The federal 340B program has become a thorn in the side of pharmaceutical companies, who point to the drug discount program’s sprawling growth amid what they contend is lack of oversight. After initially proposing changes to the way the company offers drugs under this program, Johnson & Johnson has backed down, averting further confrontation with federal officials and hospitals on the matter. For now.
When the 340B program was established in 1992, the intent was to help underserved communities. Under the program, eligible hospitals and clinics serving low-income and uninsured patients may purchase outpatient prescription medications at discounts of up to 50%. In August, J&J proposed a major change. Starting on Oct. 15, entities covered under 340B would have to pay full price, then make a claims submission for a rebate. This proposal would apply to two drugs, the plaque psoriasis medication Stelara and the blood thinner Xarelto.
The Health Resources and Services Administration (HRSA), which administers the 340B program, told J&J the proposed changes are “inconsistent” with the statute and would need approval before they could take effect. In a Sept. 27 letter to J&J, HRSA Administrator Carole Johnson noted that the company had not requested such approval and proceeding with the rebate change would violate the 340B statute. The administrator added that implementations of the rebates would lead to termination of the company’s pharmaceutical pricing agreement and a referral to the Department Health and Human Services’ Office of the Inspector General.
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In a letter of response, J&J maintained that the statute allows for rebates as a mechanism for drug manufacturers to offer the 340B price to covered entities. Furthermore, the company said its rebate proposal will target duplicate discounts, transactions in which a covered entity receives a 340B discount and then submits a claim for a Medicaid rebate — a violation of the statute. J&J says audits to uncover such duplicates have not solved the problem.
“As HRSA knows, J&J’s efforts to identify and address program abuse through HRSA-approved audits of covered entities have been thwarted; nearly all of the entities for whom HRSA approved J&J audit requests have violated federal law by refusing to cooperate,” the company’s letter said. “Some have gone so far as to file suit against HRSA to invalidate the audit approvals. Plainly, audits alone are not a viable means for J&J to obtain information necessary to detect unlawful duplicate discounts and diversion as they occur.”
Nevertheless, J&J said HRSA’s threat to terminate the company’s participation in the program would have the effect of cutting off millions of Medicare and Medicaid patients from necessary medicines. The company’s commitment to these patients leaves it “no choice but to forego implementation of the rebate model pending resolution of these issues.” J&J hints that litigation could be a next step. The company says it continues to believe its rebate model is “legally permissible” and “sorely needed” for drugmakers to comply with requirements of both the Inflation Reduction Act and the 340B statute.
“J&J reserves all of its legal rights with respect to this matter,” the company said.
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In other regulatory news, we have FDA decisions for drugs (mostly approvals), some clinical holds, and one product withdrawal. Here’s a recap of recent regulatory developments:
Regulatory Decisions
—Exact Sciences’ Cologuard Plus now has FDA approval. The product is a next-generation version of Cologuard, the company’s non-invasive colorectal cancer test. Cologuard Plus offers greater sensitivity for colorectal cancer and advanced precancerous lesions. Like Cologuard, Cologuard Plus is approved for use in adults age 45 and older who are at average risk of colorectal cancer. Exact Sciences said it expects to launch this new test in 2025.
—Partners Fresenius Kabi and Formycon received FDA approval for Otulfi, a biosimilar referencing the Johnson & Johnson biologic drug Stelara. The regulatory decision for Otulfi covers all of the approved uses of Stelara, which include Crohn’s disease, ulcerative colitis, moderate-to-severe plaque psoriasis, and active psoriatic arthritis. Separately, the European Union approved Otulfi in late September. Otulfi will jostle for market share with Pyzchiva from Samsung Bioepis and Sandoz, and Wezlana from Amgen, two Stelara biosimilars that have received FDA approvals in the past year.
—Eli Lilly drug Retevmo is now FDA approved for treating adults and pediatric patients age 2 and older who have advanced cases of medullary thyroid cancer carrying a RET mutation. The drug has been available in this indication under accelerated approval. The latest regulatory decision converts Retevmo’s status to traditional approval.
