On November 12, 2024, the drug manufacturer Johnson & Johnson (J&J) filed a lawsuit against the Health Resources and Services Administration (HRSA) in the United States District Court for the District of Columbia. The lawsuit relates to J&J’s proposal to require certain 340B covered entities – specifically, disproportionate share hospitals (DSH) – that purchase J&J’s drugs Stelara and Xarelto under the 340B Drug Pricing Program (340B Program) to do so under a rebate model. J&J is challenging HRSA’s threatened enforcement action against the drug maker.
The 340B Program The 340B Program requires that drug manufacturers “offer” covered outpatient drugs to 340B “covered entities” for “purchase” at or below the 340B ceiling price which is calculated in accordance with the statute governing the 340B Program. Along with DSHs, which are non-profit or publicly-owned hospitals that serve a significantly disproportionate number of low-income Medicare patients, “covered entities” include Federally Qualified Health Centers (FQHCs), Critical Access Hospitals, Native Hawaiian Health Centers, Tribal and Urban Indian Organizations, children’s hospitals, and providers that care for rural populations. The 340B statute only allows covered entities (or their contract pharmacies) to dispense drugs acquired through the 340B Program (340B Drugs) to eligible patients (i.
e., patients of the covered entities). The statute also explicitly prohibits the transfer of covered dru.
