Court Strikes Down 340B Orphan Drug Discounts

Rural and cancer hospitals will no longer have access to 340B discount pricing for orphan drug purchases.

A federal court struck down guidance issued last year by the Health Resources and Services Administration (HRSA), the administrative arm of the US Department of Health and Human Services (HHS), that required drug manufacturers to provide discounts between 20% and 50% on orphan drugs used for non-orphan conditions to 340B facilities serving vulnerable patients.

The rule allowed 340B-eligible rural and cancer hospitals to purchase high-cost orphan drugs at a discounted price for use to treat common conditions. However, this court ruling likely means that affected providers will be unable to enjoy 340B discounts for any orphan drug used for any purpose.

Orphan drugs and breakthrough therapies—which last year comprised the highest number of new medications approved since 2001—can cost patients $300,000 or more per year.

Because rural hospitals run on “razor-thin margins,” the ruling “could be the difference between closing or staying open,” 340BHealth spokesperson Randy Barrett exclusively told Pharmacy Times.

The ruling means that there will be fewer free or discounted medications for patients in need of them, which translates to “less clinical and medication management care,” Barrett said.

Health-system leaders fear that any scale back of the 340B drug-pricing program could hurt the very patients it was designed to benefit.

"This ruling will limit access to critical medications for the sickest patients in our healthcare system," said Kasey K. Thompson, PharmD, MS, MBA, ASHP spokesperson, in a statement.

Disproportionate share hospitals are not affected by this federal ruling.

The decision comes just over a month after HRSA released the 340B Program “mega-guidance” that clarified other conditions for drug discounts.

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