The U.S. Department of Health and Human Services (HHS) recently made headlines by scrapping its 2025 340B Rebate Model Pilot Program due to multiple legal challenges. This decision comes after a court ruling that criticized the initial plan for not considering the long-standing reliance of hospitals on upfront discounts.
The Rise and Fall of the 2025 Pilot Program
In August 2025, the Health Resources Service Administration (HRSA) introduced a voluntary pilot to change the way the 340B drug pricing program works. The idea was to shift from upfront discounts to rebates collected after the fact.
- Target: Initially focused on 10 high-cost drugs that Medicare negotiates.
- Model: 340B entities would pay the full Wholesale Acquisition Cost (WAC) upfront and then file claims to get rebates later.
However, many covered entities raised serious concerns. They argued that the model would create “irreparable harm,” causing severe cash-flow problems and added administrative challenges. The American Hospital Association (AHA) even took legal action to stop the program.
In December 2025, a federal court in Maine sided with the AHA. The court found that HRSA hadn’t properly considered three decades of reliance on upfront discounts. A couple of weeks later, the Appeals Court upheld this decision, leading the Department of Justice to join the effort to eliminate the flawed pilot entirely.
What Comes Next? The New Request for Information (RFI)
On February 13, 2026, HRSA kicked off a new phase by issuing a Request for Information (RFI). This indicates a potential “reset” regarding how to approach drug pricing rather than a complete dismissal of rebates.
HRSA is looking for feedback on several key issues:
- Operational Impact: What would it cost to adjust staffing or IT systems for rebates?
- Cash-Flow Concerns: Could rebating undermine services provided by safety-net hospitals?
- Guardrails: What protections are needed to stop manufacturers from unfairly rejecting rebate claims?
- Legal Questions: Does the existing 340B law allow for a choice between rebates and discounts at the agency’s discretion?
The Bigger Picture
As of now, stakeholders have until March 19, 2026, to submit their comments on the RFI. This process could reshape the future of the 340B program, which plays a crucial role in making medications affordable for underserved populations.
A recent survey by the National Association of Community Health Centers found that 67% of safety-net providers expressed concern about the impact of proposed changes on their ability to serve low-income patients. This highlights why responses to the RFI will be so critical.
The landscape of healthcare pricing is evolving. The U.S. is at a pivotal moment concerning drug costs, with ongoing debates about value-based pricing and the role of generics and biosimilars. According to the Kaiser Family Foundation, as of 2023, the average annual cost of prescription drugs has risen significantly, which emphasizes the need for effective pricing models.
As we await more input from stakeholders, the future of the 340B program remains uncertain but crucial for many. Keeping an eye on these developments can help us understand how policy changes may impact access to vital medications.
