On July 31, 2025, the Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) announced the availability of a voluntary 340B Rebate Model Pilot Program that will allow drug manufacturers to provide 340B-discounted drug prices using a rebate mechanism in limited cases starting January 1, 2026. OPA published guidance in the Federal Register on August 1, 2025, outlining an application process for manufacturers that choose to participate.
In recent months, drug manufacturers have attempted to unilaterally implement expansive 340B rebate models, and two federal district court judges have ruled that manufacturers may not implement rebate models without prior approval. Covered entities and pharmacies have raised concerns that manufacturers could use rebate models to deny 340B pricing. Rebate models under the Pilot Program would be significantly narrower than the manufacturer proposals. Manufacturers could provide rebates only for the 10 drugs selected for negotiation under the Medicare Drug Price Negotiation Program (MDPNP) in 2026, and manufacturers may not deny rebates based on concerns about 340B program non-compliance.
Pilot Program Requirements
Manufacturers interested in participating in the Pilot Program must apply to participate for a minimum one-year period, with applications due by September 15, 2025. OPA will approve rebate plans by October 15, 2025, with January 1, 2026, as effective dates for any approved rebate plans. Manufacturers must give covered entities 60 calendar days' notice of a rebate model with instructions on how to register for any IT platforms.
To start, manufacturers may only provide 340B pricing through rebates for the 10 drugs selected for negotiation under the MDPNP in 2026, the first year of the program. Manufacturers may provide rebates for these 10 drugs regardless of the payer. OPA noted it may consider expanding the Pilot to other drugs after assessing the Pilot Program.
Under a rebate model, instead of making an upfront purchase at a 340B-discounted price, covered entities would order drugs at wholesale acquisition cost (WAC) prices and, after dispensing a drug to a 340B-eligible patient, submit a rebate request. If approved, the manufacturer would issue a refund for the difference between the WAC and 340B prices. To minimize burden on covered entities, manufacturers must cover the costs of data submission; allow covered entities to order drugs under existing distribution mechanisms; allow covered entities to submit data for up to 45 calendar days from the date of dispense; specify if rebates are paid at the package level or the unit level; provide technical assistance and customer service; and ensure that the IT platform protects patient identifying information consistent with HIPAA and any other privacy and data security laws.
OPA will also limit the data elements that manufacturers can require covered entities to submit with rebate requests. The guidance references submission of "pharmacy claim fields," suggesting that the Pilot Program would allow rebates only for pharmacy claims, not clinic-administered drugs billed by facilities. The required pharmacy claim fields include:
- Date of Service
- Date Prescribed
- RX number
- Fill Number
- 11 Digit National Drug Code (NDC)
- Quantity Dispensed
- Prescriber ID
- Service Provider ID
- 340B ID
- Rx Bank Identification Number (BIN)
- Rx Processor Control Number (PCN)
Manufacturer's Ability to Deny 340B Rebates
A key concern from 340B covered entities and pharmacies has been whether manufacturers could use rebate models to deny 340B pricing. OPA will permit manufacturers participating in the Pilot Program to require that covered entities submit certain claims data elements through an IT platform for review. The guidance does not dictate what IT platform a manufacturer must use, suggesting that manufacturers could use different IT platforms.
Manufacturers must pay or deny rebates within 10 calendar days of data submission. In the event of a rebate denial, manufacturers must provide a rationale and supporting documentation. However, manufacturers may not deny rebates based on concerns over a covered entity's compliance with the prohibitions against diversion or Medicaid duplicate discounts. OPA instructs manufacturers to address those concerns with HRSA or through existing mechanisms, such as by auditing covered entities or using the 340B administrative dispute resolution (ADR) process. OPA does recognize, though, that manufacturers may deny rebates in certain cases, referencing deduplication under the MDPNP and a 340B rebate provided to another covered entity on the same claim as two examples.
Legal and Market Implications and Next Steps
Manufacturer efforts to implement 340B rebate models are the latest development in a series of actions taken by drug manufacturers to limit the size of the 340B program. Last fall, five manufacturers attempted to unilaterally implement broad rebate models, and HRSA threatened enforcement action if they implemented rebate models without prior approval. All five manufacturers filed lawsuits against HRSA. Two federal district court judges have ruled for HRSA, finding that manufacturers may not implement rebate models without prior approval. The courts asked HRSA to complete its review of the rebate proposals and address what types of rebate models are permitted, if any.
In the guidance, OPA acknowledged the manufacturer rebate proposals, which, according to OPA, were "primarily" to address 340B duplication under the MDPNP, "but also to facilitate other aims such as the prevention of 340B Medicaid duplicate discounts and diversion." The types of rebate models allowed under the Pilot Program would be significantly narrower than the proposed rebate models. Several of the proposals applied to drugs beyond those selected for negotiation under the MDPNP and indicated that the manufacturer may deny rebates if the manufacturer disagreed that the claim was for a 340B-eligible patient. In contrast, the Pilot Program will allow rebates only for drugs selected for negotiation, and OPA will not permit manufacturers to deny rebates based on diversion or duplicate discount concerns.
However, the guidance notes that manufacturers can deny 340B rebates in certain cases, and it is not clear what circumstances could result in a denial. OPA is seeking comments on whether OPA should consider any "additional safeguards to mitigate adverse, unintended impacts for covered entities" or "any potential implementation issues not yet sufficiently accounted for in the pilot design." 340B covered entities and pharmacies may continue to have concerns that the Pilot Program could allow manufacturers to deny rebates for claims that are eligible under the 340B statute for 340B pricing.
OPA is seeking comments on the Pilot Program, which will be due by September 2, 2025. However, the guidance says OPA "is under no obligation to respond to or act on the comments." Given the experimental nature of the Pilot Program, it is not clear what OPA's future plans are with respect to allowing 340B rebate models. The guidance says the purpose of the Pilot Program is "to better understand the merits and shortcomings of the rebate model from stakeholders' perspectives, and to inform OPA consideration of any future 340B rebate models consistent with the 340B statute and the Administration's goals."
Meanwhile, four of the five manufacturers that have proposed rebate models have appealed the lower court decisions to the U.S. Court of Appeals for the D.C. Circuit. The manufacturers are likely to continue asking federal courts to permit manufacturers to implement broad rebate models without prior approval. Covered entities are also likely to continue arguing that rebate models prevent covered entities from accessing 340B pricing and are inconsistent with the 340B statute. The Court has consolidated the cases, and briefing is due in late August.
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