340B HEALTH FILES MOTION TO INTERVENE IN J&J REBATE LAWSUIT
WASHINGTON, D.C.— Today, 340B Health and two of our member hospitals filed a motion with a federal court in Washington, D.C., to intervene as defendants in Johnson & Johnson’s lawsuit against the government over the company’s 340B rebate plans. This intervention would allow us to help defend the federal government’s authority to block J&J from imposing these rebates on any 340B hospitals.
J&J was the first drug company that proposed replacing upfront 340B discounts with backend rebates, which it said it would apply to the drugs Stelara and Xarelto to start. The Health Resources & Services Administration (HRSA) informed the drugmaker that it had not received federal approval for the rebates, and the agency said the company would be subject to steep fines and the loss of all Medicaid and Medicare Part B coverage of its drugs if it proceeded. J&J subsequently suspended its rebate plans and filed a lawsuit with the U.S. District Court for the District of Columbia over the dispute. Four additional drug companies – Bristol Myers Squibb (BMS), Eli Lilly, Novartis, and Sanofi – also have sued HRSA in the same court seeking the right to impose their own rebate schemes.
“We filed today’s motion as part of our comprehensive legal and advocacy campaign against harmful drug company plans to force their 340B rebate schemes on hospitals,” 340B Health President and CEO Maureen Testoni said. “If the court permits J&J and other drug companies to replace upfront 340B discounts with backend rebates, it would cause crippling damage to safety-net hospitals throughout the nation. It would force hospitals to divert scarce resources to comply with rebate requirements, pay tens of millions of dollars in additional drug purchase costs, and assume the enormous financial risk of drugmakers rejecting legitimate rebate claims based on their own interpretations of 340B rules. The federal government has the legal authority and the obligation to block these rebate schemes, and we are urging the court to uphold this authority.”
340B Health filed our motion to intervene with UMass Memorial Medical Center (UMMC), based in Worcester, Mass., and Genesis HealthCare System, based in Zanesville, Ohio. Both are disproportionate share (DSH) hospitals representing the thousands of 340B hospitals of all types that would face harm from the J&J rebates if the court allows them to take effect. A memo to the court supporting our motion details the damage this would cause just for these two hospitals:
- UMMC would need to spend nearly $400,000 on staffing and legal fees just to comply with J&J’s rebate requirements and would need to pay an additional $24 million a year to purchase Stelara and Xarelto at full price upfront. In the likely events that J&J denies legitimate rebate claims and that such rebates expand to all 340B drugs from all drugmakers, the financial hit to the hospital would be much larger. This would threaten UMMC’s 340B-funded initiatives, including free care to low-income patients, prescription drug assistance, mental health counseling, mobile care clinics, and post-acute medical care and social support.
- Genesis would need to spend more than $200,000 a year to comply with the J&J rebate requirements and an additional $300,000 a year to purchase the two J&J drugs at full price, with that upfront cost rising to more than $62 million per year if the rebates expanded to all 340B drugs. This financial hit and the ongoing risk of not receiving rebates on legitimate claims would force the hospital to significantly scale back or eliminate 340B-funded initiatives that include its patient drug assistance program, transportation support, discharge medication services, and free community health programs.
Contact: Jon Tilton at jon.tilton@340bhealth.org or 202-536-2285