A federal judge has rejected Johnson & Johnson’s challenge to block its proposed rebate model under the 340B Drug Pricing Program, Bloomberg Law reported June 27.
Judge Rudolph Contreras of the U.S. District Court for the District of Columbia ruled that the Health Resources and Services Administration, an agency of HSS, lawfully rejected J&J’s model, which would have allowed hospitals and clinics to pay commercial up-front prices for medications and later receive rebates.
HRSA said the approach was inconsistent with the traditional replenishment model where drugs are purchased at steep discounts.
“Because HRSA reasonably explained key differences that justify different treatment of the models, J&J’s argument that the differential treatment was arbitrary and capricious is without merit,” Mr. Contreras wrote in an opinion filed June 27.
The ruling comes amid a broader legal battle over the future of the 340B program. J&J, Eli Lilly, Sanofi and Bristol Myers Squibb have filed lawsuits against the federal government challenging HRSA’s rejection of similar rebate-based models.
In August 2024, J&J said it plans to end upfront discounts for two drugs, Xarelto and Stelara, replacing them with a rebate process that would require hospitals to pay commercial prices and later submit claims data for reimbursement. However, the company paused implementation in September after HRSA warned the model could lead to enforcement actions and penalties. As a result, J&J filed a lawsuit in November seeking a legal finding that its rebate plan was lawful.
