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The 340B program has faced increased scrutiny and significant proposed changes in 2025.
Our content for 340B Report in May and September focused on the shift of the program to a rebate model. The Health Resources and Services Administration (HRSA) announced the launch of a voluntary rebate model pilot on July 31, 2025. This pilot represents a cautious step toward a seismic shift.
Specifically, the pilot seeks to limit participation to drugs selected for the Centers for Medicare & Medicaid Services (CMS) Medicare Drug Price Negotiation Program for the start of 2026, which will include those drugs across various dosages. The pilot allows qualifying manufacturers to provide rebates instead of upfront discounts, addressing concerns like duplicate discounts under the Inflation Reduction Act’s Maximum Fair Price provisions.
Under the model, covered entities purchase at Wholesale Acquistion Cost (WAC) and submit pharmacy claims data with limited data elements exclusively for the pilot, such as date of service, NDC, and quantity for review through the Beacon Channel Management system. Manufacturers must issue rebates —projected as WAC minus the 340B ceiling price — within 10 days, bearing all administrative costs and prohibited to withhold payments without documented evidence of diversion or duplicate discounts. This would include any IRA drug that is physician-administered or billed under the medical benefit, if applicable. Manufacturers were required to submit their operational plans to HRSA for approval by September 15, 2025. Those approvals were slated for October 15 and the start of the pilot is January 1, 2026, for at least one year.
As of publication date, HRSA has not yet announced approved manufacturers or participants likely due to the current government shutdown. The comment period garnered over 1,200 submissions, reflecting broad engagement. HRSA emphasizes the pilot’s role in testing feasibility while assessing if the model aligns with the 340B statute’s current language, potentially informing whether the rebate model expands after the pilot concludes.
To summarize key feedback on the model, as emphasized in the comments submitted to HRSA):
- There are arguments that the cost of operating this program for covered entities could reach as high as an additional $500,000 per year, going toward retrieval, submission, and troubleshooting all data required for the rebate model.
- Shifting away from 30+ years of precedent in how the 340B program has operated threatens some covered entities’ ability to provide access to care for their low-income patients.
- Lawmakers have also voiced concerns, with some calling for the abolition of the pilot altogether.
- Manufacturers, however, welcome the pilot as a step toward greater transparency and reducing the duplication of multiple discounts.
The pilot’s data requirements, though limited, suggest that broader demands are imminent. If manufacturers claim to want transparency, they must adequately define what they mean by transparency so that covered entities can determine if they can meet those demands. Regardless, there is no way around 340B providers avoiding an increase in workloads. Contract pharmacy restrictions also persist and must be managed appropriately for the pilot to continue.
Looking forward, the pilot’s outcomes could reshape 340B, potentially expanding into a full rebate model. While preparation is key for covered entities, it is equally important to advocate for safeguards of this rebate model. These safeguards are a newer concept as none exist within the contract pharmacy restrictions. Learning from that history, covered entities and advocacy groups should consider promoting safeguards such as:
- Define static rules of engagement for the Rebate Model so that all participating manufacturers conform to a single set of standards instead of adopting their own approaches.
- Advocate for clear rules surrounding how and when manufacturers can “change their rules” for how the Rebate Model works (e.g., no new changes for 24 months). This could substantially mitigate overhead costs for covered entities
- Establish reciprocity for the call to transparency, requiring participating manufacturers to demonstrate exactly how all data elements provided through this model are used — assuring covered entities that their data are handled for the common goal of 340B program integrity.
These safeguards mark an important shift — encouraging collaboration between covered entities and manufacturers rather than opposition. As the 340B program evolves, balancing affordability and accountability remains paramount to supporting underserved communities.
Justin Ott is the Principal, Account Management, SunRx.
He can be reached at jott@sunrx.com.
