PhRMA sues feds over new rule on orphan-drug discounts

The U.S. pharma trade group wasn't happy when the U.S. government put orphan drugs back on its list of products that must be discounted heavily for certain customers. Now, PhRMA has sued the government's Health Resources and Services Administration (HRSA) over the change and asked a judge to block the new rule while the suit plays out.

At issue is whether drugs developed under the FDA's orphan drug program should be subject to discounts under the 340B program, which are "significant," according to the Department of Health and Human Services. The discounts apply to certain types of healthcare facilities, including "critical-access" hospitals that primarily serve Medicare and Medicaid patients. Orphan drugs had been excluded, but the Affordable Care Act mandated the change. Yesterday, the new rule--issued by HRSA--went into effect.

There's one important aspect to the new rule, however; it only applies when orphan drugs are used for nonorphan uses. A number of drugs given orphan status--for uses in rare diseases--are also approved for broader populations of patients.

Consider Rituxan, the Roche ($RHHBY) drug; it's approved in a variety of orphan diseases, including Wegener's granulomatosis and chronic lymphocytic leukemia, a rare form of that blood cancer. But it's also approved for rheumatoid arthritis, which isn't an orphan indication. Novartis' ($NVS) Afinitor has orphan status for tuberous sclerosis and pancreatic neuroendocrine tumors, among others, but much of its sales comes from kidney cancer.

Under the new rule, Roche would have to sell Rituxan to these facilities at a discount for RA patients, but the company could still charge the usual price for orphan uses. Same for Novartis and Afinitor; the drug would be discounted for nonorphan uses but not for orphan indications.

PhRMA sued in Washington, D.C., federal court and asked the judge for an injunction against the rule. The government asked the judge for a stay, thanks to the government shutdown. So far, the judge hasn't spoken on either score.

- see the final HRSA rule
- get more on the 340B exclusion program

Special Report: Top 20 Orphan Drugs by 2018 - Rituxan - Afinitor