Beacon Platform: A move to a 340B Rebate Model for Select J & J Products

TLDR;

Johnson & Johnson has announced a change in its 340B program for DSH covered entities. Starting October 15th, J&J will transition two of its drugs—Stelara and Xarelto—from an upfront discount model to a rebate model. This will take place through a new platform called Beacon. The RxTrail team is ready to assist with this transition and Beacon management. DSH covered entities need to register an account with Beacon. While this change currently applies only to DSH entities, we want all entities to be informed and prepared for any potential changes. For more detailed information on Beacon and account registration, see the attached document.

What is happening: Move to a Rebate Model for Select J&J Products

Johnson & Johnson (J&J) has announced a change in its 340B program for Disproportionate Share Hospital (DSH) covered entities. Starting October 15th, J&J will transition two of its drugs—Stelara and Xarelto—from an upfront discount model to a rebate model. This change will be implemented through a new platform called Beacon, which is operated by the same parent company as 340B ESP (Second Sight Solutions). As of now, J&J is the only manufacturer utilizing Beacon.

Under the new process, DSH covered entities will no longer receive 340B pricing for these two drugs at the wholesaler level. Instead, CEs will need to purchase these drugs at a commercial price (e.g. Wholesale Acquisition Cost or WAC) and then submit claims data to Beacon. Once sufficient claims are accumulated and validated, Beacon will issue a credit payment reflecting the difference between the WAC and the 340B ceiling price. Beacon anticipates processing 340B credits within 7-10 days of sufficient claims submission. Beacon will require the submission of purchase data, pharmacy claims data, and medical claims data.

Single contract pharmacy restrictions will continue to apply. CEs must designate contract pharmacies and submit claims to 340B ESP for products that are not part of the rebate model. Beacon will verify contract pharmacy eligibility through ESP during claims validation. Only the CE’s designated single contract pharmacy will be eligible for 340B rebates.

Future Implications

The impact of this change on states with laws prohibiting contract pharmacy restrictions remains uncertain. In these states, where claims data must still be submitted to ESP to receive 340B pricing at unlimited contract pharmacies, J&J may require participation with Beacon to access 340B credits.

This development raises significant concerns for all types of covered entities. While the change currently affects only DSH covered entities and two specific drugs, it could set a precedent for other manufacturers to adopt similar policies. For instance, Eli Lilly was the first manufacturer to impose contract pharmacy restrictions in 2020. Since then, 37 manufacturers have enacted such policies, many of which apply to all CE types, including federal grantees. These policies are often expanding to include more drugs, CE types, and stricter participation requirements. According to 340B Report, Second Sight Solutions is a wholly owned subsidiary of Berkeley Research Group (BRG), which is a large consulting firm that has conducted several studies funded by Pharmaceutical Research and Manufacturers of America (PhRMA) and has contributed to the pharmaceutical industry in the legal battle over contract pharmacy restrictions. The Beacon initiative is a clear signal that PhRMA will try to move the 340B discount to a rebate-driven process. This could prove to be very difficult for covered entities and TPA’s that lack the resources and technology to keep up.

Next Steps

The RxTrail team is actively preparing for the implementation of Beacon. Our IT department is developing a data submission process to ensure accurate and timely submission of claims data in order for CEs to receive 340B rebates as soon as possible. We will provide support for covered entities with Beacon, similar to our current assistance with 340B ESP. Our consulting team is prepared to help CEs with the Beacon registration process to ensure a smooth transition by the October 15th start date. Additionally, our team will continue to monitor the development of this program and any new manufacturer involvement or policy changes.

DSH CEs must create a Beacon account by navigating to the Beacon registration page. Registration is free of charge and required only for the 340B parent ID.

To complete your registration, you will need the following documents:

• EIN
• IRS letter (CP575) with the entity address
• Articles of Incorporation for the covered entity
• Bank Letter from a US financial institution with bank account information for ACH payments

For any questions or assistance with Beacon registration, please contact your RxTrail consultant. Additional information can be found in the Beacon Support Center and the Johnson & Johnson notice.

Many reading this article will want to know the following:

• Will this last?
• Will this impact Non-DSH entities at some point (Grantees)?

If history is a tell, “Orphan Drug Issue”, “ESP Submissions Issue”, “Single Contract Pharmacy Issue”, the answer is YES. It is likely the summer of 2020 just reimagined.

Reach out to our team if you need help navigating this!

1. 340B Report
2. Beacon Registration
3. Beacon Support
4. J&J Notice