Hospital group urges federal probe of drugmakers’ 340B rebate models: 5 notes

The American Hospital Association is calling on federal regulators to launch an antitrust investigation into its claims of drug manufacturers’ actions regarding 340B rebate models. 

In a letter sent to the Federal Trade Commission and the Department of Justice, the AHA accused several pharmaceutical giants of undermining the 340B drug pricing program through behavior the association said may violate federal competition laws. 

Here are five notes: 

1. The AHA argued that major drugmakers, including Johnson & Johnson, Eli Lilly, Sanofi, Novartis and Bristol Myers Squibb, have imposed new rebate models that restrict access to 340B drug discounts.
2. Under the rebate model, 340B eligible hospitals must pay full price upfront for medications and wait for rebates, a reversal of the program’s initial, upfront discount structure, the letter said. AHA warned the models would result in forcing financially strained safety-net providers to issue interest free loans to wealthy pharmaceutical companies.
3. The letter also outlined a timeline of events when drug companies began announcing rebate models in rapid succession, starting with Johnson & Johnson in August 2024 and other drugmakers following suit shortly thereafter. AHA argued the timing showed a “parallel conduct,” raising concerns under antitrust law.
4. As a result, the AHA urged the FTC and the Justice Department to launch a formal investigation into what it called a “potential antitrust conspiracy” which could threaten the financial stability of safety-net hospitals serving low-income and rural communities.
5. Most recently, the Health Resources and Services Administration launched a rebate model pilot program in August, offering manufacturers the opportunity to propose alternative discounts. In response, hospital groups, including AHA, America’s Essential Hospitals, the American Society of Health-System Pharmacists and others issued an Aug. 8 letter voicing concerns about the speed and scope of the rollout, urging the agency to extend key deadlines. 

   The American Medical Group Association also recently opposed the 340B rebate model , saying it would undermine the initial program’s intent and jeopardize access to care for millions of vulnerable patients. 

   “Safety-net providers operate on razor-thin margins. The rebate pilot would destabilize these institutions, directly threatening access to affordable medications for patients,” Jerry Penso, MD, president and CEO of AMGA stated in a Sept. 8 letter. “HHS should withdraw the proposal and strengthen the existing upfront discount model that has successfully supported providers and patients for decades.”

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