U.S. Reps. Peter Welch (D-Vt.) and David McKinley (R-W.Va.) have reintroduced bipartisan legislation in the U.S. House to give 340B rural and free-standing cancer hospitals access to 340B pricing on orphan drugs—which according to a 2019 study are 25 times more expensive than traditional drugs and cost U.S. patients an annual average of $186,758 in 2017.
Welch has co-sponsored the Closing Loopholes for Orphan Drugs Act with different GOP colleagues since 2016. He teamed up with Rep. Morgan Griffith (R-Va.) during the 114th Congress, Rep. Greg Harper (R-Miss.) during the 115th Congress, and McKinley during the last session. Welch and McKinley are senior members of the House Energy and Commerce Committee which has jurisdiction over the 340B program. McKinley has been a particularly active proponent of 340B provider-friendly causes.
The bill would let critical access hospitals, sole community hospitals, rural referral centers, and free-standing cancer hospitals access 340B pricing on drugs designated for orphan diseases or conditions when the drugs are prescribed for common diseases or conditions. The Affordable Care Act made these four hospitals categories eligible for the 340B program. It simultaneously precluded them from accessing 340B pricing on orphan drugs, which accounted for just under half (44 percent) of new U.S. drug approvals in 2019 and are predicted to account for 18 percent of global prescription drug sales by 2024, according to the consulting firm EvaluatePharma.
The U.S. Health Resources and Services Administration (HRSA) published a 340B program regulation in 2013 that would have given 340B rural and cancer hospitals the same relief as under Welch and McKinley’s bill. A federal district judge, acting in a case brought by Pharmaceutical Research and Manufacturers of America (PhRMA), struck down the rule in 2014, saying Congress did not give HRSA authority to issue the regulation. The court’s ruling was the first link in a chain of events that led to the current controversy over manufacturers’ denials of 340B pricing on drugs dispensed by contract pharmacies.
“Drug companies have been taking advantage of the ‘orphan drug’ loophole since 2014 at the expense of consumers, and rural hospitals and healthcare providers,” Welch said. “Hospitals rely on the 340B program to ensure they are able to continue to serve rural and vulnerable Americans with health care needs. We cannot allow big drug companies to use this loophole to cash in at the expense of these hospitals and those they serve.”
“The 340B program was created to help hospitals who serve our rural communities with the skyrocketing cost of prescription drugs. Unfortunately, the pharmaceutical industry has abused loopholes and hurt rural hospitals and patients by charging exorbitant prices” McKinley said. “Our bill would put a stop to this by making sure that the orphan drug exclusion is used as intended, so that patients continue to get the treatment they need.”
