AHA Asks Court to Protect Integrity of the Orphan Drug Program

The American Hospital Association (AHA) filed an amicus brief in a case challenging the applicability of the orphan drug program, urging a federal district court to sustain the validity of an HHS interpretive rule regarding drug pricing for certain facilities under the program. The AHA asserted in its brief that without the rule in place, rural and cancer hospitals would not be ensured access to otherwise unaffordable drugs. The brief argued that if the court were to interpret the HHS interpretive rule to exclude all drugs with an orphan designation, the expansion of Section 340B of the Public Health Services Act (PHSA) through the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) would be nullified.


Through the ACA, under 42 U.S.C. § 256b(a)(4), the PHSA was expanded to allow rural and cancer hospitals access to drugs with an orphan designation—drugs used primarily to treat rare diseases. The 340B program works by imposing a price ceiling on medications sold to certain health care facilities, entities known as “340B covered entities.” Under the ACA, the covered entities were expanded to include: children’s hospitals, cancer hospitals, critical access hospitals, rural referral centers, and sole community hospitals.


Pharmaceutical Research and Manufacturers of America (PhRMA)—a trade association representing drug manufacturers—brought a lawsuit against HHS arguing that HHS improperly construed the ACA as limiting the applicability of the orphan drug exclusion to occasions where the drug is used to treat the rare disease that earned the drug its orphan designation. The AHA brief suggested that the complaint misunderstood the ACA and the purpose of the orphan drug program. According to the brief, the rationale for the program is to encourage manufacturers to develop drugs for rare diseases. The AHA believes the interpretive rule, as it stands, clarifies the intent of Congress to improve access to 340B drugs in certain facilities while protecting the financial incentives to produce drugs for rare diseases. Additionally, the AHA brief asserted that if the PhRMA positon were adopted it would deprive rural and cancer hospitals of much needed drugs, financially jeopardize those hospitals, and provide an undue financial windfall to drug manufacturers for drugs, even when they aren’t being used for the purpose that the 340B program intended to incentivize.