Hospitals criticize J&J's (NYSE:JNJ) new drug discount program

Healthcare providers are up in arms against Johnson & Johnson (NYSE: JNJ) after the pharmaceutical giant on Friday made significant changes to a program that allows certain hospitals to receive discounts on expensive drugs. The Wall Street Journal reported.

According to the WSJThe company has introduced a new rebate system for hospitals participating in the federal 340B program, allowing healthcare providers who treat uninsured and low-income patients to receive discounts on expensive outpatient prescription drugs.

Citing a letter from JNJ, magazine said that under the revised program, hospitals would have to pay the full price for JNJ's blockbuster drugs Stelara and Xarelto up front and apply for reimbursement later.

The American Hospital Association immediately criticized JNJ's actions, saying it was “an example of big pharmaceutical companies taking unilateral actions to gain advantages at the expense of the hospitals that care for America's most vulnerable patients.”

The New Brunswick, New Jersey-based company defended itself by arguing that it was trying to prevent the “rampant abuse and misuse” of the 340B program.

“To help the 340B program better serve vulnerable patients, J&J is implementing appropriate, standard business practices that are also used in other government programs and contracts,” a company spokesperson said.

Xarelto, a blood thinner marketed by JNJ and Bayer (OTCPK:BAYZF) (OTCPK:BAYRY), has already come under government scrutiny under the Medicare price negotiation program introduced as part of the Biden administration's inflation reduction bill in 2022. Meanwhile, psoriasis drug Stelara will face low-cost generics in the U.S. next year.