—Dupixent, a blockbuster immunology drug from Sanofi and Regeneron Pharmaceuticals, expanded its approved uses to include chronic obstructive pulmonary disease (COPD). Dupixent is the first FDA-approved biological treatment for COPD. Dupixent approved uses now span six dermatological and respiratory conditions.
—FDA approval of Bristol Myers Squibb drug Cobenfy makes the drug the first novel schizophrenia drug in decades. The twice-daily capsule is designed to target a different receptor than currently available antipsychotic drugs, offering better efficacy and tolerability. Cobenfy comes from Karuna Therapeutics, which BMS acquired for $14 billion.
—Eli Lilly drug Kisunla is now approved in Japan for the treatment of patients in the early stages of Alzheimer’s disease. Kisunla is part of a class of antibody drugs that work by reducing plaques of amyloid proteins that form in the brains of Alzheimer’s patients. Japan marks the second major market approval for Kisunla, which was approved by the FDA in July.
—In other Japanese regulatory news, Takeda Pharmaceutical’s Fruzaqla won approval for the treatment of advanced or recurrent colorectal cancer. The Japanese pharma giant acquired the oral small molecule from Hutchmed in early 2023. Nearly a year ago, the FDA approved the drug for treating colorectal cancer.
—Ipsen landed European Union approval for Kayfanda as a treatment for cholestatic pruritus (severe itching) associated with the rare liver disease Alagille syndrome. The approval was made under “exceptional circumstances” that permits marketing authorization when comprehensive efficacy and safety data are not available. The Ipsen drug won FDA approval for Alagille patients last year; in the U.S., the once-daily capsule is marketed as Bylvay. Ipsen added the drug to its pipeline via its $952 million acquisition of Albireo.
—Ipsen’s rare liver disease portfolio also welcomed European Union approval of Iqirvo for treating primary biliary cholangitis (PBC), a chronic disorder that damages the liver’s bile ducts. The approval covers use of the once-daily pill in combination with ursodeoxycholic acid (UDCA) for patients whose disease does not adequately respond to that standard of care drug. Iqirvo may be used as a monotherapy for patients who cannot tolerate UDCA. European approval comes nearly four months after the FDA greenlit Iqirvo for PBC.
—Zevra Therapeutics drug Miplyffa became the first FDA-approved treatment for Niemann-Pick disease type C, a rare inherited lysosomal storage disorder that can become fatal by the time patients reach adolescence. The approval specifically covers the neurological effects of the disease. Zevra acquired the rights to Miplyffa from Orphazyme, which failed to win FDA approval for the small molecule in 2021.
—Days after Miplyffa’s approval, the FDA approved levacetylleucine, brand name Aqneursa, making the drug from privately held IntraBio the second approved treatment for Niemann-Pick disease type C. Similar to Miplyffa, the regulatory decision for the IntraBio drug covers the treatment of neurological effects of the rare disease.
—The European Union approved Astellas drug zolbetuximab, brand name Vyloy, as a treatment for advanced gastric and gastroesophageal junction cancer. The approval covers use of the drug in combination with chemotherapy. The FDA turned down Astellas’s submission for the drug early this year, citing manufacturing issues. Astellas resubmitted its application, which now has a Nov. 9 target date for a regulatory decision.
—FluMist, an intranasally dosed influenza vaccine that’s been available in the U.S. for two decades, is now FDA-approved for self- or caregiver administration. The regulatory decision makes the AstraZeneca product the first influenza vaccine that does not need to be given by a healthcare provider. For those choosing this option, the vaccine will be available through a third-party pharmacy following a screening and eligibility assessment completed when patients order the vaccine.
