On November 13, 2014, the Health Resources and Services Administration ("HRSA") announced its plans to abandon the much anticipated "mega-reg" amid questions concerning HRSA's rule-making authority.  The "mega-reg" was expected to provide much needed clarity to the 340B drug discount program (the "340B Program") by addressing, among other things, the definition of an eligible patient, compliance requirements for contract pharmacy arrangements, hospital eligibility, and criteria for hospital off-site facilities.

HRSA submitted draft regulations to OMB in April 2014, and the proposed "mega-reg" was expected to be released in June 2014.  However, several legal challenges to other 340B Program regulations undermined HRSA's legal posture to proceed.  A federal district court ruling in May 2014 determined that HRSA did not have the statutory authority to issue regulations concerning the Orphan Drug provision of the 340B Program.[1] This decision called into question HRSA's authority for promulgating regulations for the 340B Program, except for limited rulemaking authority granted to it under the Affordable Care Act.[2]  In response to the May 2014 decision, on July 23, 2014, HRSA released a nonbinding Interpretive Rule that set forth the same Orphan Drug policies as the challenged regulation.[3]  EBG has previously posted more in-depth detail as to the court's decision on the PhRMA lawsuit and the Interpretative Rule here.

After release of the Interpretative Rule, PhRMA filed a motion for miscellaneous relief arguing that the challenged regulation was outside of HRSA's rulemaking authority and incapable of surviving as an Interpretive Rule.[4]  The court decided to limit its initial decision to whether HRSA had the authority to issue the Orphan Drug rule as a legislative rule, and PhRMA filed a second lawsuit on October 9, 2014, challenging HRSA's Interpretive Rule as violative of the plain language of the statutory Orphan Drug exclusion.[5]  Despite questions concerning its rulemaking authority, HRSA has updated its frequently asked questions asserting that the failure to comply with statutory requirements as interpreted by HRSA could be considered a violation of the Orphan Drug statute and subjects the drug manufacturer to enforcement action.[6]

Despite the withdrawal of the "mega-reg," HRSA has stated that it will pursue proposed rules where it has clear legislative rulemaking authority.  To this end, the HRSA Office of Pharmacy Affairs website includes a statement that HRSA will issue proposed rules pertaining to civil monetary penalties for manufacturers, calculation of the 340B ceiling price, and administrative dispute resolution in 2015.[7]  In addition, the website states that HRSA will issue proposed guidance to address "key policy issues," which are surmised to include the areas that would have been addressed by the "mega-reg."  Historically, HRSA has not issued regulations, but has issued program guidance through a series of Notices issued through the Federal Register, as well as other sub-regulatory guidance, including FAQs on its website.

HRSA's ability to issue and enforce guidance will likely be impacted by ongoing litigation and challenges brought forth by the drug industry.  In addition, calls from the drug industry, and a new conservative majority in the Senate, may cause the Senate to reopen the original 340B statute to address the policy debates, lack of clarity regarding the permissible interpretation of 340B Program requirements and standards and HRSA's rulemaking authority.  Thus, even in the absence of the "mega-reg," significant changes to the 340B Program should be expected by stakeholders in 2015.

 


[1]Pharm. Research & Mfrs. of Am. v. United States HHS, No. 13-1501, 2014 U.S. Dist. LEXIS 70894 (D.D.C. May 23, 2014).

[2]As codified in the Public Health Service Act 42 U.S.C.§ 256b(d) (administrative dispute resolution), § 256b(d)(1)(B)(i)‒(ii) (calculation of 340B ceiling price), and § 256b(d)(1)(B)(vi)(I) (civil monetary penalties).

[3] HRSA, Notice Regarding Availability of Interpretive Rule: Implementation of the Exclusion of Orphan Drugs for Certain Covered Entities Under the 340B Program, 79 Fed. Reg. 42801 (July 23, 2014).  See also HRSA Freqeuntly Asked Questions, available at http://www.hrsa.gov/opa/faqs/index.html.

[4] PhRMA Supplemental Memorandum in Support of PhRMA's Mot. for Misc. Relief, PhRMA v. HHS, No. 13-1501, ECF No. 52.

[5] PhRMA Complaint PhRMA v. HHS, Case No. 14-1685, ECF No. 1.

[6] HRSA, Office of Pharmacy Affairs website, Freqeuntly Asked Questions, available at http://www.hrsa.gov/opa/faqs/index.html (last visited Nov. 20, 2014) (follow link to"Orphan Drugs").

[7]HRSA Office of Pharmacy Affairs website, available at http://www.hrsa.gov/opa/index.html (last visited Nov. 20, 2014).

 

Back to Health Law Advisor Blog

Search This Blog

Blog Editors

Authors

Related Services

Topics

Archives

Jump to Page

Subscribe

Sign up to receive an email notification when new Health Law Advisor posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.