Illustration: Annelise Capossela/Axios
Johnson & Johnson has backed off from a plan to change how safety net providers can get discounts on two high-demand medicines under the 340B discount drug program.
Why it matters: The company's pivot came after the Biden administration threatened to refer J&J to the HHS inspector general and take other actions for not complying with the 340B statute.
Catch up quick: The dispute centered around J&J's August decision to make 340B providers pay full price for the drugs Stelara and Xarelto, then submit claims data to receive a rebate for the discounted 340B price once they're verified.
- The Health Resources and Services Administration said the rebate mechanism wasn't approved by the HHS secretary and that the plan violated J&J's legal obligations.
- The agency later threatened to terminate J&J's pharmaceutical pricing agreement and refer the matter to the IG. Almost 200 members of Congress pressed HHS to intervene Monday.
- Scott White, J&J COO for North America, cited the government's "unwarranted threats of excessive and unlawful penalties" Monday in the decision to back off.
In a statement, a J&J spokesperson said the company believed the rebate model was "statutorily permitted" but would stop implementation amid HRSA's warnings.
- "Despite the glaring need for more transparency and accountability, J&J is forgoing implementation of its transparency rebate model pending resolution of issues raised by HRSA. We are taking this action to ensure HRSA's unprecedented position would not restrict patients' access" to the company's drugs.
Hospital groups applauded the outcome.
- The American Hospital Association said the J&J plan "would have harmed patients and 340B providers" and thanked HRSA for stepping in.
- "The decision by Johnson & Johnson to back down from its illegal plan for rebates in the 340B Drug Pricing Program shows how swift and firm federal action and vigorous advocacy by essential hospitals can stop harmful drug industry behaviors," Bruce Siegel, CEO of America's Essential Hospitals, said in a statement.
