Today, the Health Resources and Services Administration (HRSA) issued a letter to Johnson and Johnson Health Care System Inc. (J&J) calling for the manufacturer to “cease implementation of its rebate proposal immediately” and threatening sanctions if J&J does not inform HRSA by September 30, 2024 that it has withdrawn its rebate proposal. HRSA’s letter follows an unpublished August 14 letter to J&J objecting to its policy.  Today’s letter states that J&J’s policy violates the 340B statute.  HRSA dismissed J&J’s argument that the rebate model is similar to an inventory replenishment model, stating that, “[t]here are fundamental differences between J&J’s proposal and some covered entities voluntarily using inventory replenishment processes.”

HRSA reminded the manufacturer of its authority to terminate J&J’s participation agreement with the 340B program, which would deprive J&J of Medicaid and Medicare Part B coverage for its drugs, and of the authority to impose civil monetary penalties against J&J.

On August 23^rd, 2024, J&J announced that, effective October 15, 2024, DSH covered entities will no longer have access to up-front 340B pricing for Stelara and Xarelto.  Instead, the hospitals will be required to purchase the drugs at non-340B pricing (a commercial price such as wholesale acquisition cost), submit claims and medical data through a J&J platform, and wait for the payment of a rebate.

The Powers 340B team will continue to monitor any additional developments.