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Another Drug Manufacturer Pursues Rebate Program as 340B Alternative

Client Alert
December 11, 2024

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.

Health LawHealthcareHRSA
Client Alert

The Ohio Board of Pharmacy’s Latest Batch of Rules: What Providers Should Know

January 15, 2024The Ohio Board of Pharmacy released several new rules and proposed amendments to existing rules over the past month that will significantly impact pharmacy operations. Topics range from updates to the Terminal Distributor of Dangerous Drugs license to mobile clinics to mandatory rest breaks for pharmacists of outpatient pharmacies. A summary of the proposed changes is below, along with instructions for commenting on the rules. Your BMD healthcare attorney can help write comment letters and submit the comments on your behalf as well.Client Alert

Employee or Independent Contractor? New Guidance Issued by the Department of Labor

January 10, 2024On January 9, 2024, the U.S. Department of Labor (DOL) issued its long-awaited final rule — effective March 11, 2024 — revising its prior interpretation of worker classifications under the federal Fair Labor Standards Act (FLSA). The new final rule rescinds the standard previously established in 2021, in turn, shifting the analysis of whether a worker is an employee (versus an independent contractor) of a business from a more streamlined “economic reality” test to a more complex “totality of the circumstances” standard.Client Alert

Increased Medicaid Rates to Take Effect This Month for Ohio Providers

January 5, 2024As required by House Bill 33, Ohio’s 2024-2025 operating budget bill, reimbursement rates paid by the Ohio Department of Medicaid will increase for a wide range of providers starting on January 1, 2024.Client Alert

Corporate Transparency Act Update

December 27, 2023The Corporate Transparency Act (“CTA”), with an effective date of January 1, 2024, is set to impose strict reporting guidelines on business owners throughout the country. The following provides a brief update on two aspects of the CTA ahead of its effectiveness next week.Client Alert

The Second Wave of UnitedHealthcare's Prior Authorization Cuts Started in November

December 11, 2023In August 2023, UnitedHealthcare released its plan to eliminate roughly one-fifth of its then-current prior authorization requirements. The first round of prior authorization cuts took effect on September 1, 2023. In that round, UnitedHealthcare eliminated the necessity for some prior authorizations for UnitedHealthcare Medicare Advantage, UnitedHealthcare commercial, UnitedHealthcare Oxford and UnitedHealthcare Individual Exchange plan members. The second and final round of prior authorization cuts began on November 1, 2023. The November 2023 Prior Authorization Cuts apply to the same plans as well as community plans (i.e., Medicaid managed care plans).
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