AHA wants J&J to face monetary penalties in 340B plan
J&J would become the ultimate arbiter of whether a rebate should be approved and paid, AHA says.
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The American Hospital Association wants the Health Resources and Services Administration to levy monetary penalties against Johnson & Johnson if the drug company continues with its plan to give 340B hospitals rebates instead of upfront payments.
"If Johnson & Johnson moves forward with its plan to undermine the 340B Drug Pricing Program by unilaterally imposing a rebate model rather than the longstanding upfront discount model, the Health Resources and Services Administration should take 'immediate enforcement action,' including assessing civil monetary penalties on Johnson & Johnson for intentionally overcharging 340B hospitals," the AHA said in a letter to the HRSA.
AHA general counsel Chad Golder wrote: "J&J's adoption of this rebate model is yet another example of a drug company seeking to squeeze every possible penny from the hospitals and health systems that care for America's underserved patients."
America's Essential Hospitals also sent a letter urging the HRSA to take action.
"HRSA should use all available tools in the statute to prevent J&J and other manufacturers from harming patients by withholding upfront discounts from safety net providers," said Dr. Bruce Siegel, president and CEO of America's Essential Hospitals. "Ultimately, HRSA must assert its statutory authority to hold drug companies accountable."
Congress stands by the HRSA affirming its authority to administer the program "in the best interests of patients," Siegel said. "For example, in 2020, when a private company, Kalderos, proposed a rebate model similar to J&J's recent proposal, 217 members of Congress signed a bipartisan letter urging HRSA to take action to enforce the statute."
WHY THIS MATTERS
The HRSA has told Johnson & Johnson it cannot use a rebate model to replace upfront discounts in its 340B drug-pricing program.
However, J&J has stood by its rebate model. In a statement, a company spokesperson said that its "limited scope rebate model is fully consistent with the 340B statute, which specifically references rebates as a payment mechanism, and is expected to mitigate legally prohibited program abuses by improving transparency."
J&J also said: "The 340B program is not meeting its original goal of allowing safety net providers to obtain discounted medicines for vulnerable patients. Patients are not realizing the full benefit of the 340B program because of rampant abuse and misuse."
THE LARGER TREND
On August 23, Johnson & Johnson announced that it would change the way it made 340B pricing available for two of its most popular products, Stelara and Xarelto. Starting October 15, J&J said it would require all disproportionate share hospitals participating in the 340B Drug Pricing Program to purchase these drugs at full price and submit data to J&J. Upon verification of the drug's 340B status, the DSH hospitals would receive a rebate for the discounted 340B price.
AHA said that J&J's new policy is a fundamental shift in how the 340B program has operated for over 30 years. Disproportionate share hospitals, which already operate on thin margins, would be forced to develop pricey administrative mechanisms to make and track rebate requests, the AHA said.
"And J&J will essentially transform itself into the ultimate arbiter of whether a rebate should be approved and paid, with the likely consequence of J&J denying rebates to hospitals that they appropriately owe," AHA said. "While J&J may contend that this new policy is needed to improve program transparency, Congress did not permit drug companies to take the law into their own hands. … This new rebate policy – like the drug companies' contract pharmacy policies that preceded it – is a money-making scheme dressed up as a program integrity measure."
Email the writer: SMorse@himss.org
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