Post updated on 12/31/2025.
On August 1, 2025, the Health Resources and Services Administration (“HRSA”) issued a Notice announcing the launch of the 340B Rebate Model Pilot Program (“Pilot Program”), that would dramatically change the way in which participating drug manufacturers provide discounts to healthcare entities eligible to participate in the 340B Program.
Established under Section 340B of the Public Health Service Act, the 340B Program requires pharmaceutical manufacturers to discount the price of outpatient drugs sold to eligible safety net healthcare providers, referred to as Covered Entities (“CEs”). Traditionally, discounts under the 340B Program are applied at the time that CEs purchase the drugs from manufacturers. Under the Pilot Program, CEs would pay full price for the drug at the time of purchase and manufacturers would later pay CEs a rebate reflecting the discount under the 340B Program.
To participate in the Pilot Program, HRSA seeks applications from manufacturers whose products are on the Medicare Drug Price Negotiation Selected Drug List (“MDPNP”), which currently includes 23 drugs at various strengths and dosages. Under the Inflation Reduction Act, effective January 1, 2026, the drugs on the MDPNP are subject to pricing negotiations to lower their costs under Medicare Part D, with additional drugs to be added in future years. According to the Notice, if the Pilot Program continues, HRSA will consider expanding the Pilot Program to other drugs. Manufacturers’ applications to participate are due September 15, 2025, with approvals or denials to be issued by HRSA by October 15, 2025. The Pilot Program will begin on January 1, 2026.
HRSA also seeks comments on the Pilot Program’s structure and application process.
The Pilot Program comes in the wake of various drug manufacturers’ efforts to implement a rebate model for 340B drugs. Manufacturers argue that the rebate model allows them to more effectively verify 340B eligibility, minimize duplicate discounts, and reduce the risk of diversion or other compliance concerns. CEs counter that rebate models add significant administrative burden and cost and delay realization of 340B program savings critical to the financial health of safety net providers. HRSA blocked the rebate models, stating that the rebate models must receive approval by HRSA prior to implementation.[1] Manufacturers quickly filed multiple lawsuits against HRSA’s enforcement action, with split decisions across district and appellate courts.[2] The August 1st Notice stated that the Pilot Program is being introduced to “better understand the merits and shortcomings of the rebate model from stakeholders’ perspectives, and to inform [the Office of Pharmacy Affairs’] consideration of any future 340B rebate models consistent with the 340B statute and the Administration’s goals.”
Drug Manufacturer Application Criteria
Manufacturers’ applications must include a plan, in 1,000 words or less, for implementing their proposed rebate model and minimally address how they will comply with certain criteria outlined in the Notice, including:
- All costs for data submission through an IT platform is completely borne by the manufacturer and not passed on to the CEs
- 60 days’ notice to CEs prior to implementation of the rebate model
- Ability for CEs to order the drugs under existing distribution mechanisms and infrastructures (e.g., existing 340B accounts)
- Technical assistance and customer services are provided to CEs through the IT platform and manufacturer point of contact
- The IT platform is secure and the collection of data is limited to elements necessary for providing the 340B rebates
- The IT platform will protect patient identifying information, consistent with HIPAA and other privacy and security laws
- CEs can submit and report data for up to 45 days from date of dispense, with allowances for extenuating circumstances and other exceptions
- The IT platform will have the capacity to receive data that will filter and use only the data required to effectuate the rebate
- The IT platform will provide real-time reconciliation reports to inform CEs of rebate status
- The manufacturer will provide periodic reports to HRSA for the agency to evaluate the program’s effectiveness
- The Manufacturer will specify whether rebates are paid at the package or unit level
- The Manufacturer will pay rebates to CEs within 10 calendar days of data submission
- 340B rebates will not be denied based on compliance concerns with diversion or Medicaid duplicate discounts
- Rebates are only paid on MDPNP drugs
- Requested data is limited to certain readily available pharmacy claim fields
Request for Comments
HRSA is also seeking 340B Program stakeholder comments on all aspects of the Pilot Program and specifically is interested in feedback on:
- Additional flexibilities or safeguards to optimize the Pilot Program and mitigate adverse, unintended impacts on CEs
- Data or reporting elements to improvement implementation and evaluation of the Pilot Program
- Potential logistical or administrative implementation issues or burdens
Comments are due by August 30, 2025 and should be submitted electronically via the Federal eRulemaking Portal at https://www.regulations.gov, with reference to HHS Docket No. HRSA-2025-2025-14619.
UPDATE: On December 29, 2025, U.S. District Judge Lance Walker of the District of Maine enjoined HRSA from launching the 340B Rebate Pilot Program, which was slated to begin on January 1, 2026. In his opinion, Judge Walker did not condemn the 340B Rebate Pilot Program in concept, but noted it was “hastily assembled” and that HRSA likely failed to “consider and reasonably explain the impact of a rebate model on 340B hospitals” in the administrative agency record, as required by the Administrative Procedure Act (“APA”). On December 30, the U.S. Department of Health and Human Services filed an appeal and requested an emergency stay of the injunction. The lawsuit was filed on December 1, 2025 by the American Hospital Association and the Maine Hospital Association and sought to enjoin implementation of the 340B Rebate Pilot Program on the grounds that it violated the APA and was unlawful.
FOOTNOTES
[1] See, e.g., Letter from HRSA to Johnson & Johnson, dated September 27, 2024.
[2] See, e.g., Eli Lilly & Co. v. Becerra, 88 F.4th 1142 (7th Cir. 2023); Sanofi Aventis U.S. LLC v. United States Dep't of Health & Human Servs., 570 F. Supp. 3d 129 (D. Del. 2021); AstraZeneca Pharms. LP v. Becerra, 543 F. Supp. 3d 47 (D. Del. 2021); Novartis Pharms. Corp. v. Espinosa, No. 21-cv-01479 (CKK), 2021 WL 5161783 (D.D.C. Nov. 5, 2021); United Therapeutics Corp. v. U.S. Dep’t of Health & Human Servs., No. 21-cv-01686 (TSC), 2021 WL 5178834 (D.D.C. Nov. 5, 2021).