June 3, 2014

On May 23, 2014, the U.S. District Court for the District of Columbia ruled in favor of the Pharmaceutical Research and Manufacturers of America (“PhRMA”) by invalidating the “orphan drug rule.” Generally, the orphan drug rule allows rural referral centers, sole community hospitals, critical access hospitals and free-standing cancer hospitals to purchase certain “orphan drugs” that are used for “non-orphan” conditions at 340B Program prices.

The Department of Health and Human Services had finalized this rule in 2013 as part of its efforts to bring clarity to the 340B Program. This decision calls into question HHS’s rulemaking authority with respect to the 340B Program, and has created an atmosphere of regulatory uncertainty for providers and pharmaceutical manufacturers alike just as HHS was expected to release its sweeping “mega-reg” for the 340B Program.

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