The 340B Drug Pricing Program is facing some of its most significant policy and operational challenges in years. Recently, two developments have placed covered entities under simultaneous pressure. The Health Resources and Services Administration (HRSA) issued a Request for Information (RFI) on the proposed 340B rebate model, with the comment deadline having closed on April 20, 2026. At the same time, Eli Lilly and Novo Nordisk implemented policies conditioning 340B pricing on the submission of in-house claim-level dispensing data, and pricing denials are already occurring. Covered entities that are not actively monitoring access and building a documented record risk losing savings that may be difficult to recover.
HRSA’s Proposed 340B Rebate Model and the Current Legal Landscape
In August 2025, HRSA announced a voluntary 340B Rebate Model Pilot Program allowing approved manufacturers to provide 340B discounts through post-purchase rebates rather than upfront at the point of sale. The proposed shift was a fundamental departure from the program’s 30-year history. Under the existing model, covered entities purchase drugs at the discounted 340B ceiling price. Under the rebate model, they would be required to purchase drugs at Wholesale Acquisition Cost and then submit claim-level data to receive a rebate equal to the discount they are owed. In other words, covered entities would be required to front the full cost of the drug and wait to be made whole. The pilot was set to launch January 1, 2026, but a preliminary injunction halted it days before. In December 2025, the American Hospital Association (AHA) and other stakeholders sued in the U.S. District Court for the District of Maine, arguing that the program bypassed the Administrative Procedure Act by failing to provide adequate notice and comment and by ignoring 30 years of covered entity reliance on upfront discounts. On February 10, 2026, the court vacated and remanded the pilot entirely.
Rather than immediately relaunch the pilot, HRSA responded by issuing an RFI on February 17, 2026, seeking input on whether a rebate model could be designed lawfully and operationally. Topics included cash flow impacts, covered entity reliance interests, guardrails against improper denials, and data submission requirements. HRSA also signaled it may expand any future program to cover up to 25 drugs from 13 manufacturers across the 2026 and 2027 IRA Medicare Drug Price Negotiation cycles. The AHA, in its formal comment, urged HRSA to abandon the concept entirely, citing the First Circuit’s recognition in Am. Hosp. Ass’n v. Kennedy that the Department of Health & Human Services (HHS) had historically found a rebate mechanism inferior to the upfront-discount model and disruptive to safety-net providers.
What the RFI Means for Covered Entities
The comment window closed April 20, but the RFI process is far from over. Comments submitted will shape any future rebate program HRSA proposes. For covered entities that submitted comments, the next step is ensuring that HRSA’s ultimate decision, if any, is held to the commitments made in the Maine court remand agreement, including a requirement that HRSA issue a fresh notice, solicit new manufacturer applications, allow for public comment, and provide a minimum 90-day implementation window before any new program takes effect. For covered entities that did not submit comments, the window to engage directly is closed for now, but the legal and operational work of positioning against a potential rebate model is not.
If a rebate model takes effect, covered entities will be required to carry the full cost of drugs at list price across potentially thousands of dispenses while waiting for manufacturers to pay rebates. HRSA has proposed that manufacturers process rebate payments or issue denials within ten calendar days of data submission, but as discussed below, denials are virtually certain to occur. Each denial triggers a separate dispute process. The administrative burden of tracking denials, compiling supporting data, and initiating and maintaining Administrative Dispute Resolution (ADR) filings across multiple manufacturers and drug classes would be substantial and ongoing. Covered entities should begin building internal data infrastructure now to capture the detail that would be required in a rebate environment: per-claim dispense data, payor class identification, Medicaid carve-in and carve-out status, and accurate NCPDP field mappings.
Covered entities should also continue to monitor HRSA’s ADR process as the primary recourse for manufacturer-related disputes that are not directly resolved. HRSA has indicated it is aware of pricing denials currently occurring under active manufacturer data policies and is monitoring ADR filings. That monitoring is meaningful, as it gives HRSA a real-time view of the operational impact of data-conditioned pricing policies. Covered entities that file and document ADR claims now are contributing to the evidentiary record that will inform both the RFI response and any future enforcement action.
Manufacturer Claim-Level Data Policies: A Growing Industry Trend
Separate from the rebate model, an increasing number of manufacturers have implemented or announced policies conditioning 340B pricing on the submission of in-house dispensing data, and those policies are active today. What began as contract pharmacy-specific requirements has rapidly expanded into a system-wide data collection expectation that now reaches in-house pharmacy dispenses as well. As of this writing, at least seven manufacturers have announced in-house claim-level data submission requirements, with additional manufacturers expected to follow. Eli Lilly and Novo Nordisk represent the most prominent and operationally active examples. Eli Lilly’s updated 340B Distribution Program policy took effect February 1, 2026. It requires covered entities to submit claim-level data for all in-house 340B dispenses through the 340B ESP platform, covering Lilly’s full portfolio under labeler codes 00002, 00077, and 66733. For most products, data must be submitted within 45 days of dispense. For select products administered in clinical settings, including ALIMTA®, Amyvid®, CYRAMZA®, ERBITUX®, Kisunla®, Omvoh®, Portrazza®, and Tauvid®, the window is 60 days from administration. Novo Nordisk implemented a similar policy with comparable timelines. Both policies are fully in effect as of April 1, 2026.
