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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.


Legal Uncertainties Remain Following Passage of Issue 1 in Ohio

In the November 2023 General Election, Ohio voters passed Issue 1 which, among other things, “[e]stablish[es] in the Constitution of the State of Ohio an individual right to one’s own reproductive medical treatment, including but not limited to abortion”. Despite passage of Issue 1, questions persist about how its codification on December 7 affects previously passed legislation restricting abortion and related pending court cases.

NLRB Issues Final Rule on Joint-Employer Status

On October 26, 2023, the National Labor Relations Board (NLRB) issued its final rule on determining joint-employer status, departing from its prior 2020 standard. The final rule provides that two or more entities may be considered “joint employers” if each entity has an employment relationship with employees and if the entities share or codetermine one or more employees’ essential terms and conditions of employment. The final rule goes into effect on December 26, 2023, and will only be applied to cases filed after the effective date.

WEBINAR SERIES RECAP | Employment & Labor

BMD Partner and Co-Chair of the Employment & Labor Law Group, Bryan Meek, presented this four-part webinar series on trending topics in employment law.

Ohio Legalizes Recreational Marijuana; What’s Next for Ohio Employers?

Recent Changes to the No Surprises Act’s Federal IDR Process

Proposed changes to the No Surprises Act’s independent dispute resolution (IDR) process were recently issued by the Department of Health and Human Services, Department of Labor, Department of Treasury, and the Office of Personnel Management. The October 27, 2023, proposed rule overhauls the current Federal IDR process in an effort to create efficiencies and reduce delays relating to eligibility determinations and address feedback from interested parties and certified IDR entities.