Dive Brief:
- Johnson & Johnson is requiring hospitals and medical clinics to submit more documentation in order to get upfront savings on drugs in a federal program, the latest escalation in a war between drugmakers and providers over the discounts.
- Starting Tuesday, J&J will require all providers to submit claims data for each drug dispensed or administered under the program, called 340B, if they want those drugs to be discounted at the point of sale. The pharmaceutical giant argued the change is needed to prevent duplicative discounts and other illegal transactions.
- J&J is the latest drugmaker to impose heightened reporting requirements on 340B providers. Hospitals have decried the programs, arguing their true purpose is to give manufacturers cover to avoid paying out 340B discounts.
Dive Insight:
J&J’s new policy requires providers to submit extensive pharmacy or medical claims data each time one of the drugmaker’s products is dispensed through 340B. It applies to all 340B providers, including hospitals and community health centers, except for those in HIV/AIDS programs.
For most drugs, providers have up to 45 days to submit documentation, like when the prescription was filled at a pharmacy and the identification numbers for prescribing providers, so that J&J can ensure the drug is actually eligible for 340B and that it doesn’t overlap with discounts through other programs like Medicaid.
If providers fail to comply, J&J could suspend their access to all 340B discounts, the drugmaker said. It’s a serious threat: Hospitals would lose out on the 20% to 50% savings they receive on 340B drugs.
J&J is the latest manufacturer to impose a reporting requirement in the decades-old discount program.
Eli Lilly started cutting providers out of 340B discounts if they didn’t submit claims data this summer, sparking condemnation — and at least one lawsuit — from hospitals. Novo Nordisk has also implemented a data sharing requirement.
Drugmakers say the increased guardrails are necessary to root out fraud and abuse.
“We have determined that collection of limited, commercially standard 340B claims data in accordance with this policy is necessary to identify and address 340B-related transactions that involve prohibited duplicate discounts and diversion,” J&J wrote in a Sept. 4 notice to providers announcing the change. “Without access to this data, [J&J] cannot effectively identify these prohibited transactions and tailor its program integrity activities to promote efficient oversight and dispute resolution.”
However, providers argue that drugmakers are trying to avoid paying out discounts that hospitals and clinics are owed in 340B, which was established in the early 1990s to help cash-strapped providers afford pricey prescription drugs.
Drugmakers don’t have statutory authority to create additional reporting requirements, according to hospital lobbies, which have urged federal regulators to intervene.
The Health Resources and Services Administration, the HHS agency that oversees 340B, has said it is reviewing the policies.
Spats over 340B between hospitals and drugmakers are nothing new. But the disagreements have increased in scope and intensity in recent years as 340B has grown, lending more heft to arguments from pharmaceutical companies, lawmakers and health policy experts that the program may be spiraling out of control.
In 2025, hospitals and outpatient facilities purchased $100 billion worth of drugs in 340B, up almost 23% from the year prior and more than double the volume in 2021, according to government data.
Much of that growth is fueled by hospitals acquiring clinics, contracting with more pharmacies and prescribing higher cost drugs in order to inflate their discounts in the program, according to the Congressional Budget Office.
Lawmakers have also highlighted issues with 340B, including how 340B statute doesn’t put any parameters around what providers have to do with the savings or require them to report that information.
The reporting requirements are one strategy from drugmakers to reshape 340B pricing. In 2024, a cadre of developers, including J&J, said they would instead require hospitals to pay full price for 340B drugs and then divvy out savings in the form of rebates later on, after they verified the medications were eligibile for 340B.
However, no such programs went into effect, after federal judges agreed with HRSA and the hospital industry that Congress didn’t give drugmakers the authority to tweak 340B’s payment structure on their own. J&J has sued HHS and HRSA over the issue.
The pharmaceutical company issued another notice on Sept. 4 saying that hospitals can only receive 340B pricing at one contract pharmacy within 40 miles of the parent site, also effective Tuesday. The policy kicks in Nov. 3 for grantees.
