September 14, 2010—Pharmaceutical manufacturers have begun notifying the nation's children's hospitals that, pursuant to a controversial provision in the new health care reform law, they will no longer provide them with 340B pricing on "orphan" drugs to treat rare medical conditions.
The Monitor has learned in recent days that Genentech has begun notifying children's hospitals that it has ceased offering 340B discounts on all 10 of its products with orphan designations from the Food and Drug Administration. In an Aug. 31 letter to a children's hospital obtained by the Monitor, it says that for now it will not seek to recoup discounts provided to such hospitals from Jan. 1 to the present. But it reserved the right to do so if it becomes clear at some future date that the provision of such pricing adversely affects its products' average manufacturer price (AMP), best price, average sales price (ASP) and/or non-federal average manufacturer price (NonFAMP).
Other Companies Following Suit
Meanwhile, the Monitor has learned that Allergan has denied another children's hospital's nearly $91,000 chargeback for two orders of Botox, which is used to treat the neurological disorder dystonia, bought at 340B prices in June and July. The reason stated on the invoice from the hospital's wholesaler was "customer ineligible." Sources also report that Shire Human Genetic Therapies has stopped providing children's hospitals with 340B pricing on Elaprase, which is used to treat Hunter Syndrome.
An 11th hour amendment added to the Affordable Care Act (ACA) at the request of drug manufacturers denied children's hospitals as well as free-standing cancer centers, critical access hospitals, rural referral centers and sole community hospitals access to 340B discounts on 351 high-priced orphan drugs, many of which are for cancer or pediatric indications. The health care law granted the cancer centers and rural hospitals access to 340B pricing for the first time. Children's hospitals, however, have been eligible to participate in 340B for almost a year. Twenty-four such hospitals were already receiving discounts on orphan drugs when President Obama signed ACA into law in March.
Attention Turns to Congress
The U.S. House has passed legislation to lift the orphan drug exclusion for children's hospitals but it remains bottled up in the Senate. In mid July, the chairmen of the House and Senate committees with jurisdiction over 340B sent a letter to Secretary of Health and Human Services (HHS) Kathleen Sebelius saying that Congress intends to lift the ban for those hospitals and asked her to delay its implementation. Sebelius, however, had yet to publicly and formally announce a decision on their request by the second week of September.
Frustrated by the Senate's inability to attach the exemption to a passable piece of legislation, Sen. Sherrod Brown (D-Ohio) recently sent a letter co-signed by 17 of his colleagues to Senate Majority Leader Harry Reid (D-Nev.) urging to bring the matter to a vote promptly.
Rural health groups are expected to press more forcefully the removal of the entire 340B orphan drug prohibition as many newly eligible rural hospitals have indicated that they might not enroll in the discount program if they cannot buy orphan drugs at 340B prices.
Congress reconvenes following its August recess on Sept. 13.