Recently, a colleague pointed out that the last three installments of the 340Buzz, going back to September, have included the word “rebate” in the headline. This month’s installment makes it four, and recent developments — including three new manufacturer lawsuits against the government, a fourth promising to plow ahead with a rebate model and the implications of the November general election — suggest the streak could continue for a while.
Voters on Nov. 5 gave Republicans a trifecta, with control of the White House, Senate and House, plus some unorthodox cabinet nominations. The results raise many questions for 340B that we’ll explore in a separate, upcoming post.
Taking things sequentially, it turns out we were correct in predicting that Johnson & Johnson, fresh from caving to the U.S. Department of Health and Human Services over its proposed 340B rebate model for two of its best-selling drugs, was waiting to see the election results before filing its lawsuit against the government. The company on Nov. 12 filed suit against HHS, asking a federal judge to declare its rebate proposal lawful and bar the government from taking enforcement action (recall that HRSA on Sept. 27 threatened to revoke J&J’s access to Medicare and Medicaid unless it dropped its controversial, unilateral plans).
Two days later, Eli Lilly filed its own lawsuit against HRSA, in which we learned the company had approached HHS with its own proposal: Force all covered entity types to purchase its drugs at wholesale acquisition cost and then submit claims data for evaluation of eligibility and issuance of weekly 340B rebates. In its complaint, Lilly said HRSA had “invoked the nuclear option of removal from not only the 340B program but also Medicaid and Medicare Part B” over denying what it calls its “cash replenishment model.”
By the following week, French drugmaker Sanofi joined the party. The company said it would launch its own “Sanofi 340B Credit Model” rebate program Jan. 6 — the start of the next Congress, but also a bit of blunt symbolism for its disruptive policy — for 25 of its drugs, including its top-selling anti-inflammatory agent Dupixent.
According to the 340B Report, “It is unclear to what extent Sanofi and HRSA have communicated” about the change, which would require entities to submit 28 different data elements to determine eligibility. Separately, Sanofi has been battling HRSA in court over releasing some 7,500 contract pharmacy agreements, which they allege would show 340B wrongdoing and clearly demonstrates the industry’s goal to eradicate the contract pharmacy model entirely.
Then just to spoil everyone’s Thanksgiving pumpkin pie comes Bristol Myers Squibb with its own lawsuit against HRSA, which rejected its proposal to convert 340B sales of its blood thinner Eliquis to an after-purchase rebate.
So we’re stuck fighting against rebates for the foreseeable future, unfortunately. The other day I had four different calls with associations and attorneys on the topic. It seems safe to assume HHS will send the same cease and desist letter to Sanofi as it sent J&J. If that happens, will Sanofi back down? Or will it stand firm, believing that outgoing HHS Secretary Xavier Becerra won’t dare take action with a new Republican administration coming to town?
Other 340B news
Elsewhere in the 340B world:
- Three of the hospital systems that sued HRSA, alleging it unlawfully authorized J&J to audit them, are now asking the federal court to bar the agency from removing them from the 340B program. HRSA warned the hospitals — MaineGeneral Medical Center, Oregon Health & Science University and Washington D.C.-based Children’s National Hospital — they could be removed from the program by Nov. 26 if they didn’t agree to participate in the drugmaker’s audits, according to the 340B Report. The hospitals’ temporary restraining order asked the court to bar HRSA from taking any action against them for at least 28 days while their lawsuit against the agency is pending.
- There’s plenty of confusion over how to exclude 340B drugs from calculating rebates under the Inflation Reduction Act and its maximum fair pricing (MFP) under Medicare Part D. In its 2025 Physician Fee Schedule final rule, CMS says it will “explore’ the idea of launching a Part D claims data repository, abandoning its earlier proposal to estimate the number of 340B claims to withhold. But it offered no timeline, and it seems doubtful that the agency could establish a repository in time for the provision’s launch in 2026. The rule also lacks clarity on how claims transmission will work to align 340B ceiling pricing with MFP.
- Premier, one of the big group purchasing organizations, is suing HRSA over the GPO prohibition preventing 340B hospitals from purchasing covered outpatient drugs through a GPO. Premier argues the prohibition drives up costs for covered entities and inflates revenues for manufacturers and Apexus, the 340B prime vendor and a fellow GPO, and should be struck down.
- Finally, Boehringer Ingelheim will require all covered entities, starting Dec. 2, to submit contract pharmacy claims data. It will also require covered entities that replenish BI products in bulk to ensure that 340B products are shipped directly to the contract pharmacy where the drug was dispensed to an eligible patient.
Meanwhile, the prospects for any concrete action on 340B in a lame duck Congress are quickly dimming — in fact we still haven’t seen draft language for the SUSTAIN 340B Act from the Senate “gang of six.” We have plenty of work ahead of us to defend and protect our vital safety net program.
If you'd like to continue the conversation with me, please contact me at [email protected].