This overview is excerpted from Manatt on Health, Manatt’s subscription service that provides in-depth insights and analysis focused on the legal, policy and market developments.
On September 17, the Health Resources and Services Administration (HRSA), which administers the prescription drug discount program established under Section 340B of the federal Public Health Service Act, sent a letter to pharmaceutical manufacturer Johnson & Johnson (J&J), threatening to impose sanctions unless J&J ceases implementation of its recently announced plan to stop offering 340B discounts to disproportionate share hospitals at the time of purchase on two of its drugs and to instead make 340B pricing available via a rebate model.
Notably, the sanctions threatened in HRSA’s letter include not only the potential imposition of civil monetary penalties, but also termination of J&J’s Pharmaceutical Pricing Agreement, which would mean that J&J’s drugs would no longer be covered by Medicare Part B or Medicaid—a step that would almost certainly lead to litigation.
