Schiff Joins Spanberger, 189-Member Bipartisan Effort Urging Administration to Protect Safety Net Hospitals from Johnson & Johnson’s Attempt to Undermine Prescription Drug Discount Program
Washington, D.C.— On Friday, Representative Adam Schiff (D-Calif.) joined Representative Abigail Spanberger (D-Va.) and 189 bipartisan members of Congress in urging the U.S. Department of Health and Human Services (HHS) to quickly prevent burdens on safety net hospitals and vulnerable patients caused by Johnson & Johnson (J&J)’s proposal to undermine the federal 340B Drug Discount Program.
On August 23, 2024, J&J announced that the company would be transitioning two drugs — STELARA and XARTELO — currently available at a direct discount under the 340B program to an unlawful rebate model starting on October 15, 2024. J&J intends to upend decades of federal law by stopping direct discounts for hospitals primarily serving low-income communities. This move would remove the direct discount received by safety-net providers on these prescription drugs, creating concerns about the impacts on care for patients in underserved communities who may no longer be able to afford the upfront cost of the drug without a direct discount. This egregious action violates the 340B statute and negates long standing guidance from HHS’s Health Resources and Services Administration (HRSA).
In a letter sent to U.S. Secretary of Health and Human Services Xavier Becerra, the lawmakers urged the Department to act swiftly to prevent the significant financial challenges and administrative burdens for safety-net hospitals and patients that would be caused by J&J’s transition to a rebate model, including pursuing available enforcement actions. Additionally, the lawmakers underscored how switching to a rebate model violates the 340B statute and threatens access to care for the most vulnerable Americans.
“We write to express our concern over the Johnson & Johnson (J&J) plan to upend more than 30 years of federal law by delaying access to 340B discounts on pharmaceuticals for certain safety-net hospitals. J&J aims to impose new extra-statutory rules for hospitals to follow as a condition of accessing those discounts. This unapproved and unlawful change would have severe consequences for our nation’s safety net providers and the patients they serve,” wrote the lawmakers. “We understand that J&J is moving forward with this proposal despite being told by the Health Resources & Services Administration (HRSA) that the company’s proposal is inconsistent with the 340B statute.”
The lawmakers continued, “Under the rebate model, these safety-net hospitals would be required to purchase drugs at the high sticker price of wholesale acquisition cost (WAC), instead of at the substantially lower 340B discount, and wait for an undetermined period to receive the 340B discount as a rebate. This model reduces resources available for patient care, undermining the core purpose of 340B.”
Read the full letter here.
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