Drug Discount Monitor

Emotions Surface During 340B Conference Session on Orphan Drugs

July 21, 2010 - The man who just days ago led the federal Office of Pharmacy Affairs (OPA) pointedly asked an official of a firm that specializes in orphan drugs yesterday if his company was prepared to add staff and use computer screening tools to block children's and rural hospitals from buying such drugs at their 340B discounted prices.

The tough question that former OPA Director Jimmy Mitchell posed to Marcus Farbstein of Genentech during the 340B Coalition annual conference in Washington epitomized the deep feelings that exist over a provision in health care reform denying newly eligible 340B providers access to discounts on 351 high-priced drugs, many of which are for cancer or pediatric indications.

The U.S. House recently voted to lift the orphan-drug exclusion for children's hospitals only but the bill's fate remains uncertain in the Senate. Hospital groups are pressing Congress to lift it as well for critical access hospitals, sole community hospitals, rural referral centers and free-standing cancer hospitals but legislation to that effect has not been introduced.

Mitchell, who said he was speaking personally and not on OPA's behalf, asked Farbstein if his company or wholesalers acting on its behalf with would proactively deny children's and rural hospitals access to 340B prices on Genentech's orphan drugs "or are you depending on everyone to be honest and good citizens?" His question was not angry or accusatory, but seemingly asked out of personal concern for the program he ran for more than a decade.

Farbstein, who also said he was speaking on his own behalf and not Genentech's, replied that his company was still struggling with "how we oversee all the new rules and regulations and how we interpret them from a legal standpoint."

"We certainly will continue to face a huge number of challenges and I'm sure covered entities face a similar situation as they try to sort through how they can participate," he continued. For small hospitals, he said he wonders at what point the costs of split billing software, consultants, and lawyers will "overwhelm the decision to join the program."

"It's a valid question," he acknowledged.

Earlier in the session, John Van Eeckhout, a vice president of the Child Health Corporation of America (CHCA), which represents 43 free-standing children's hospitals, said that loss of access to 340B-priced orphan drugs could cost those institutions between $50 million and $100 million annually. Many CHCA member hospitals currently in the program might withdraw if the exclusion is not reversed and others that are not covered now or in the process of applying might not join, he predicted.

"Children's hospitals are literally the epicenter of rare disease diagnosis, treatment and chronic care over a lifetime for a lot of these kids" he said. "It's a long term commitment we make to these patients."

Eric Zimmerman, legal counsel to the Rural Referral Centers/Sole Community Hospital Association, remarked that the exclusion language "is no doubt a mess and a shame." If not reversed, said, "it will become the source of a lot of fighting for years to come."

"I'm hearing from my clients that very few of them are seeing value in enrolling in 340B" with the orphan drug exclusion in place, Zimmerman continued. "They are measuring savings in the tens of thousands of dollars as a result of the exclusion." Especially for rural referral centers with significant cancer care programs, he said, there is very little benefit to joining 340B when weighed against its administrative burdens.