A pharmaceutical company proposes launching an effort to begin transforming the 340B prescription drug discount program from an upfront discount program to a rebate program.

Last week, Johnson & Johnson told eligible 340B providers, including safety-net hospitals, that later this fall they will need to begin purchasing two of its products, the drugs Stelara and Xarelto, at list price and then, after dispensing them to patients, submit 340B rebate claims to the company.

In response to swift, negative reaction from 340B providers, the Department of Health and Human Services’ Health Resources and Services Administration (HRSA) told providers that it wrote Johnson & Johnson that “As the Health Resources and Services Administration has communicated to Johnson & Johnson, [its] proposal to implement a 340B rebate model is inconsistent with the 340B statute, which requires secretarial approval of any such proposal.”

The HRSA statement also noted that “The secretary has not approved J&J’s rebate model” and that “HRSA has communicated this information to J&J and will take appropriate actions as warranted.”

The 340B program is a vital tool in safety-net hospitals’ efforts to serve their large numbers of low-income, uninsured, and underinsured patients.  Losing the program or seeing how it operates altered could jeopardize its effectiveness – and the ability of such safety-net hospitals and others to continue meeting the needs of many of their patients.

Learn more about Johnson & Johnson’s intentions from this notice it sent to 340B participants and from the Healthcare Dive article “J&J plans unilateral reform to 340B drug discount program.”