Only a week after calling it quits on a court-halted pilot program, the Trump administration is already revving the engine on how it could test out a rebate model for the 340B Drug Discount program.
The Health Resources and Services Administration (HRSA) released a request for information (RFI) asking stakeholders and the public for input on whether and how such a model should be implemented for 340B, which, for over 30 years, has required drug manufacturers to provide upfront discounts on their products to help subsidize safety-net care.
The 340B program has grown substantially over the past several years, prompting lawmaker scrutiny and attempts from drugmakers to clamp down on what they describe as health systems’ margin-padding abuse of the program.
Last year, the administration took up those concerns by forming a pilot program that would have had nine drugmakers swap out discounts for after-the-fact rebates for a limited set of products. That test run was set to go into effect on Jan. 1, but was blocked by the court after hospitals alleged in a lawsuit that HRSA had failed to meet administrative requirements around public feedback amid a hasty rollout.
The hospitals’ lawsuit had also reiterated concerns voiced by the industry in public messaging and numerous comments submitted to the agency: substantial new administrative burdens on hospitals to file for rebates, limited integrity safeguards on the drug manufacturers overseeing the rebate process and the burden on cash-strapped safety-net hospitals that would be required to “float” funds until their rebates were processed.
After a mutual agreement with plaintiff hospital groups and promises to expand the rulemaking timeline, HRSA has taken the first steps on a mulligan. Friday’s RFI sets a March 19 deadline for stakeholders to weigh in on what the agency should consider when putting together its second attempt.
Specifically, it calls for input on potential cash-flow impacts, whether participating providers’ reliance on upfront discounts “are reasonable” in light of the government’s statutory authority to implement either “rebate or discount,” and any proposed alternatives and scope-limiting measures “including safeguards to promote the integrity of the 340B Program.”
Other areas of the RFI speak directly to hospitals’ concerns. HRSA said it wants to hear about whether a potential pilot would require participating providers to hire more staff or modify their IT systems, and what specific guardrails should be put in place for drugmakers to issue a rebate claim denial.
“With the information collected from this RFI, HRSA will evaluate if a potential 340B Rebate Model Pilot Program is in the public’s interest and, if so, determine a viable implementation strategy, consistent with the 340B statute,” the RFI reads.
340B Health, an association representing over 1,600 hospitals participating in the discount program, reiterated its prior position that the rebate model would be “a major departure” from the 340B program’s traditional operation. The group said it intends to submit formal comments to HRSA opposing the rebates.
“The 340B program’s upfront discount structure provides hospitals with predictability and stability, enabling them to stretch scarce resources to meet community needs. A rebate approach reverses that payment model by requiring hospitals to pay full price upfront and wait for reimbursement. That shift would disrupt cash flow, increase administrative burdens, and introduce uncertainty that many safety-net hospitals cannot absorb.”
The American Hospital Association, which was a plaintiff in the litigation against the prior pilot rollout, said it welcomes HRSA's call for further information on the rebate model's potential impact.
"We hope that after careful consideration of comments from 340B hospitals and other stakeholders, HRSA will recognize that imposing hundreds of millions of dollars in costs on hospitals serving rural and underserved communities is not a sound policy," Aimee Kuhlman, vice president of advocacy and grassroots at the AHA, said in a statement.
While the administration sticks with its efforts to rein in the drug discount program, Sen. Bill Cassidy, M.D., R-Louisiana, the Senate’s leading health official, has also ramped up his scrutiny. Earlier this month, the lawmaker sent an information request to Apexus—which has for over 20 years served as the 340B Program’s prime vendor, negotiating drug prices for providers in exchange for fees—asking the private company to describe its revenues and business practices.
“As I indicated in my report on the 340B Program last spring, a serious lack of transparency in the 340B Program prevents 340B discounts from translating to better access or lower costs for patients,” Cassidy wrote in the request. “In light of Apexus’s role as the current 340B prime vendor, and given questions raised into its business practices, I am requesting information and data to better understand how Apexus generates its revenue and designs its commercial offerings related to the 340B Program.”
Editor's note: On Feb. 26, HRSA announced it would be extending the comment period to April 20.