In a Sept. 17 letter to Johnson & Johnson (J&J), the Health Resources and Services Administration (HRSA) demanded that the drug company immediately halt its plan to offer rebates, rather than up-front discounts, on certain drugs in the 340B Drug Pricing Program.
HRSA said the plan “violates J&J’s obligations under the 340B statute” and that the agency “expects J&J to cease implementation of it” by the end of this month. J&J has said it would begin the rebate program for Stelara and Xarelto on Oct. 15.
HRSA’s action follows advocacy by America’s Essential Hospitals, urging the agency to take immediate steps to protect covered entities from the proposed policy. The association argued the policy is illegal and would harm patients, limit resources for hospitals to provide safety net care, and only benefit drug companies’ bottom line.
In the letter to J&J’s chair and CEO, HRSA outlined how the proposed model violates federal statute and regulation. The agency stated that, under the 340B statute, manufacturers must enter into a pharmaceutical pricing agreement (PPA) with the secretary of health and human services (HHS) and may not unilaterally change it. Because the proposed rebate model would violate J&J’s PPA and, in turn, the 340B statute, it could subject the company to termination of its PPA and civil monetary penalties. An active PPA is required for a manufacturer to participate in Medicare Part B and the Medicaid market.
HRSA demanded J&J immediately cease implementation of the rebate model and notify the agency of this action by Sept. 30.
Contact Director of Policy Rob Nelb, MPH, at rnelb@essentialhospitals.org or 202.585.0127 with questions.
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