Hospital and health system groups are skeptical the Trump administration will have enough time to weigh and incorporate providers' concerns before opening its 340B rebate pilot program up to drugmaker applicants.
In a letter sent to the Health Resources and Services Administration (HRSA), which oversees the controversial subsidy program, seven provider associations requested HRSA extend the timeline for stakeholder comments and give itself a broader window to consider public comments.
Specifically, the current timeline outlined by HRSA in late July requires comments on the program to be submitted by Sept. 8, and for drugmakers to submit their applications and rebate plans by Sept. 15. Approvals would be made by Oct. 15, and the pilot is slated to begin at the top of the year (Editor's note: see more details from HRSA's guidance in the original story below).
Instead, the associations have floated a Sept. 15 comment period, an Oct. 20 manufacturer application deadline and a Nov. 3 approval date.
"With the fundamental changes a rebate model will impose on all 340B stakeholders, it is impossible for the agency to meaningfully consider, in just seven days, all the feedback it will surely receive," the associations wrote in their letter (PDF). "Moreover, drug companies have spent years developing and preparing for a rebate model, but the agency’s current timeline would give 340B hospitals far less time to prepare."
The rebate pilot is a tentative step toward policies drugmakers tried to impose on their own before being blocked in court decisions asserting the government's authority. The companies said swapping out upfront discounts for after-the-fact payments would improve transparency and help address inappropriately duplicated discounts. Hospitals pushed back, noting that the held funds would delay needed payments to struggling and safety-net hospitals the program was designed to support.
Emily Jane Cook, a partner with McDermott who works with healthcare organizations on regulatory issues including 340B, told Fierce Healthcare after the pilot's announcement that it appeared to be "materially more favorable to 340B covered entities" than the versions drugmakers had tried implementing on their own, for instance by limiting the rebates to 10 drug products included on the Centers for Medicare and Medicaid Services (CMS) Medicare Drug Price Negotiation Selected Drug List.
However, she noted several open issues and potential areas of concern, such as interactions with state contract pharmacy protection laws and recourse for covered entities should a manufacturer improperly deny a rebate.
July 31
HHS will demo drugmakers' 340B rebate model in limited pilot program
The Trump administration is now accepting applications for a pilot program to demo rebates for 340B drugs that drugmakers have said are necessary to reduce abuse of the decades-old subsidy program.
Announced Thursday by the Department for Health and Human Services (HHS) Health Resources and Services Administration (HRSA), the pilot would swap out traditional upfront discounts to providers for an equivalent post-purchase payment coordinated by the drug manufacturer.
Providers eligible for 340B discounts, referred to in the program as covered entities, would need to submit a data report to a drugmaker within 45 calendar days of the drug being dispensed—with allowances for extenuating circumstances—and then receive the rebate payment within 10 days of submitting their report, according to HRSA’s notice outlining the pilot program.
The test run will be limited to the 10 drug products included on the Centers for Medicare and Medicaid Services (CMS) Medicare Drug Price Negotiation Selected Drug List, according to a notice outlining the pilot program.
The Office of Pharmacy Affairs (OPA) will be accepting and reviewing applications from drug manufacturers with standing Medicare Drug Price Negotiation Program Agreements for 2026, with the pilot program aiming for a Jan. 1, 2026 start.
“Today’s announcement of the availability of a Rebate Model Pilot Program addresses concerns we have received from both covered entities and manufacturers, while creating a measured approach to the process of approving manufacturer rebate models under the 340B Program,” HRSA Administrator Tom Engels said in the pilot’s announcement. “We look forward to receiving comments and working with everyone to ensure that the program operates with accountability, transparency and adherence to the 340B statute, allowing covered entities to stretch scarce resources as far as possible.”
The pilot would see manufacturers shouldering all the costs tied to running an IT system for submitting drug purchasing data, as “no additional administrative costs of running the rebate model shall be passed onto the covered entities,” according to the notice. Additionally, manufacturers participating in the test run are not to deny a rebate based on concerns of diversion or duplicate discounts, and are instead instructed to raise those concerns directly with the OPA.
“Covered entities are also afforded opportunities to raise concerns with OPA if there are issues with rebate delays and denials, or any other administrative or logistical issues emerging through implementation of the rebate model,” the notice reads.
Comments on the pilot plan will be accepted for 30 days, with OPA seeking feedback on any additional flexibilities, safeguards and data reporting elements that should be worked into the pilot. Drug manufacturer applications are due by Sept. 15, with the government planning to approve participants by Oct. 15.
Drugmakers previously attempted to implement a rebate model for 340B drug discounts on their own, citing the program’s rapid growth, lack of transparency and instances of duplicate discounts. Hospitals pushed back, arguing that the built-in delay of rebate payments would threaten financially strained providers and impede access to care.
HHS and HRSA, under the prior administration, stepped in to block the rebates without explicit permission from the HHS secretary. Drugmakers contested that authority in court and were largely rebuked—and though the new administration maintained its assertion of authority over changes to the program, it didn’t rule out the possibility of permitting rebates on its own terms.
American Hospital Association (AHA) Vice President of Advocacy and Grassroots Aimee Kuhlman, in a statement, said her organization is reviewing the pilot program notice and, off the bat, appreciates “HRSA’s efforts to impose strict guardrails on its limited pilot program.” Evoking “serious financial risks to patients, communities and … hospitals,” she also underscored the need for HRSA to ensure manufacturers bear all costs around rebate model implementation and make their discount payments expeditiously.
“However, we are concerned that this guidance authorizes a significant departure from how the 340B program has successfully operated for decades and sets a dangerous precedent for possible harmful expansions in the future,” Kuhlman said. “This pilot program is a response to a non-existent program integrity problem that the drug manufacturers have manufactured in the public discourse.”
A similar wariness came from 340B Health, which represents over 1,600 hospitals participating in the program. President and CEO Maureen Testoni warned of potential financial and administrative burdens an expansion of the model could impose on hospitals, and pointed to an analysis the group conducted that rebates for all 340B drugs would have disproportionate share hospitals fronting more than $72 million each on average while awaiting rebates.
"340B rebate models shift financial burden from highly profitable drug companies to hospitals with the fewest resources serving the most vulnerable patients," she said.
Alex Schriver, senior vice president of public affairs at drugmaker lobbying group Pharmaceutical Research and Manufacturers of America (PhRMA), called the pilot a "positive first step toward addressing hospital abuse of the 340B program" but added that it should reach a broader set of drugs and more directly address drugmakers' concerns around program integrity.
"Manufacturer rebate models have been used for decades in other federal programs and are one of the most effective tools to prevent duplicative discounts," Schriver said in an emailed statement. "If we want to lower drug prices in the U.S., Congress and the administration must fix the 340B program, starting with expanding this rebate model. We look forward to commenting on the notice and working with the administration on this pilot."