The federal government renewed its threats to Johnson & Johnson on Friday over the company’s proposal to change how some hospitals receive drug price discounts under the 340B program.
The company announced plans last month to implement a rebate model in which some hospitals serving low-income patients would receive 340B discounts on Xarelto and Stelara only after validating certain data, rather than right away. J&J previously said the plan is intended to prevent “rampant abuse and misuse” of 340B. But the Health Resources and Services Administration, which oversees the discount program, said J&J’s proposal violates the statute and would drive up costs for hospitals upfront.
On Friday, HRSA Administrator Carole Johnson said in a letter that J&J has until the end of the month to pull the plug. If it doesn’t, HRSA reminded J&J that the consequences may include terminating the company’s pharmaceutical pricing agreement under 340B or referring the company to the HHS’ Office of Inspector General. J&J’s plan was originally set to take effect Oct. 15.
HRSA threatened fines in a similar letter to J&J last week. The agency said Friday that the 340B statute requires prior approval of such proposals, and “despite communicating this point to J&J multiple times,” the company has yet to ask for approval.
J&J stood behind its plan in a statement to Endpoints News on Friday.
“J&J has clear legal authority to implement a rebate model. The 340B statute clearly and unequivocally contemplates rebates as a mechanism for manufacturers to offer the 340B price to covered entities,” a company spokesperson said.
Editor’s note: This story has been updated to include comment from J&J.