Hospital Association Calls for Antitrust Investigation into Drugmaker 340B Practices
The American Hospital Association (AHA) is requesting a federal antitrust investigation into the practices of several major pharmaceutical companies concerning the 340B drug pricing programme. In a letter to the Federal Trade Commission (FTC) and the Department of Justice, the AHA alleges that these companies are engaging in potentially anti-competitive behavior that undermines the programS benefits.
The core of the AHA’s concern centers around a shift in rebate models implemented by companies including Johnson & Johnson, eli Lilly, Sanofi, Novartis, and Bristol Myers Squibb. Traditionally, the 340B program provided upfront discounts on medications to eligible hospitals, notably those serving vulnerable populations. However, these manufacturers have begun requiring hospitals to pay the full price upfront and than apply for rebates – effectively reversing the program’s established structure.
The AHA argues this new model forces financially vulnerable safety-net hospitals to essentially provide interest-free loans to pharmaceutical companies, potentially destabilizing their operations. The timing of these announcements,beginning with Johnson & johnson in August 2024 and quickly followed by other manufacturers,has raised further concerns,with the AHA citing “parallel conduct” as a potential indicator of collusion.
The association is urging the FTC and DOJ to launch a formal investigation into a “potential antitrust conspiracy” that could jeopardize the financial stability of hospitals serving low-income and rural communities.
These concerns are echoed by other healthcare groups. the Health Resources and services Governance (HRSA) recently initiated a pilot program offering manufacturers the prospect to propose option discount models. However, organizations like the AHA, America’s Essential Hospitals, and the American Society of Health-System Pharmacists have voiced opposition, requesting extensions to key deadlines due to concerns about the program’s rapid rollout.
The American Medical Group Association (AMGA) has also expressed strong opposition, stating the new rebate model would “undermine the initial program’s intent and jeopardize access to care for millions of vulnerable patients.” AMGA President and CEO Jerry Penso, MD, called for the withdrawal of the pilot program and a return to the existing upfront discount model, which he believes has historically supported both providers and patients.
