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Another Drug Manufacturer Pursues Rebate Program as 340B Alternative

Client Alert

Some of the nation’s largest drug manufacturers are forging ahead to implement rebate programs for 340B drugs, even after the federal government has called these programs illegal.

In August 2024, Johnson & Johnson first announced its plan to implement a drug rebate program for 340B drugs whereby the manufacturer would charge buyers full price for drugs and offer a back-end rebate, instead of allowing safety net providers to purchase outpatient drugs at lower costs, as they have done since the program’s inception.

In response, the Health Resources and Services Administration (HRSA), the federal agency that oversees the 340B drug pricing program, deemed Johnson & Johnson’s rebate program illegal, prompting Johnson & Johnson to initially revoke the rebate plan. However, Johnson & Johnson had a change of heart and on November 12, 2024, filed a lawsuit to challenge HRSA’s decision.

Emboldened, other drug manufacturers have begun to implement drug rebate programs. On November 26, 2024, Bristol Myers Squibb filed a lawsuit against HRSA, asking the federal court to deem its rebate program legal and prevent U.S. Department of Health and Human Services from taking agency action to invalidated rebates.

While it is unclear how these federal courts will rule, these lawsuits signal a desire by drug makers to change how they offer 340B drug discounts to health care providers that operate using scarce federal resources, a move that could threaten the sustainability of safety net providers and the patients they serve.

If you have questions about these lawsuits, or the 340B program in general, please contact Member Daphne Kackloudis at dlkackloudis@bmdllc.com or Attorney Jordan Burdick at jaburdick@bmdllc.com.


Supreme Court Upholds Coverage under the Affordable Care Act

The U.S. Supreme Court has upheld the authority of the U.S. Preventive Services Task Force under the ACA, ensuring continued no-cost coverage for over 100 preventive health services. The decision impacts millions of Americans and preserves provider reimbursement through insurance.

Health Care Providers Take Note: Federal Budget Brings Medicaid and Staffing Rule Changes

The 2025 federal budget introduces significant changes for health care providers and Medicaid recipients, including new cost-sharing requirements, work eligibility mandates, rural health grants, and a pause on minimum staffing rules.

Key Healthcare Provisions in Ohio’s 2026–2027 Budget

Ohio’s newly enacted biennial budget (HB 96) for FY 2026–2027 brings sweeping changes for healthcare providers across the state. The law includes new Medicaid eligibility requirements, reporting mandates, funding directives, and social policy provisions. Several vetoes by Governor DeWine also affect healthcare-related initiatives.

Providers Beware: Court Sides with Insurers in No Surprises Act Arbitration

On June 12, 2025, the Fifth Circuit ruled in favor of Aetna and Kaiser in two lawsuits brought by air ambulance providers challenging how insurers calculated payments under the No Surprises Act’s Independent Dispute Resolution process. The court held that unless there is clear evidence of fraud or serious misconduct, IDR decisions will stand, reinforcing the finality of the arbitration process.

Introducing HB 281: Enforcement of Federal Immigration Laws in Ohio Hospitals

House Bill 281, introduced on May 20, 2025, would require Ohio hospitals to allow law enforcement, including federal immigration agents, to enter facilities and enforce immigration laws. The bill mandates that hospitals comply with information requests and adopt formal policies, raising significant concerns about patient privacy and access to care for immigrant communities.