As 340B Consultants and avid program supporters who have witnessed firsthand the profound impact this program has on providing essential healthcare services to vulnerable and underserved populations, we’re deeply concerned about Johnson & Johnson’s recent attempt to undermine the 340B Drug Pricing Program through their proposed rebate model. HRSA’s swift and decisive response to this blatant violation of the 340B statute is commendable, but it’s clear that more needs to be done to protect this vital program from manufacturer overreach.
HRSA’s Response: A Step in the Right Direction
HRSA’s recent communications to J&J clearly outlined why the proposed rebate model violates the 340B statute. The agency’s stance is unequivocal: J&J’s plan to replace upfront discounts with a retrospective rebate model for Xarelto and Stelara is inconsistent with the law and must be abandoned.HRSA’s warning to J&J includes potential consequences that are both appropriate and necessary:
- Termination of J&J’s Pharmaceutical Pricing Agreement (PPA)
- Referral to the HHS Office of Inspector General for civil monetary penalties
These measures demonstrate HRSA’s commitment to enforcing the 340B statute and protecting covered entities from manufacturer manipulation.
J&J’s Misguided Approach
J&J’s attempt to justify its rebate model by comparing it to “replenishment” processes is a clear misinterpretation of the 340B statute. The company’s insistence on proceeding with this plan, despite HRSA’s warnings, shows a disturbing disregard for both the letter and spirit of the law.The proposed rebate model would force disproportionate share hospitals to:
- Purchase drugs at full price upfront
- Submit data to J&J for verification
- Wait for rebates to be processed and paid
This approach would create significant financial burdens for safety-net providers and introduce unnecessary complexity into the 340B program.
The Need for Stronger Enforcement
While HRSA’s response is a positive step, it’s evident that more robust measures are needed to deter manufacturers from attempting similar maneuvers in the future. As advocates who have seen the critical role 340B plays in expanding access to care for those most in need, we believe HRSA should:
- Implement faster enforcement mechanisms: The current timeline gives J&J several weeks to respond, potentially allowing the company to proceed with its plan. A more rapid response system is needed to prevent implementation of non-compliant policies.
- Increase transparency: HRSA should consider making public its communications with manufacturers who violate 340B rules, serving as a deterrent to others.
- Seek legislative support: Work with Congress to strengthen the 340B statute, explicitly prohibiting rebate models and other attempts to circumvent the program’s intent.
- Enhance penalties: Consider advocating for more severe consequences for repeat offenders, including temporary exclusion from government healthcare programs.
Protecting the 340B Safety Net
The 340B program is a crucial lifeline for safety-net providers and the vulnerable populations they serve. J&J’s actions threaten to undermine this vital program, potentially setting a dangerous precedent for other manufacturers. As supporters who have witnessed the transformative power of 340B in communities across the nation, we stand with HRSA in its efforts to maintain the integrity of the program. However, we urge the agency to take an even stronger stance against manufacturer overreach. Only through vigorous enforcement and proactive measures can we ensure that the 340B program continues to fulfill its mission of stretching scarce federal resources and expanding access to comprehensive health services. The healthcare community must remain vigilant and united in opposing any attempts to weaken or circumvent the 340B program. It’s time for HRSA to send a clear message: the 340B statute is not open for interpretation, and attempts to subvert it will be met with swift and severe consequences.