On August 1, 2025, the Office of Pharmacy Affairs (OPA) of the Health Resources and Services Administration (HRSA) announced a pilot rebate program for purchases under the 340B drug discount statute of certain drugs subject to Medicare Fair Pricing (MFP). Although the scope of the pilot remains limited to a group of ten drugs, the announcement deserves scrutiny from 340B covered entities and their advocates, not least because (with one exception) the pilot program announcement reflects HRSA’s first foray into rebate models for 340B purchases. The announcement invites public comments within 30 days.

The 340B statute states that manufacturers wishing to make a drug eligible for reimbursement under Medicaid or Medicare Part B must enter a Pharmaceutical Pricing Agreement with the Secretary of Health and Human Services to offer a discounted purchase price for the drug by participating 340B “covered entity” safety-net providers, “taking into account any rebate or discount, as provided by the Secretary.” 42 U.S.C. § 256b(a)(1).

Apart from a limited approval for rebates for state AIDS Drug Assistance Programs (ADAPs) in 1997, however, no prior administration has approved a rebate model. Previously, administrations recognized “[a purchase] mechanism that is appropriate to one type of ‘covered entity’ such as community health centers, may not be appropriate to another type, such as State AIDS drug assistance programs,” and “the Secretary … will use the mechanism that is the most effective and most efficient” for each type of 340B covered entity. 62 Fed. Reg. 45,823 at 45,824 (1997) (quoting H.R. Rep. No. 102-384(II), 16 (1992)).

In Fall 2024, four manufacturers and one manufacturer data vendor sued HRSA seeking a court ruling that would permit the manufacturers unilaterally to implement rebate models without HRSA. The manufacturer models included the manufacturer’s rights to review submitted claims under the manufacturer’s own criteria for 340B eligibility and to issue rebates on the manufacturer’s own timetables. A federal court ruled HRSA retains the ability to review and approve rebate models, and the manufacturers have now appealed. However, the administration indicated it would publish guidelines regarding potentially acceptable rebate models.

HRSA limited its pilot program to the ten drugs (identified at the NDC-11 level) in the Medicare Drug Price Negotiation Program (MDPNP) for 2026. The Center for Medicare & Medicaid Services (CMS) had received feedback from manufacturers and others observing those drugs could potentially be subject to discounted prices under both MFP as well as the 340B statute. The manufacturers of those drugs may choose to submit for HRSA’s review and approval a plan for implementing a rebate model for 340B purchases of those drugs, with important criteria that HRSA specified in its announcement, including:

• The manufacturer’s plan must ensure the manufacturer will pay 340B rebates to covered entities (or denied, with documentation in support), within 10 calendar days of data submission.
• The manufacturer’s plan must ensure the manufacturer will not deny rebates solely based on compliance concerns with duplicate discounts or diversion; rather, the manufacturer must provide specific documentation for any claim denials and should resolve compliance concerns through the 340B statutory mechanisms, such as audits and the 340B Administrative Dispute Resolution process.
• The manufacturer’s plan must allow for 60 days’ notice to covered entities before implementation of a rebate model and include assurances that the manufacturer will not impose or pass additional administrative costs onto covered entities.

HRSA’s announcement invited public comment on the proposed pilot program, including whether there are “any additional safeguards to mitigate adverse, unintended impacts for covered entities that should be considered in the pilot design.” 340B covered entities and their advocates should carefully consider the potential effects of, and possible improvements or substitutes for, HRSA’s proposal.

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For specific questions about the 340B Drug Pricing Program, please contact Stephen Kuperberg.