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Section 340B of the Public Health Service Act (42 U.S.C. 256b), as amended by sections 7101 and 7102 of the Patient Protection and Affordable Care Act, is amended-
(1) in subsection (a)-
(A) in paragraphs (1), (2), (5), (7), and (9), by striking the terms ''covered drug'' and ''covered drugs'' each place either term appears and inserting ''covered outpatient drug'' or ''covered outpatient drugs'', respectively;
(B) in paragraph (4)(L)-
(i) in clause (i), by striking ''and'' at the end;
(ii) in clause (ii), by striking the period and inserting ''; and''; and
(iii) by inserting after clause (ii), the following:
''(iii) does not obtain covered outpatient drugs through a group purchasing organization or other group purchasing arrangement.''; and
(C) in paragraph (5)-
(i) by striking subparagraph (C);
(ii) by redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively; and
(iii) in subparagraph (D), as so redesignated, by striking ''subparagraph (D)'' and inserting ''subparagraph (C)'';
(2) by striking subsection (c);
(3) in subsection (d)-
(A) by striking ''covered drugs'' each place it appears and inserting ''covered outpatient drugs'';
(B) by striking ''(a)(5)(D)'' each place it appears and inserting ''(a)(5)(C)''; and
(C) by striking ''(a)(5)(E)'' each place it appears and inserting ''(a)(5)(D)''; and
(4) by inserting after subsection (d) the following:
''(e) EXCLUSION OF ORPHAN DRUGS FOR CERTAIN COVERED ENTITIES.- For covered entities described in subparagraph (M), (N), or (O) of subsection (a)(4), the term 'covered outpatient drug' shall not include a drug designated by the Secretary under section 526 of the Federal Food, Drug, and Cosmetic Act for a rare disease or condition.''.