340B Orphan Drug Exclusion Ruling By Federal Court

PBIRx®

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As of October 14, 2015, 340B Covered Entities such as rural referral centers (RRC) and free standing cancer hospitals (CAN) that had “Opted In” to purchase Orphan Drugs will no longer be able to utilize 340B pricing for “any” drug for which there is at least one Orphan Drug designation per ruling by Rudolph Contreras, United States District Judge.

Though entities that “Opted In” agreed to track the use of each drug by indication and to maintain audible records, the ruling is in favor of The Pharmaceutical Research and Manufacturers of America (PhRMA), which claims that HRSA incorrectly interpreted the Orphan Drug exclusion to be used for indications other than the Orphan Drug indication as a 340B eligible drug.

Another option for 340B Covered Entities was to “Opt Out” of submitting any drugs that are considered Orphan Drugs because “they are unable or unwilling to track by indication."

What is interesting is the large number of existing drugs for which there IS at least one Orphan Drug designation that would be surprising to some such as Crestor, Humira, Enbrel, Prozac, Betaseron, Copaxone and others. One thought is that by seeking at least one Orphan Drug designation for an existing drug, manufacturers therefore would not have to provide a 340B pricing discount and at the same time increase the cost of the drug.

A recent PBIRx 340B Compliance Audit for a covered entity that had “Opted Out” of submitting for drugs that are considered Orphan Drugs uncovered a significant issue. The 340B Covered Entity was using two different Contract Pharmacies that were each using two different Contract Pharmacy Service Providers (CPSPs). CPSPs establish automated operating procedures for the contract pharmacy program.

PBIRx’s  340B Compliance Audit identified that one contract pharmacy had submitted for 92 prescriptions for Crestor, which has one Orphan Drug designation, while the second contract pharmacy was compliant and had no submissions for Crestor or any other drug for which there is an Orphan Drug designation. Therefore, one of the covered entities contract pharmacy was non compliant and as such, posed a big loss of 340B status risk for the covered entity as HRSA could view this as diversion. PBIRx is working diligently with the client on an immediate resolution to protect their very valuable 340B status.

To protect your 340B status, contact our experienced and knowledgeable team for your 340B HRSA Compliance Audit at (888) 797-2479. Through the use of our cutting edge technology, we can provide you with the most comprehensive evaluation report and provide the necessary solutions where needed.