—The FDA rejected Vanda Pharmaceuticals’ tradipitant as a treatment of gastroparesis. This delayed gastric emptying is associated with diabetes but can also develop in those who do not have diabetes. According to Vanda, the FDA disregarded clinical evidence for the drug and asked the company to conduct additional clinical testing. The company said it still plans to seek marketing authorization for this drug. A separate new drug application is also planned for tradipitant later this year for preventing vomiting from motion sickness.
—An experimental Applied Therapeutics drug for the rare genetic metabolic disease classic galactosemia will not be discussed by an FDA advisory committee. After completing a late-cycle review meeting, the agency told the company a meeting was no longer needed for the drug, govorestat. The Nov. 28 target date for a regulatory decision still stands.
—The FDA authorized the first over-the-counter hearing aid software. Called Hearing Aid Feature, this Apple software is compatible with the company’s AirPods Pro headphones. The software was reviewed through the regulator’s De Novo premarket review pathway. FDA authorization is based on a clinical trial enrolling 118 patients with mild-to-moderate hearing loss. Results showed those who self-fit the software and device achieved similar benefit as those who received a professional fitting.
—Eli Lilly won FDA approval for lebrikizumab, brand name Ebglyss, a new treatment for atopic dermatitis. It will compete with biologic drugs Dupixent from Sanofi and Regeneron Pharmaceuticals, and Adbry from LEO Pharma. Compared to those every-other-week injectable drugs, Lilly’s new product offers patients less burdensome once-monthly maintenance dosing.
—Roche landed FDA approvals for subcutaneously injectable drugs that were originally developed as intravenous infusions. Tecentriq Hybreza is the injectable version of the cancer immunotherapy Tecentriq; Ocrevus Zunovo is the injectable version of the multiple sclerosis drug Ocrevus. Both drugs employ drug delivery technology from Halozyme that enables biologic drugs to be administered as injections.
—Travere Therapeutics drug Filspari converted its accelerated approval into a full FDA approval for the treatment of the rare kidney disease immunoglobulin A nephropathy. The regulatory decision came nearly a year after Travere reported the drug narrowly failed its Phase 3 confirmatory study. The approval is based on longer-term data showing the once-daily pill significantly slowed the kidney function decline.
One Clinical Hold Placed, Two Lifted
—Following the report of patient deaths, the FDA formally placed a clinical hold on zetomipzomib, a Kezar Life Sciences drug in development for treating lupus nephritis. Kezar had voluntarily stopped dosing and enrollment in the study after emerging safety data showed four Grade 5 (fatal) serious adverse events over the course of the study so far. The company said that three of those fatalities showed a common pattern of symptoms and proximity to dosing; additional non-fatal complications also showed a proximity to dosing.
—The FDA lifted a clinical hold on Biomea Fusion’s Phase 1/2 clinical trial testing BMF-219 in type 1 and type 2 diabetes. Redwood City, California-based Biomea said review of the clinical data to date found that concerning safety signals observed in the Phase 2a escalation study did not translate to the larger Phase 2b expansion study. BMF-219 is a small molecule that forms a covalent bond and inhibits menin, a protein thought to suppress the pancreatic beta cells that produce and secrete insulin.
—The FDA removed the partial clinical hold placed on an Avidity Biosciences’ delpacibart etedesiran, or del-disiran, an RNA therapy in development for the rare muscular disorder myotonic dystrophy type 1. The partial hold was placed in 2022 following the report of a serious adverse event in a single patient. Del-disiran is currently in Phase 3 testing.
A Rare Disease Drug Withdrawal
—Pfizer is voluntarily withdrawing Oxbryta from the market and discontinuing all clinical tests of the drug, which won accelerated FDA approval for sickle cell disease in 2019. The pharma giant said its decision is based on the totality of data now indicating higher rates of complications and deaths in patients treated with the oral drug. The FDA issued an alert about the withdrawal and said it has been conducting its own safety review of postmarketing data. When the review concludes, the agency said it will communicate additional findings, if necessary. Oxbryta was the centerpiece of Pfizer’s $5.4 billion acquisition of Global Blood Therapeutics in 2022.
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