HHS calls Johnson & Johnson’s plan to switch to a rebate plan from upfront drug price discounts ‘inconsistent’ with federal law

AIDS Healthcare Foundation (AHF) condemns the illegal scheme by Johnson & Johnson to stop providing required 340B discounts at time of sale to safety net covered entities, and instead provide rebates if and when J & J deigns to, which will shortchange and ultimately stiff program participants. J & J’s change means the drug maker may or may not reimburse providers at a later date, making every 340B-claim subject to dispute and protracted payment. The multibillion-dollar pharmaceutical giant is violating the law by unilaterally rewriting its 340B program obligations.

Ploys meant to deny 340B savings to their intended recipients are already too familiar to nonprofit healthcare providers. Johnson & Johnson is one of over 35 drug companies that have instituted contract pharmacy restrictions since the beginning of 2020. According to the drug maker, the new proposal will only affect disproportionate share hospitals, but it will be only a matter of time before they will try to extend to all 340B covered entities.

The Health Resources & Services Administration has said the proposed rebate model is inconsistent with the law. The 340B statute is clear – drug manufacturers must provide upfront discounts at or below the 340B ceiling price.

This rebate scam further confirms that PhRMA is not a good faith actor in efforts to change the 340B program. Pharmaceutical industry calls for 340B “reform” amount to little more than efforts to shrink the program and increase their profits.

Currently, an effort to “reform” the 340B program, called the SUSTAIN Act, is being drafted by six Senators.

“The Senators working on the SUSTAIN Act should figure in PhRMA’s bad faith when making their final draft of the bill, revisit PhRMA-friendly provisions already in their draft, and include language expressly outlawing this behavior,” said Tom Myers, General Counsel and Chief of Public Affairs for AHF.

AIDS Healthcare Foundation (AHF), the largest global HIV and AIDS organization, provides medical care and/or services to more that 2 million individuals in 47 countries worldwide in the US, Africa, Latin America/Caribbean, the Asia/Pacific Region, and Eastern Europe. To learn more about AHF, please visit our website, find us on Facebook, follow us on IG and Twitter, or subscribe to our “AHFter Hours” podcast.

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