HRSA issues final warning to J&J to cease implementation of its 340B proposed rebate program

The Health Resources and Services Administration Sept. 27 sent a final warning letter to Johnson & Johnson urging the company to inform the agency by Monday, Sept. 30 that it would halt its proposed 340B rebate model scheduled to go into effect next month. 

“As outlined in HRSA’s September 17, 2024, letter, if J&J proceeds with implementing its rebate proposal without Secretarial approval, it will violate section 340B(a)(1) of the Public Health Service Act,” HRSA wrote today. “If J&J has not notified HRSA that it is ceasing implementation of its rebate proposal by September 30, 2024, HRSA will begin the process outlined in J&J’s Pharmaceutical Pricing Agreement related to terminating the agreement. In addition, if J&J moves forward with implementation of its rebate proposal, HRSA will initiate a referral to the HHS Office of Inspector General pursuant to 42 U.S.C. § 256b(d)(1)(B)(vi).” 
 
On Aug. 23, J&J announced that it would be upending its approach to 340B pricing for two of its most popular products, Stelara and Xarelto. Historically, J&J offered upfront discounts to 340B hospitals when they purchased these drugs. However, J&J said starting Oct. 15 it will require all disproportionate share hospitals participating in the 340B program to purchase these drugs at full price and apply for a rebate from J&J. Under the new program, these hospitals would be required to submit certain data to J&J when they purchase the drugs at full price. After J&J verifies the drug’s 340B status, it will send disproportionate share hospitals a rebate for the difference between the amount paid and the discounted 340B price. 
 
Immediately after J&J’s announcement, AHA expressed concern and said HRSA should take “immediate enforcement action,” including assessing civil monetary penalties on J&J for intentionally overcharging 340B hospitals.