Bass, Berry & Sims attorney Jeff Davis provided insight for articles in Bloomberg Law and Law360 examining a new policy recently announced by Johnson & Johnson (J&J) related to how it will provide hospitals with access to discounted drug prices under the 340B Drug Pricing Program. J&J announced it would no longer provide 340B prices through up-front discounts and instead would require hospitals to buy drugs at higher list prices and request back-end rebates to access 340B-discounted prices. The articles note that the Health Resources and Services Administration (HRSA) has not approved the rebate model and has said it is “inconsistent with the statute.”
Speaking of a 340B rebate model for hospitals, Jeff told Law360 “It would be a major shift that would make it significantly more difficult for safety-net hospitals to be able to get access to the financial benefits made available under this federal program.”
Jeff added that the healthcare industry is watching to see how HRSA will respond to a rebate policy he said was at odds with how the agency has interpreted the statute and operated the program since 1992. “This type of model would fundamentally change how this federal program has worked from day one,” Davis said in an interview.
In the Bloomberg Law article, Jeff said “The 340B statute says that drug manufacturers may not overcharge covered entities, and in a situation where a drug manufacturer knowingly and intentionally overcharges the covered entity, HHS [Department of Health and Human Services] has the authority to impose civil monetary penalties. HHS could say to a manufacturer that uses rebates without prior approval that ‘what you’re doing is a violation of the statute, it’s resulting in overcharges, we’re going to impose penalties.’”
The two articles are available online at the links below:
- “J&J’s Drug Discount Plan Prompts Calls for Enforcement Actions,” Bloomberg Law (September 3)
- “‘Showdown’ Looms As J&J Pursues Rebates In 340B Program,” Law360 (September 3)