If Johnson & Johnson refuses to scrap its proposed changes to the 340B drug pricing for hospitals, it risks the termination of participation in the program and monetary fines, the Health Resources and Services Administration warned.
The U.S. Health Resources and Services Administration on Tuesday wrote a letter to Johnson & Johnson CEO Joaquin Duato, insisting that the pharma cease implementation of proposed modifications to its 340B drug discount policy.
If J&J refuses to comply, it will be in violation of its original obligations under the federal discount program for hospitals and will be open to “potential consequences,” according to the agency. These include the termination of J&J’s participation in the 340B program and other “civil monetary penalties.”
The pharma has until the end of the month to inform the Health Resources and Services Administration (HRSA) of its decision.
Tuesday’s warning from HRSA follows a previous announcement from J&J that it will implement sweeping changes to how it lowers drug costs under 340B. Instead of offering upfront discounts, the pharma plans to require participating hospitals to first purchase drugs at full price and then offer rebates later, subject to “validation.”
The 340B changes are slated to cover J&J’s blood thinner Xarelto (rivaroxaban) and blockbuster antibody Stelara (ustekinumab) and will go into effect on Oct. 15, 2024.
To qualify for rebates, hospitals should file their requests within 45 days of dispense and submit data related to the use and purchase of Xarelto and Stelara, according to the company. Rebates will be handed out “once the number of validated dispensed units equals the number of units in the purchased package size,” J&J noted at the time.
In its letter on Tuesday, HRSA slammed J&J’s “unapproved rebate proposal” noting that it “violates J&J’s obligations under the 340B statute.” The 340B program indicates that drugmakers enter into an agreement with the Secretary of the Department of Health and Human Services and arrive at a specific amount to be paid to the manufacturer, “taking into account any rebate or discount, as provided by the Secretary,” HRSA pointed out.
“The Secretary has not ‘provided’ that the rebates described in J&J’s notice” should be considered when determining the amount to be paid for Stelara and Xarelto, according to the agency.
J&J in a statement to STAT News said that it will continue to work “constructively” with HRSA to identify ways to “modernize” the 340B program “for a more sustainable future.”
Implemented in 1992, the 340B program establishes drug discounts for certain hospitals who in turn prescribe these medicines to patients that fall below the federal poverty level. The industry has in recent months tried to impose restrictions on the program, limiting the discounts available for hospitals that dispense the drugs through third-party pharmacies.
