HRSA 340B Rebate Model Pilot Program: More Limited Than Anticipated, But Still Concerning to Covered Entities on Several Fronts

8/1/2025 – HRSA 340B Rebate Model Pilot Program: More Limited Than Anticipated, But Still Concerning to Covered Entities on Several Fronts

HRSA issued a Federal Register Notice detailing the terms of its 340B rebate model pilot program. The notice states that participation is voluntary and limited to the ten drugs and their associated drug manufacturers subject to the 2026 Inflation Reduction Act (IRA) price caps. The new pilot program would allow covered entities to order drugs using their existing supply chain, but the wholesaler would sell the covered entity the drug at the wholesale acquisition cost rather than at the 340B price. It would then be the job of the drug manufacturers to provide a rebate to the covered entities to make up the difference.

HRSA states that the agency is using the pilot program to test the rebate model and may consider expanding the model to other 340B drugs. 340B covered entities have strongly opposed rebate models and are already expressing concerns that this pilot program would create a “slippery slope” leading to rapid expansion of the pilot and the eventuality of the Administration allowing drug manufacturers to impose their own rebate models with fewer protections. Five drug manufacturers and one industry ally – Eli Lilly, Novartis, Sanofi, Bristol Myers Squibb, J&J and Kalderos – have already tried advancing rebate models. When blocked by HHS, they went to court to challenge HHS’ actions, arguing that HHS approval of the rebate model is unnecessary.

On the one hand, HRSA’s notice reflects an interest in supporting manufacturers’ use of a rebate mechanism. On the other hand, it contains several protections for covered entities.

Regarding the latter, the pilot would require drug manufacturers to pay approved rebates within 10 calendar days of receiving claims data from covered entities. Importantly, manufacturers would be barred from denying a rebate based on concerns about alleged diversion or Medicaid duplicate discounts. They would only be allowed to deny rebates in two narrow circumstances: if they already provided a 340B rebate to another covered entity on the same claim or if the manufacturer had already granted the covered entity a lower price based on the IRA maximum fair price. Denied claims would have to be explained and supported by documentation. Manufacturers would also be banned from passing on any administrative costs to covered entities and could be removed from the pilot for any violations.

The notice requires that drug manufacturers specify in their HRSA submission whether the rebate will be issued on a per claim basis or until a certain number of claims for a given drug are received. Covered entities must submit rebate requests within 45 calendar days of the drug dispense date. HRSA requires drug manufacturers to participate for a minimum of 1 year. HRSA presumably can extend the pilot indefinitely.

HRSA would allow drug manufacturers to collect the following 340B claims data from covered entities:

Date of service;
Date prescribed;
RX number;
Fill number;
National drug code (NDC);
Quantity dispensed;
Prescriber ID;
Service provider ID;
340B ID;
Rx bank identification number (BIN); and
Rx processor control number (PCN).

Covered entities have long asserted that sharing such detailed 340B claims data leads to discrimination against both them and their contract pharmacies. They have advocated for a neutral clearinghouse model as a more appropriate avenue for guarding against duplicate discounts and diversion which, they assert, are occurring at infrequent levels. The clearinghouse model has appeared in several federal 340B bills and is widely supported by nearly all 340B stakeholders.

The initial list of prescription drugs that are eligible for the pilot program are:

Januvia;
Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill;
Farxiga;
Enbrel;
Jardiance;
Stelara;
Xarelto;
Eliquis;
Entresto; and
Imbruvica.

The agency is accepting comments on this rebate model until September 2, 2025; however, the notices states that the notice is “effective immediately as published, unless revised by a future notice.” Eligible drugmakers applying to participate must submit plans to HRSA by September 15, 2025. HRSA will announce whether it has approved those applications by October 15, 2025, and the rebate plans it approves will be operational by January 1, 2026.

In early May, 2025, HHS alerted a DC District Court judge that it would be issuing guidance on the use of rebates withing the 340B program. After two federal judges held that HHS has the authority to approve the drug manufacturers’ rebate models, the drug manufacturers appealed their cases to the DC Court of Appeals where drug manufacturers are slated to begin their briefings today, August 1, 2025. It is unclear how or if this new pilot might influence the Court of Appeals ruling.

Powers will continue to monitor activity surrounding the 340B pilot program and other drug pricing developments. Please contact Powers’ drug pricing team, or your lead Powers attorney, if you have any questions.