Some covered entities are already losing access to 340B pricing for Lilly products. HRSA acknowledged it is aware of the denials and is monitoring ADR filings. Covered entities located in Colorado, Maine, Nebraska, North Dakota, Oregon, Rhode Island, South Dakota, Tennessee, Vermont, and West Virginia are currently exempt from Lilly’s in-house data requirement, as are FQHCs and look-alike entities in New Mexico. Lilly reserves the right to modify those exemptions, so any entity relying on one should document that reliance and monitor for changes.
What to Do Now: Protecting Pricing Access and Preparing for ADR
Any covered entity dispensing products subject to active manufacturer data policies in-house should confirm immediately whether it is still receiving 340B pricing at the individual drug level. If denials are identified, the covered entity should compile claim-level data and initiate good-faith communication with the manufacturer before filing a formal ADR complaint. HRSA’s ADR process is the primary avenue for recovering denied savings, but it requires prompt action, an organized factual record, and a clear showing that submissions were timely and complete.
Covered entities should use this period to assess their data infrastructure. Pharmacy, revenue cycle, and compliance teams should confirm that required NCPDP data fields are captured accurately at the point of dispensing, that file layouts conform to 340B ESP or other platform specifications, and that transmission workflows are documented and auditable. Covered entities should also clarify in writing with each contract pharmacy which party is responsible for compiling and transmitting data, how disputes will be handled, and what the correction timeline is for rejected submissions. If a manufacturer moves to limit contract pharmacy access or impose a single-pharmacy designation, legal counsel should be engaged immediately and pending ADR rights preserved.
Litigation by Covered Entities Against Manufacturers: Current Landscape and Limitations
As manufacturer restrictions have proliferated, covered entities and their advocates have increasingly turned to litigation to challenge them. That litigation landscape is defined, first and foremost, by a structural constraint that has not changed: the Supreme Court’s 2011 decision in Astra USA, Inc. v. Santa Clara County, 563 U.S. 110, which held unanimously that Section 340B does not create a private right of action and that covered entities cannot enforce 340B obligations through third-party beneficiary claims against manufacturers. The Astra holding has significantly narrowed the avenues available for direct judicial enforcement of Section 340B, channeling most covered entity grievances into HRSA’s ADR process rather than federal court. Courts reviewing state contract pharmacy access laws have also invoked Astra’s centralized-enforcement rationale as a limit on how far state law can go in effectively creating private 340B enforcement mechanisms.
Against that backdrop, covered entities pursued two notable alternative litigation theories in early 2026. The first is a direct state court action. In Sagebrush Health Services v. Amgen (Ventura County Superior Court, filed December 2025), a Nevada nonprofit operating STD clinics sued Amgen in California state court, asserting five causes of action under California law after Amgen unilaterally terminated Sagebrush’s 340B access and clawed back approximately $7 million in past discounts. The complaint alleges that Amgen disregarded the established federal process for challenging a covered entity’s eligibility and took unilateral action that HRSA, not Amgen, is authorized to take. The case tests whether state law theories, including unfair business practices claims, can survive where a direct federal Section 340B claim cannot. The outcome will have implications for other covered entities in states with robust consumer protection or unfair competition statutes.
The second and potentially more far-reaching theory is the FCA qui tam. On March 17, 2026, the Ninth Circuit issued a unanimous decision in United States ex rel. Adventist Health System of West v. AbbVie Inc., reversing the district court’s dismissal and holding that a covered entity can pursue a False Claims Act qui tam action premised on Section 340B overcharging even where Section 340B itself provides no private right of action. Adventist alleged that AbbVie, AstraZeneca, Novartis, and Sanofi knowingly charged prices exceeding statutory ceiling prices, causing federal and state governments to overpay hundreds of millions of dollars through Medicaid, Medicare, and government-funded clinics. The Ninth Circuit concluded that the FCA’s broad remedial purpose, which Congress intended to reach all types of fraud resulting in financial loss to the government, is an independent mechanism not displaced by Astra’s holding. The decision is significant because it opens a litigation path that bypasses the ADR process entirely and carries the threat of treble damages and per-claim FCA penalties. Whether the theory survives on the merits, and whether courts outside the Ninth Circuit accept it, remain open questions, but covered entities and their counsel should be aware of both its potential as an enforcement tool and its limitations as a path to prompt recovery of denied pricing.
How Frier Levitt Can Help
Our team advises hospitals, health systems, federally qualified health centers, and specialty and retail pharmacies across the full spectrum of 340B issues, including manufacturer data requirements, in-house and contract pharmacy compliance, pricing access disputes, and ADR proceedings. We help clients build the claim-level documentation frameworks that current and proposed manufacturer policies require and maintain the audit trail that withstands scrutiny in any manufacturer or regulatory review. If your organization has experienced a pricing denial under any active manufacturer data policy or has questions about how to position its operations in anticipation of a potential rebate model or emerging litigation risks, we are available to assist.
