Johnson & Johnson’s 340B Drug Discount Policy Change Rejected by HHS

Johnson & Johnson's Plan:
J&J announced a plan to change its payment method for hospitals participating in the 340B drug discount program, switching from upfront discounts to a rebate system for its drugs Stelara and Xarelto, effective October 15, 2024.

HHS and HRSA Response:
The Health Resources and Services Administration (HRSA) stated that J&J's proposed rebate model is "inconsistent" with federal law and has not been approved by the Secretary of the Department of Health and Human Services.

340B Program Background:
The 340B program, established in 1992, requires drug manufacturers to offer discounts on eligible outpatient drugs to participating hospitals and clinics, primarily those serving low-income patients.

Impact on Hospitals:
Critics argue that the rebate approach could deny 340B pricing at the time of purchase and impose significant financial and administrative burdens on hospitals.

Legal Challenges:
The move is part of ongoing legal and policy disputes between drug manufacturers and healthcare providers over the 340B program, with some drugmakers suing over HRSA's interpretations of the statute.