J&J drops 340B rebate model following HRSA pressure

By Hayley DeSilva / September 30, 2024

Johnson & Johnson has dropped its controversial plan related to the drug discount program less than a month after the U.S. Health Resources and Services Administration sent a letter ordering the drugmaker not to implement it.

In the letter, HRSA said the company would face federal sanctions because the program violated 340B drug dscount program rules and had not received federal approval. Monday the agency said it received notice from Johnson & Johnson that the company was scrapping the initiative.

In August, Johnson & Johnson announced new reimbursement plans for its anticoagulant Xarelto and Stelara, a Crohn's disease drug, at 340B-participating hospitals. Under the proposed switch, the providers would have had to pay upfront for the two drugs and receive legally required discounts later.

The proposal drew criticism from organizations like the American Hospital Association, which represents nonprofit hospitals, and America's Essential Hospitals, which represents the nation's safety-net facilities.

Both groups said they were pleased with the drugmaker's decision to rescind the proposal and applauded HRSA's handling of the matter.

“J&J is strongly committed to the original intent of the 340B Program to help serve vulnerable patients,” a company spokesman said in a statement. “Increased transparency, including the use of a statutorily permitted rebate model, will help the 340B program better serve vulnerable patients. Despite the glaring need for more transparency and accountability, J&J is forgoing implementation of its transparency rebate model pending resolution of issues raised by HRSA. 

"We are taking this action to ensure HRSA’s unprecedented position would not restrict patients’ access to J&J’s life-saving and life-changing medicines. The time is now for real solutions and action to help better ensure this important safety net program benefits patients and stops the growing diversion of 340B medicines, abuses, and misuses of the program. We will continue to constructively engage with HRSA, and all stakeholders, to explore solutions to modernize the 340B Program with more transparency, accountability and oversight.”