue that argument before the court. In support of that position, the briefing points to the language in HRSA’s statement regarding stakeholder compliance with the policy. PhRMA notes that HHS specifically declined to brief whether the rule should be viewed as an interpretive rule, and therefore it is inconsistent for the government to be operating as if HRSA's interpretation of the orphan drug exclusion, as articulated in the final rule, still is in effect and binding. PhRMA requests that the court either order additional briefing on the issue of whether the rule can survive as an interpretive rule or enter a final order invalidating the rule.

As with any development involving a government program in which your company participates, it is very important that you review the materials directly and carefully yourself so that you can identify all issues relevant to your organization.