USA's HRSA issues first proposed regulation on 340B drug discount progam

The USA’s Office of Pharmacy Affairs (OPA) of the Health Resources Services Administration (HRSA) has published its first proposed regulation under the 340B Drug Discount Program since the Program was established in 1992 in the Federal Register to implement health reform orphan drug exclusion.

This Program, authorized under section 340B of the Public Health Service Act, requires manufacturers who execute a Pharmaceutical Pricing Agreement with the government to sell covered out-patient drugs to specified categories of covered entities at a price that does not exceed a statutory ceiling price. Execution of the agreement is a condition for the federal government to pay for the manufacturer’s covered outpatient drugs under Medicaid and Medicare Part B. The specified covered entities are several categories of clinics that receive federal grants as well as certain hospitals that serve low income populations. The HRSA has published guidance to implement the 340B Program, but has never before issued a regulation, noted Alan Kirschenbaum on law firm Hyman, Phelps & McNamara’s FDA Law Blog.

The Patient Protection and Affordable Care Act of 2010 (ACA) made a number of changes to the 340B Program, including the addition of several types of hospitals to the list of eligible covered entities. Beyond disproportionate share hospitals and children’s hospitals, which were eligible covered entities before the ACA was enacted, the ACA expanded the program to include free-standing cancer hospitals, critical access hospitals, rural referral centers, and sole community hospitals. However, the ACA also contained an exception under which these new types of covered entity hospitals are precluded from obtaining 340B discounts for “a drug designated by the Secretary...for a rare disease or condition” – ie, for a drug designated by the Food and Drug Administration as an orphan drug. The OPA’s proposed rule implements this restriction.