ASHP Opposes Manufacturer's Attempt to Undercut 340B Program

Today, Johnson & Johnson (J&J) sent a letter to covered entities that are disproportionate share hospitals (DSH), saying that J&J is converting up-front 340B discounts to a rebate program for two drugs, Stelara and Xarelto. J&J states the policy will take effect on Oct. 15, and that the DSH covered entities will have approximately six months to fully adjust to changes.

The 340B Drug Pricing Program is built around prospective discounts. A unilateral manufacturer switch to a rebate framework violates the basic operation of the program and invites further manufacturer disruption of 340B price discounts. Although the new J&J policy is currently applicable only to DSH hospitals, it seems likely that J&J’s rebate model is a test case that manufacturers may seek to expand to other products and other covered entities if the policy goes unchallenged.

J&J is also requiring DSH covered entities to use the Beacon claims platform to process the refunds, a practice specifically prohibited by ASHP’s model legislation developed in partnership with 340B Health to protect the program.

“Manufacturer efforts to undercut the 340B program by skirting, or in this case, violating, program requirements harm patients and the healthcare providers they rely on,” said Tom Kraus, ASHP vice president of government relations. “Manufacturers must be held to the same expectations of compliance as the covered entities who rely on 340B savings to care for their patients, particularly for vulnerable and underserved populations.”

ASHP will work with our partners at the American Hospital Association and 340B Health to oppose these new requirements. Specifically, ASHP will ask the Health Resources and Services Administration to intervene to enforce manufacturer compliance with the 340B program’s statutory and regulatory requirements.

ASHP will continue to keep our members informed regarding ongoing challenges to this new manufacturer policy and our aggressive advocacy efforts to safeguard this critical program for our members and the patients they serve.