On July 23, 2013, the Health Resources and Services Administration (HRSA) issued a final rule implementing the 340B Drug Pricing Program orphan drug exclusion established by the Health Care and Education Reconciliation Act. Under the final rule, HRSA is excluding from the 340B program orphan drugs (that is, drugs designated by the FDA as “a drug for a rare disease or condition” pursuant to section 526 of the Federal Food, Drug, and Cosmetic Act at the request of the sponsor) when those drugs are used for the indication for which they received an orphan designation, but not when the drug is used for other approved indications independent of that designation. The orphan drug exclusion only applies to a subset of newly-eligible rural hospitals, critical access hospitals, and free-standing cancer hospitals. It is the responsibility of the 340B covered entity to maintain auditable records that demonstrate compliance with the orphan drug exclusion requirements. HRSA asserts that its regulation “will provide clarity in the marketplace, maintain the 340B savings for newly-eligible covered entities, and protect the financial incentives for manufacturing orphan drugs designated for a rare disease or condition as indicated in the Affordable Care Act and intended by Congress.” The rule is effective on October 1, 2013. HRSA will conduct a public webinar to discuss the rule on August 8, 2013.