The U.S. District Court for the District of Columbia ruled in favor of a Pharmaceutical Research and Manufacturers of America (PhRMA) challenge to a 2014 interpretive rule on an Affordable Care Act (ACA) provision that excludes certain hospitals from 340B Drug Pricing Program discounts on orphan drugs.

According to the Court, while the Health Resources and Services Administration (HRSA) has the authority to issue interpretive guidance, its interpretation of the ACA provision to exclude 340B discounts only when the drugs are used for the purpose of the orphan designation is “contrary to the plain language of the statute.”

As a result of the ruling, free-standing cancer hospitals, critical access hospitals, rural referral centers, and sole community hospitals will no longer have access to 340B discounts on orphan drugs used for any purpose. The ruling does not affect other covered entities that were eligible for the 340B program before the ACA; those entities can continue to access 340B discounts on orphan drugs for orphan and non-orphan purposes.

The Court’s reasoning could have implications for changes the agency chooses to finalize in its recently proposed 340B “mega-guidance” and any legal challenges to provisions in that guidance.

If you have questions or concerns, contact Erin O’Malley, director of policy, at eomalley@essentialhospitals.org or 202.585.0127.