Opinion: The law has to catch up on orphan-designated drugs with multiple uses

Oct. 2, 2026 Mildenberge is the specialty pharmacy manager, senior clinical lead pharmacist, and community pharmacy compliance officer at Sidney Regional Medical Center in Sidney, Neb. As sure as the sun rises, Crohn’s disease is most definitely not juvenile idiopathic arthritis. But government policy doesn’t seem to understand that. I’m a pharmacist, and I started a specialty pharmacy in the small town of Sidney, Neb. My pharmacy patients drive miles and hours across the sun-drenched Nebraska prairie to see me at my pharmacy. They are often overjoyed to arrive at my counter to pick up medications like Rinvoq. No longer do they have to deal with remote mail-order pharmacies — they can come to my pharmacy anytime to speak with me and pick up their medications for things like Crohn’s disease in person. While I am glad to sell my patients their Rinvoq, there is a downside that I never tell them: I sometimes sell them their medications at a staggering loss to the pharmacy. The reason for that loss has nothing to do with my patient’s disease. Rinvoq carries an FDA orphan designation for juvenile idiopathic arthritis, a childhood arthritis that many of my patients do not have. Because my hospital is a critical access hospital, manufacturers can prevent me from buying any orphan-designated drug at the government discount price, no matter what it is being used to treat. The designation follows the molecule, not the diagnosis, so a Crohn’s prescription gets handled as though it were a juvenile idiopathic arthritis prescription. The problem here is 340B, a government drug discount program that allows the sale of discounted medications to places like hospitals and certain kinds of clinics (i.e., “covered entities”) and allows them to keep the profit to help with things like medication access, service expansion, staffing, operations, and patient care. When the Affordable Care Act brought hospitals like mine into the program in 2010, it came with a caveat. Some of the newly added covered entities, critical access hospitals among them, were shut out of 340B pricing on drugs carrying an orphan designation at the manufacturers’ discretion, meaning drugs the Food and Drug Administration has designated to treat a rare disease or condition affecting fewer than 200,000 people in the United States. While this seems simple enough, many of these medications have more than a single use, and if a medication has an orphan designation, it does not have to be sold be sold at 340B discount prices even if it is currently being used for a non-orphan indication, depending on the manufacturer. The Health Resources and Services Administration (HRSA) has tried to fix this before. In 2013 the agency issued a rule saying the exclusion should apply only when an orphan drug is actually used for the rare condition it was designated for. A federal court vacated that rule in May 2014, holding that HRSA lacked the authority to issue it. HRSA reissued the same position as interpretive guidance, and in October 2015 the same court struck that down as well, this time finding it contrary to the plain language of the statute. Congress had written the exclusion around designation, and the court said only Congress could rewrite it around use. Practicality was part of that fight. HRSA’s guidance told covered entities they could not buy orphan drugs through 340B unless they could track the indication, and in 2013 almost no small hospital could. That objection is now expiring. Which brings me to what HRSA published on Aug. 3. The agency announced a 340B rebate pilot that takes effect Jan. 1, 2027. Instead of buying at a discount, covered entities will buy at full wholesale price, dispense the drug, submit claims-level data, and wait for a rebate. Manufacturers can choose whether to take part. Covered entities like my pharmacy cannot. Once HRSA approves a manufacturer’s plan, my pharmacy has no option to keep buying those drugs the old way, and the savings will arrive as approved by the manufacturer after the medication has left my counter in a patient’s hands. That is a hard thing to ask of organizations with famously small margins, if there is any margin worth mentioning. The pilot itself is narrow. It reaches only the drugs on Medicare’s negotiated price list for 2026 and 2027, which HRSA estimates at under 5.5% of 340B sales, and Rinvoq is not among them. But HRSA has reserved the right to expand the model, and the agency puts the reporting cost to covered entities at roughly $34,000 a year per entity. The manufacturers are footing the bill for the IT platform of this new program to get the data and transparency they have been seeking for years. The data feed will carry the details of every transaction, including what was dispensed, how much was dispensed, and how it was covered. It is the exact machinery that did not exist in 2013, but could today if one more data field is included in the requested data feed. This brings us back to how Crohn’s is not juvenile idiopathic arthritis. Rinvoq has nine FDA-approved indications, and two of these carry orphan designations, juvenile idiopathic arthritis and giant cell arteritis. The 2021 Health and Human Services Office of Inspector General report that reviewed 40 high-spending Medicare medications found that, for Xgeva and Prolia, the share of dispensed units for their orphan indications amounted to around 1%. Orphan drug protections apply narrowly to the rare disease and do not apply when the same drug is developed for a common disease. A patient today drives 45 minutes to my specialty pharmacy that they utilize as their local pharmacy. Their Rinvoq is for Crohn’s, but because the medication carries an orphan designation for a childhood arthritis, federal law treats their Crohn’s prescription as though it were one, and I lose money filling it. I am not asking to be left out of it. If my pharmacy has to build the reporting anyway, I want the data to be worth what it costs us. That takes two things. HRSA can add the diagnosis to the claims data it is already going to collect, which is one more field on a transmission being built regardless. Congress has to do the rest, by amending the orphan exclusion so that it turns on what a drug is treating rather than on what it was once designated to treat. The court has already said that second half is Congress’ job, and the usual objection — that nobody could tell the difference — is about to stop being true. Transactions like these have contributed to pharmacy deserts and shrinking pharmacy choice. Soon my patients may find themselves on hold all over again with a remote specialty pharmacy they never chose. Crohn’s is not juvenile idiopathic arthritis. My patient knows it, their gastroenterologist knows it, and starting in 2027 the claims data could know it too. All that is left is for the law to catch up. John Mildenberger, Pharm.D., M.B.A., is the specialty pharmacy manager, senior clinical lead pharmacist, and community pharmacy compliance officer at Sidney Regional Medical Center in Sidney, Neb.