Johnson & Johnson Health Care System Inc. (J&J) announced last week that, effective October 15, 2024, disproportionate share hospital (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, submit claims data on both pharmacy and medical claims through a J&J platform, and wait for the payment of a rebate by the manufacturer. 

 J&J is requiring DSH covered entities to apply for rebates through Beacon Channel Management (www.beaconchannelmanagement.com), a unit of Second Sight Solutions (which also operates the 340B ESP platform), after purchasing the drugs.  DSH covered entities will initially purchase these drugs “at a commercial price, such as the wholesale acquisition cost (WAC)”.  Beginning March 10, 2025, the rebate request must be submitted within 45 days of the date of dispensation or administration.  The data that J&J is requiring to be submitted is listed at pages 6 -7 of the notice. 

 If “validated”, J&J will issue a rebate equal to the difference between WAC and the 340B ceiling price.  If J&J denies the rebate request, DSH hospitals may dispute the decision through the Beacon platform, which may require submission of additional documentation.  DSH hospitals must continue to designate only one contract pharmacy to access Stelara and Xarelto, consistent with J&J’s prior contract pharmacy policy.

 The policy does not affect non-DSH covered entities, but covered entities have recent experience with a manufacturer policy of this type rapidly expanding in scope.  In mid-2020, Eli Lilly began restricting shipment of a single branded drug to contract pharmacies but that policy was the precursor to dozens of manufacturers adopting similar polices for hundreds of drugs. Notably, Stelara and Xarelto are two of the ten drugs that are subject to Inflation Reduction Act “maximum fair price” standards beginning in 2026.

It is unclear whether the policy will be implemented in states with laws that prohibit drug manufacturers from imposing conditions on the shipment of 340B drugs to contract pharmacies.

The Powers 340B team will continue to monitor this development.