Opinion: The law has to catch up on orphan-designated drugs with multiple uses — SkimNews
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- Rinvoq carries an FDA orphan designation for juvenile idiopathic arthritis, but pharmacist John Mildenberger dispenses it primarily for Crohn's disease, where federal 340B rules still block his critical access hospital from the government discount price.
- The 340B orphan exclusion stems from a 2010 Affordable Care Act caveat allowing manufacturers to deny discounted pricing on orphan-designated drugs to newly added covered entities like critical access hospitals, regardless of what condition the drug is actually treating.
- HRSA attempted in 2013 to limit the rule by use rather than designation, but a federal court vacated the rule in May 2014 and struck down the agency's interpretive guidance in October 2015, ruling only Congress can rewrite the statute.
- On Aug. 3, HRSA announced a 340B rebate pilot effective Jan. 1, 2027, requiring covered entities to buy at full wholesale price and claim rebates after dispensing, with manufacturer participation optional and covered entities unable to opt out.
- The pilot covers only drugs on Medicare's negotiated price list for 2026-2027, which HRSA estimates at under 5.5% of 340B sales, and explicitly excludes Rinvoq, with reporting costs estimated at $34,000 a year per covered entity.
- A 2021 HHS Office of Inspector General report found that for orphan drugs Xgeva and Prolia, only about 1% of dispensed units went to their orphan indications, while Rinvoq itself has 9 FDA-approved indications with only 2 carrying orphan status.
- Mildenberger proposes two actions: HRSA adding diagnosis to the rebate pilot's claims data feed, and Congress amending the orphan exclusion to turn on what a drug is treating rather than on what it was once designated to treat.
Why it matters: Critical access hospitals lose money on common-disease prescriptions simply because the drug also holds a rare-disease designation, with Rinvoq having 9 indications and an OIG report showing only 1% of units for some orphan drugs went to orphan uses. Courts have twice ruled HRSA cannot rewrite the statute, leaving the gap between designation and reality to be closed only by Congress.
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