9/15/2025 – RWC-340B Urges HRSA to Abandon Rebate Model Pilot

RWC-340B submitted comments last week in response to the Health Resources and Services Administration’s (HRSA’s) notice outlining its proposed 340B Rebate Model Pilot Program.  The Rebate Model Pilot, if implemented, would allow participating manufacturers to discount their covered outpatient drugs to covered entities by paying a rebate after the drugs have been purchased rather than offering the discount at the point of sale.  In its letter, RWC-340B expressed its strong opposition to any rebate model and asked HRSA to halt plans to implement the Rebate Model Pilot immediately.  RWC-340B considers the Rebate Model Pilot to be another unjustified attempt by drug manufacturers to shrink the size and scope of the 340B program.  RWC-340B also complained about the agency’s apparent decision to proceed with implementing the Rebate Model Pilot before reviewing the comments it solicited from stakeholders about the pilot’s design and viability.  According to the federal website where comments are submitted, HRSA received 1,243 responses to its rebate proposal.

In the letter, RWC-340B details the significant harm that the Rebate Model Pilot will inflict on Ryan White clinics (RWCs) and the patients they serve.  For example, because RWCs will be forced to buy their covered outpatient drugs at much higher retail prices, the pilot will complicate their ability to offer 340B pricing to needy patients at the pharmacy counter.  According to RWC-340B, many 340B pharmacies, especially contract pharmacies, will be unable to continue their point-of-sale discount programs for cash-paying patients.  This and other substantial financial and administrative burdens caused by the rebate model will undermine our nation’s ability to control the HIV epidemic.  The letter also illustrates how the Rebate Model Pilot is unworkable from an operational perspective and how it will increase drug costs and administrative burdens for state Medicaid programs when covered entities predictably choose to “carve out” Medicaid claims from their 340B operations.

The Rebate Model Pilot also creates a serious “slippery slope” problem, according to RWC-340B.  RWC-340B expressed concern that the pilot’s lack of guardrails will be exploited by manufacturers, allowing them to use the rebate model outside the pilot program at the expense of covered entities.  The letter details how the Rebate Model Pilot does not provide adequate assurances that manufacturers will not impose additional burdens on covered entities beyond the parameters outlined by HRSA.  Additionally, the letter highlights that by allowing manufacturers to access covered entities’ claims data, the pilot will result in manufacturers using this information to deny discounts.  Manufacturers are also likely to use this data to feed both their longstanding Congressional reform efforts and misinformation campaign by perpetuating the dangerous and false narrative that covered entities are not good stewards of the 340B program.

Besides triggering an avalanche of comment letters, HRSA’s rebate notice prompted a bipartisan response from Congress.  On September 8, 2025, 163 members of Congress signed onto a letter expressing concerns with, and urging the Department of Health and Human Services to abandon, the Rebate Model Pilot.  Whether such opposition will convince HRSA to suspend or abandon the Rebate Model Pilot is unclear.  When HRSA released its Rebate Model Pilot notice on August 1, 2025, the agency appeared to have already made up its mind to proceed.  The notice stated that the pilot was “effective immediately” unless revised in the future.  The Rebate Model Pilot is limited to the ten drugs subject to the 2026 Inflation Reduction Act (IRA) price caps.  Manufacturers associated with these drugs are permitted to voluntarily participate in the model, and HRSA’s notice indicated that drugmakers are required to submit plans to participate by today’s date, September 15, 2025.

RWC-340B will continue to monitor activity surrounding the 340B pilot program and keep members appraised of any developments.