340B rebate model may strain provider resources and cash flow
The Health Resources and Services Administration has announced a pilot program with changes to the 340B Drug Pricing Program. The voluntary 340B rebate pilot program would allow pharmaceutical manufacturers to provide rebates to safety-net providers rather than discounted prices upfront. Under the current discount model, providers pay 25 to 50% less for prescription medications. The pilot program will start with 10 drugs that have been subject to price negotiations in Medicare for 2026.
The pilot program, which is set to begin in January, will require that providers pay full price initially and request their rebate within 45 days of dispense. Drugmakers are then required to make payment within 10 days. The program is voluntary for drugmakers, but not for providers.
Providers are faced with a potential increase in administrative efforts as they will be required to monitor multiple rebate models and track which pharmaceuticals are not covered by the pilot program. Additionally, providers will need to manage expected cash flow issues while awaiting pending rebate payments from drugmakers.
Comments on the pilot program are due Sept. 8 and drugmakers must apply by Sept. 15.
The takeaway
This pilot program could change how providers receive financial relief from the 340B Drug Pricing Program. The program will require that providers pay full price initially for drugs covered and subsequently submit for rebate from the drugmaker. Additional administrative efforts from the provider will be required to monitor rebate efforts and manage expected cash flow impacts on the provider.
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