340B rebate pilot: What providers need to know
Under the existing 340B program, drug manufacturers must offer outpatient medications at significantly discounted prices to eligible health care organizations, including those that serve vulnerable patient populations. According to Health Resources and Services Administration (HRSA), 340B covered entities purchased $81.4 billion in outpatient drugs in 2024.
Starting in January, however, HRSA is implementing a pilot program with changes to the 340B Drug Pricing Program. Under the pilot, pharmaceutical manufacturers will issue rebates to safety‑net providers instead of offering upfront discounted drug prices. In the existing discount model, providers receive medications at 25% to 50% below list price. Under the pilot, however, covered entities would pay full list price at the time of purchase and later submit detailed claims data to a rebate platform after dispensing eligible drugs. The program is voluntary for drugmakers, but not for providers.
As a result of this change in payment structure, providers will face increased administrative burdens as they will need to oversee multiple rebate structures and must track which medications are excluded from the pilot program. They will also be required to manage potential cash‑flow challenges, putting additional strain on already limited cash flow, while awaiting reimbursement through manufacturer rebate payments.
The takeaway
The 340B Rebate Model Pilot Program is moving forward toward a proposed Jan. 1, 2026, start date, but the program may face legal challenges leading up to that. Provider associations, including the American Hospital Association, have filed suit seeking to stop the program from taking effect after the new year.
Meanwhile, hospitals and other 340B participants should model the potential impact of anticipated changes on pharmacy margins and cash reserves. Health care organizations should consider updating their agreements with drug manufacturers to include rebate pass‑through provisions, audit rights and clearly defined mechanisms for resolving disputes.
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