Congress designed the 340B Drug Pricing Program to assist certain healthcare facilities serving poor, uninsured or otherwise vulnerable populations. Under the 340B Program, drug manufacturers, as a requirement to participate in Medicaid, are required to charge hospitals and other 340B providers (Covered Entities) no more than a significantly discounted “ceiling price” on certain outpatient prescription drugs purchased by these Covered Entities for their patients. 42 U.S.C. § 256b(a)(1), (4). The 340B’s purpose, as intended by Congress, is to enable covered entities to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.
New 340B Rebate Model Pilot Program
On July 31, 2025, the Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) announced the launch of a voluntary 340B Rebate Model Pilot Program, which could reshape how certain 340B discounts are accessed and administered. The Pilot Program, effective January 1, 2026, offers a new path for drug manufacturers to provide 340B discounts via rebates, but only with prior HRSA approval and under strict parameters.
Published in the Federal Register on August 1, 2025, HRSA’s Pilot Program outlines the terms under which manufacturers may offer 340B rebates in lieu of upfront discounts. The Pilot will apply to pharmacy-dispensed claims (not physician-administered drugs), limited to the 10 drugs selected for negotiation under the Medicare Drug Price Negotiation Program (MDPNP) in 2026. Participating manufacturers must meet extensive conditions designed to minimize the administrative burden on Covered Entities. Manufacturers are to provide covered entities with at least 60 days’ notice before implementing a rebate model, including registration and IT access instructions, allow rebate submissions up to 45 days after dispensing, cover costs of data submission platforms and technical support, and ensure platforms protect patient health information in accordance with HIPAA and other data privacy laws. Manufacturers must apply by September 15, 2025, and if approved by October 15, may begin offering rebate models effective January 1, 2026.
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. All data requested as part of the Plan should be limited to only the following readily available pharmacy claim fields:
- 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)
Implications and Future Outlook
Manufacturers must issue rebate determinations within 10 calendar days of submission and provide supporting documentation for any denials. Of note, HRSA will not allow manufacturers to deny 340B rebates based on concerns about diversion or duplicate discounts. Manufacturers are required to address such concerns through HRSA audits or the 340B ADR process, not by withholding rebates. While the Pilot bars denials based on non-compliance allegations, HRSA allows denials in limited circumstances such as MDPNP (Medical Device Plug-and-Play program) deduplication errors or duplicate rebate claims.
As a result, OPA has requested public comments by September 2, 2025, specifically on whether additional safeguards are needed to protect covered entities and whether unanticipated operational issues might arise. Still, HRSA notes that it is “under no obligation to respond to or act on the comments.”
Ultimately, the Pilot Program can potentially provide greater transparency between 340B providers, manufacturers, and intermediaries. First, no 340B discounts would be realized by the 340B providers until they demonstrate, through readily available data, that the claims are 340B-eligible claims, which also will demand less reliance on TPAs. Additionally, 340B providers will be able to better track how much of the 340B savings are being diverted and retained by intermediaries, such as TPAs and Contract Pharmacies. Finally, by clearly identifying to the drug manufacturer which claims are 340B, duplicate discounts (either on drug manufacturer rebates or Medicaid rebates), will hopefully be eliminated.
Looking ahead, HRSA’s Pilot Program invites additional key questions to be acknowledged, including whether HRSA expands the rebate model in the future and/or whether 340B pricing through a rebate-only distribution should/will continue to grow. Until those questions are resolved, Covered Entities must respond to HRSA’s request for input and prepare to navigate an increasingly complex 340B operational landscape.
How Frier Levitt Can Help
Frier Levitt can help interpret and implement new OPA guidance, ensure compliance with 340B Program requirements, and advise on operational adjustments related to manufacturer arrangements. In addition, Frier Levitt can assist with risk mitigation strategies in cases where manufacturers limit access to 340B pricing or when drug supply issues arise. By proactively addressing legal and regulatory complexities, Frier Levitt can help providers maintain program integrity while minimizing exposure to enforcement actions or financial losses. Contact us to speak with an attorney about how the new voluntary 340B Rebate Model Pilot Program can affect your practice.
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