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Big Pharma Succeeds Against Price Controls

(CN) - A federal judge invalidated price controls imposed on so-called "orphan drugs" used to treat conditions other than those for which the drug was created.

An orphan drug is a pharmaceutical developed to treat a rare medical condition that affects fewer than 200,000 people, and often comes with a steep price tag. Since drugmakers might see such a consumer base as too small to warrant the research, the U.S. government gives offers incentives for orphan-drug development.

The U.S. Department of Health and Human Services (HHS) meanwhile uses the 340B program to give hospitals that serve low-income patients discounts on drugs.

Having previously imposed use-based price controls on orphan drugs, HHS issued a rule in July 2013 that imposed price controls through the 340B program on "orphan drugs" when prescribed for "off-label" uses.

Finding the rule onerous, a trade group called the Pharmaceutical Research and Manufacturers of America (PhRMA)filed a federal complaint in Washington against HHS, Secretary Sylvia Burwell and HHS Administrator Mary Wakefield.

U.S. District Judge Rudolph Contreras found for PhRMA in 2014 and vacated the rule, holding that the agency had "acted beyond the bounds of its statutory authority."

PhRMA complained, however, that HHS failed to take the ruling to heart. Two months after the court's ruling, HHS issued an interpretive rule that required manufacturers to reimburse 340B hospitals when the orphan drug is prescribed for an "off-label" use.

PhRMA contended that the interpretive rule is substantively the same as the version the court vacated.

Contreras again found for the trade group on Thursday, and vacated the agency's rule.

"Because the term 'a drug designated ... for a rare disease or condition' in section 340B(e), as construed with reference to related statutory provisions, unambiguously indicates that Congress intended to exclude all drugs carrying an orphan-designation from 340B Program eligibility for the newly added entities, the court concludes that HHS's interpretive rule is contrary to the plain language of the statute," the judge said.

The court acknowledged that the language of the statute is "somewhat curious, and might be more difficult to reconcile with the generally-stated goal of the 340B program," which seeks to improve access for low-income patients to high-priced drugs.

But "Congress's chosen statutory language evidences that it struck a different balance and it is simply 'not for [this Court] to rewrite the statute,'" Contreras concluded.

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