On November 12, Johnson & Johnson (J&J) filed suit
against the Health Resources and Services Administration (HRSA) in
D.C. federal district court, arguing that the 340B statute
explicitly provides flexibility for manufacturers to decide how to
offer 340B pricing, either through upfront discounts or
post-purchase rebates, and that HSRA has not prohibited such an
arrangement through its agreement with manufacturers (known as the
Pharmaceutical Pricing Agreement (PPA)). This comes after HRSA
challenged through a series of letters J&J's proposed
rebate model announced in September, on the grounds that
"[J&J's] proposal to implement a 340B rebate model is
inconsistent with 340B statute, which requires Secretarial approval
of any such proposal," and that "the Secretary has not
approved J&J's rebate model. As a result, J&J paused
implementing the model.
In its complaint, J&J states that the 340B statute mentions
that manufacturers must ensure the 340B price does not exceed the
ceiling price, "taking into account any rebate or discount, as
provided by the Secretary," which J&J interprets as a
clear allowance for using rebates. Further, J&J points out that
neither the statute nor the PPA specifies or mandates a particular
mechanism for pricing, reinforcing that manufacturers retain
discretion in how they comply with the ceiling price.
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