The pharma industry’s DC-based lobbying group urged the federal government on Friday to get on board with alternative models for 340B drug price discounts.
In a letter to the Health Resources and Services Administration, PhRMA said the federal drug discount program is “out of step with the realities of the current health care system.” 340B was created to help hospitals serving low-income populations, and has grown significantly in recent years. But PhRMA argued Friday that HRSA’s oversight “simply has not kept pace” with that growth.
The trade group made the case for alternative distribution models to ensure drugmakers aren’t giving out duplicate discounts, citing a rebate model recently proposed by Johnson & Johnson. The drugmaker announced in August that some hospitals would no longer receive 340B discounts upfront on Xarelto and Stelara. Under the plan, the hospitals would recoup the discounts via rebates after validating certain data.
HRSA said J&J’s plan was “inconsistent with the 340B statute,” threatening penalties such as the termination of J&J’s pharmaceutical pricing agreement, which drugmakers must sign to participate in Medicaid and Medicare Part B. J&J ended up calling off the plan last month.
PhRMA said Friday that HRSA’s response to J&J “ improperly interferes with manufacturers’ rights” under the 340B statute to “implement reasonable business practices to improve transparency and compliance.” The trade group added that HRSA has “not taken necessary steps” to prevent duplicate discounts under 340B.
“PhRMA urges HRSA to support, or not impede, manufacturer implementation of alternative approaches to address duplicate discounting and other program abuse, such as employing a rebate to ensure covered entities receive 340B ceiling prices,” the letter reads.
The trade group also raised concerns that the federal government “has not pursued a holistic and integrated approach” to prevent duplicate discounts under the Inflation Reduction Act. Drugmakers are not required to pay discounts negotiated by Medicare under the IRA on top of 340B discounts, nor are they required to pay inflation rebates on drugs with 340B pricing. J&J pointed out in its own communications to HRSA that a rebate model could provide a solution to prevent double discounts.
“The 340B program needs to modernize in a way that reflects how the program has evolved and accounts for expanded manufacturer obligations under the IRA,” PhRMA said. “Alternative approaches — a rebate as one possible method — are needed to enable the program to operate efficiently and effectively in today’s marketplace.”
HRSA was not available for immediate comment, but Endpoints News will update this story accordingly.